State of Andhra Pradesh v Thadi Narayana
Supreme Court of India

24 July 1961
Criminal Appeal No. 222 of 1959. Appeal by special leave from the judgment and order dated February 24, 1959, of the Andhra Pradesh High Court, Hyderabad, in Criminal Revision Case No. 636 of 1958. AND Criminal Appeal No. 112 of 1961. Appeal by special leave from the Judgment and order dated July 15, 1958, of the Andhra Pradesh High Court in Criminal Appeal No. 237 of 1957.
The Judgment was delivered by : P. B. Gajendragadkar, J.
1.  The short and interesting question which arises for our decision in the present appeal is in respect of the powers of the High Court in disposing of appeals under s. 423(1) (b) of the Code of Criminal Procedure. In dealing with an appeal preferred by a convicted person against the order of conviction and sentence imposed on him by the trial court can the High Court in exercise of its appellate powers under s. 423(1)(b) reverse the finding of acquittal recorded by the trial court in favour of the appellant in respect of an offence which is directly not the subject-matter of the appeal ? On this question there has been a difference of opinion amongst our High Courts, and it appears from reported decisions that in the same High Court sometimes conflicting views have been expressed on the point.
2.  This question arises in this way. In the Court of Sessions, Visakhapatnam Division, the respondent Thadi Narayana was charged at the instance of the appellant the State of Andhra Pradesh with having committed offences punishable under s. 302 and s. 392 of the Indian Penal Code. The case against her was that on December 27, 1956 at about night meal-time at Gangacholapenta she, committed the murder of a minor girl K. Sriramulamma by stabbing her with a knife and thus rendered herself 'liable to be punished under s. 302. It was also alleged against her that at the aforesaid time and place and in the course of the same transaction she had robbed the said victim of her four pairs of gold Konakammulu and. a pair of gold Alakalu and thereby committed 'the offence of robbery under s. 392. On April 16, 1957 the learned trial judge found that the charges against the respondent under ss. 302 and 392 had not been proved beyond a reasonable doubt, and so he acquitted her of the said offences. He, however, held that the respondent was shown to have committed an offence under s. 411 and so he convicted her of the said offence and sentenced her to undergo rigorous imprisonment for a period of two years.
3.  Against the order of conviction and sentence thus imposed on her the respondent preferred a jail appeal in the High Court of Andhra Pradesh. This appeal was heard by Sanjeeva Rao Naidu, J. By his judgment delivered on July 22, 1958 the learned judge expressed his conclusion that he, was satisfied that gross miscarriage of justice had resulted in the case "and the only way to rectify this is to order the retrial of the case on the original charges under ss. 302 and 392 of the Indian Penal Code so that the accused may be properly tried thereon and, if found guilty, convicted for the offence or proved by evidence to have been committed by her." In the result the conviction and sentence of the accused under s. 411 was set aside and the case was remanded to the trial court for retrial on the charges already framed against her.
4.  Accordingly when her retrial commenced on November 3, 1958 an application was made on behalf of the respondent before the trial judge (Criminal M. P. No. 242 of 1958) in which it was urged that her trial in respect of the offences under ss.302 and 392 was not permissible having regard to the order of acquittal which had been passed in her favour at the original trial. The validity of the plea ofautrefois acquit thus raised by the respondent was challenged by the appellant, and it was 'urged that by virtue of the order passed by the High Court ordering her retrial the trial court in law was bound to proceed with the retrial. The trial judge upheld this contention and observed that he was bound to obey the directions given by the High Court and if he were to examine the merits of the contention raised before him by the respondent he would be transgressing his limits, because the determination of the point raised by the respondent would necessarily involve examining the correctness or otherwise of the High Court's order directing a retrial. The trial court thus rejected the application made by the respondent.
5.  Against this order the respondent moved the High Court by her Criminal Revision Application No. 636 of 1958. The Criminal Revision Application, as placed before a Full Bench because it raised two important questions of law. These questions were thus framed:
(1)Where an accused is tried by a Sessions Court on charges of murder and robbery, and the Sessions Court acquits the accused of those charges and convicts her only of an offence u/s. 411 I. P. C. and the accused appeals to the High Court against the conviction and sentence but the State Government does not appeal against the acquittal of the accused on charges of murder. And robbery, is it open to the High Court to set aside the conviction and sentence u/s. 411 I. P. C. and order the accused to be retried on the charges of murder and robbery ?
(2)When in pursuance of the order of the High Court the Sessions Court again frames charges u/ss. 302 and 392 I. P. C. against the accused, is it or is it not open to the accused to plead the statutory bar of AUTREFOIS ACQUIT' u/s. 403 Cr. P.C.?
6.  The answer given by the Full Bench to the first, question is that except in exercise of the revisional powers under s. 439 of the Code of Criminal Procedure subject to the limitations prescribed therein it is not open to the High Court to order a retrial on the charges on which the accused was acquitted by the trial court in an appeal by the accused against his conviction, though 'it is empowered to reverse the conviction and order a retrial on that charge alone. On the second question the Full Bench held that it was open to the accused to plead the bar of autrefois acquit under s. 403 notwithstanding the order of the High Court unless there is an adjudication on the acquittal by the High Court either under s. 423(1) (a) or S. 439 of the Code of Criminal Procedure. As a result of these answers the revisional application preferred by the respondent was allowed, her plea under s.403 was upheld and it was ordered that the retrial of the respondent for the offences under ss.302 and 392 of the Indian Penal Code cannot be proceeded with., This order was passed on March 11, 1959. It is against this order that the appellant has come to this Court by special leave.
7.  The powers of the appellate court in disposing of appeals are prescribed by s. 423 of the Code. This section occurs in Chapter XXXI of the Code which deals with appeals, reference and revision. In the present appeal we ire concerned with the provisions of s.423(1) (b). However, it is convenient to read s. 423(1) (a) and (b) 423.(1) The Appellate Court shall then send for the record of the case, if such record is not already in Court. After perusing such record, and hearing the appellant or his pleader, if he appears, and the Public Prosecutor, if he appears, and, in case of an appeal under section 411A, subjection (2) or section 417, the accused, if he appears, the Court may, if it considers that there is no sufficient ground. for interfering, dismiss the appeal, or may-
(a)in an appeal from an order of acquittal, reverse such order and direct that further inquiry be made,, or that the accused be retried or committed for trial as the case may be, or find him guilty and pass sentence on him according to law;
(b)in an appeal from conviction, (1) reverse the finding and sentence, and acquit or discharge the accused or order him to be retried by a Court of competent jurisdiction subordinate to such Appellate Court or committed for trial, or (2) alter the finding, maintaining the sentence, or, with or without altering the finding, reduced the sentence, or, (3) with or without such reduction and with or without altering the finding, alter the nature of the sentence, but, subject to the provisions of section 106, sub-section (3),. not so as to enhance the same;
8. S. 423(1) (a) expressly deals with an appeal from an order of acquittal and it empowers the Appellate Court to. reverse the order of acquittal and direct that further inquiry be made or that the accused may be tried or committed for trial, as the case may be, or it may find him guilty and pass sentence on him according to law. In appreciating the powers conferred on the Appellate Court in dealing with an appeal against, an order of acquittal it is necessary to bear in mind that the only forum where an appeal can be preferred against an original or an appellate order of 'acquittal is the High Court, that is to say the powers conferred on the Appellate Court by s.423(1) (a) can be exercised only by the High Court and not by Any other Appellate Court. Under s. 408 the Court of Sessions is an Appellate Court to which appeals from orders of conviction passed by an Assistant Sessions Judge,, a District Magistrate or any other Magistrate lie, and so the Court of Sessions is An Appellate- Court, but no appeal against an order of acquittal passed by any of the aforesaid authorities can lie to, the Court of Sessions. All appeals against acquittal whether passed by the trial court or the Appellate Court lie only to the High Court, and so the powers prescribed by s. 423(1) (a) can be exercised only by the High Court. As we will presently point out this fact has some bearing on the construction of the material words used in s. 423(1) (b) (2).
9. S. 423(1) (b) (1) in terms deals with an appeal from a conviction, and it empowers the Appellate Court to reverse the findings and sentence and acquit or discharge the accused or order a retrial by a Court of competent jurisdiction subordinate to such Appellate. Court or committed for trial. In the context it is obvious that the finding must mean the finding of guilt. The words "the finding and sentence" are co-related. They indicate that the finding in question is the cause and the sentence is the consequence; and so what the Appellate Court is empowered to reverse is the finding of guilt and consequently the order as to sentence. There is no.difficulty in holding that s. 423(1) (b) (1) postulates the presence of an order, of sentence against the accused and it is in that context that it empowers the Appellate Court to reverse, the finding of guilt and sentence and then to pass any one of the appropriate orders: therein specified. In our opinion s. 423 (1) (b) (1) is, therefore, clearly confined to cases of appeals preferred against orders of conviction and sentence, and the powers exercisable under it are therefore condition- ed by the said consideration. It is impossible to accede to the argument that the powers conferred by this clause can be exercised for the purpose of reversing an order of acquittal passed in favour of a party in respect of an offence charged in dealing with an appeal preferred-by him against the order of conviction in respect of another offence charged and found proved. There can thus. be no doubt that the order passed by Naidu, J. cannot be justified under this clause.
10.  At this stage it would be relevant to point out that Naidu, J. did not purport to proceed under s.439 in dealing with the respondent's' case when the appeal preferred by her against her conviction was being argued before him. It is true that the learned judge noticed that the appeal in question was a jail appeal and the, respondent was not defended by a lawyer. So he ordered Mr. A. Gangadhara Rao, an Advocate of' the Court, to appear amicus curiae to argue the pea on behalf of the respondent; but, as the Full Bench has pointed, out, the record clearly shows that neither the respondent nor her pleader was given notice under s' 439(2) of the Code, and even the advocate appointed amicus curiae did not know much less the respondent herself that the learned judge intended to exercise his powers under s.439 against the respondent in respect of the offences under ss.302 and 392 despite the fact that the appellant had not preferred an appeal against the order of acquittal passed in favour of the respondent on those grounds. Therefore, it is unnecessary for us to consider in this appeal the question about the scope and effect of the provisions of ss.423 and 439 of the Code read together. The only provision under which the order passed by Naidu J. is seriously sought to be supported is s.423 (1) (b) (2) and it is to that provision that we must now turn.
11.  It is urged by Mr. Choudhury on behalf of the appellant that in construing the expression "alter the finding" it would be necessary to remember that when the High Court deals with an appeal against conviction the proceedings in the Appellate Court are in substance a continuation of the proceedings in the trial court and so the entire case is in that sense pending before the Appellate Court. The argument is that in exercising the powers conferred on it by s.423 (1)(b)(2) the High Court is not confined only to the order of conviction which is directly the subject-matter of the appeal but it is possessed of the entire proceedings of the case against, the accused and it is in the light of this fact that the expression "alter the finding" must be construed.
12. In our opinion, this argument is not well founded. The scheme of s. 423 itself clearly shows that when appeals against conviction are brought before the Appellate Court by the convicted person it is only with the orders of conviction and matters incidental thereto that fall to be decided by the Appellate Court. An order of acquittal passed in favour of an accused person can be challenged by an appeal as provided by s.417 of the, Code, and s.423(1) (a) therefore expressly deals with the powers of the High Court in dealing with such appeals against orders of acquittals. Prima facie,if an order of acquittal is not challenged by an appeal as contemplated by s.417 and if no action is taken by the High Court under s.439 the said order of acquittal becomes final and cannot be impugned indirectly by the State in resisting an appeal filed by a convicted person against his conviction. In a case where several offences are charged against an accused person the trial is no doubt one; but where the accused person is acquitted of some offences and convicted of others the character of the appellate proceedings and their scope and extent is necessarily determined by the nature of the appeal preferred before the Appellate Court. If an appeal is preferred against an order of acquittal by the State and no appeal is filed by the convicted person. against his conviction it is only the order of acquittal which falls to be considered by the Appellate Court and not the order of conviction. Similarly, if an order of conviction is challenged by the convicted person but the order of acuittal is not challenged by the State then it is only the order of conviction that falls to be considered by the Appellate Court and not the order of acquittal. Therefore the assumption that the whole case is before the High Court when it entertains an appeal against conviction is not well-founded and as such it cannot be pressed into service in construing the expression "alter the finding".
13.  In this connection we ought to recall the fact that it is only the High Court which is authorised to entertain appeals against acquittal under s.417 of the Code. But the provisions of s.423 (1) (b) are applicable to all the Appellate Courts and so the meaning of the expression "alter the finding" cannot change according as the Appellate Court is the High Court or the Court of Sessions. It is common ground that the Court of Sessions which is an Appellate Court cannot alter the finding of acquittal in pursuance of the provisions of s.423 (1) (b) (2) but the argument is that the, High Court can. This argument puts two different interpretations on the same expression "alter the finding" and that would not be a proper mode to adopt in construing the clause. We are, therefore, inclined to bold that just as the Court of sessions is not entitled to alter the finding of acquittal in exercising its powers under s. 423 (1) (b) (2) so is the High Court not entitled to do it,. In other words, the expression "alter the finding" has only one meaning, and that is alter the finding of conviction and not the finding of acquittal.
14.  Besides, if the expression "alter the finding" was to include the power to reverse the finding of acquittal it is not easy to realise why s. 423 (1) (a) should have been enacted at all. From the very fact that s. 423 (1) (a) deals independently with the topic of appeals from orders of acquittal, it would be reasonable to infer that the appellate power in respect of the orders of acquittal are dealt with separately and exclusively under s. 423 (1) (a), whereas appellate powers to deal with orders of conviction are dealt with separately and exclusively under s. 423 (1) (b). The scheme of s. 423, therefore, is inconsistent with the argument that cl. (2) of S.423 (1) (b) covers orders of acquittal and empowers the Appellate Court to alter the said orders.,
15.  As a matter of construction the words ""the, finding" in the expression "alter the finding" must mean the finding of conviction' because the clause begins with "in an appeal from a conviction" and it is obvious that read in the context of the opening words of the clause "'the finding" must mean the finding of conviction and no other. It is with an appeal from conviction that the'clause deals and it is the finding of conviction or guilt which it empowers the Appellate Court to alter. The word "alter" must in the context be distinguished from the word "reversed". Whereas, under s. 423(1)(b)(1) power is conferred on the High Court to reverse the order of conviction the power conferred on the Appellate Court by the expression "'alter the finding" is merely the power to alter. Reversal of the order implies its obliteration, whereas alteration would imply no more than modification and not its obliteration. This consideration also shows that what- the expression aims at is the finding of conviction or guilt and not the finding of acquittal or innocence.
16.  There is yet another consideration which leads to the same conclusion. S. 423(1)(b)(2) emphatically refers to the sentence and requires that despite the alteration of the finding the sentence must be maintained. In other words, the finding and the sentence go together and the clause provides that, even if the finding is altered the sentence may be retained. Similarly, the sentence may be reduced with or without altering the finding. The reference to the sentence in both the cases indicates that the finding which can be altered under the clause is a finding which has led to the imposition of sentence on the accused person. This clause would naturally raise the question as to what are the kinds of cases in which the power can be exercised ? The answer to this question is furnished by the provisions of ss. 236, 237 and 238 Section. 236 deals with cases where separately enacted in order to empower the High Court in the interest of justice to examine the orders of acquittal and if it is satisfied that in any case, the order of acquittal needs to be revised the High Court can exercise its power suo motu. The legislature has therefore deliberately provided wide powers under s. 439 in the interest of justice, and so it is very unlikely that the' legislature could have intended to confer a similar power on the High Court under s. 423 (1) (b) (2).
17.  In this connection we ought to deal with another argument which is sometimes dressed into service in support of the wider construction of the clause 'falter the finding". It is said that the provisions of s. 439 apply-to cases where there is a complete and express order of acquittal, whereas a. 423 (1) (b) (2) covers cases of implied and partial acquittal. It is also urged that whereas there is a specific provision made in s. 439 (4) by which the High Court is precluded from converting a finding of acquittal into one of conviction there is no such limitation in s. 423. Both these arguments do not appear to us to be well- founded. In regard, to the argument of implied acquittal being open to review by the High Court under s.423 (1) (b) (2) it would be enough to refer to at decision of the Privy Council where this argument has been rejected. In Kishan Singh v. The King-Emperor ((1928) 55 I. A. 390) 1928 Indlaw PC 18 the appellant had been tried by a Sessions Judge under s. 302 on a charge of murder. He was convicted under S.304 of culpable homicide not amounting to murder. This conviction was recorded in the, light of the provisions of s.238 (2) of the Code,. For the offence under s.304 he was sentenced to five years' rigorous imprisonment. While convicting the appellant under s. 304 the trial court did not record a specific order of acquittal for the offence under s. 302. The State Government did not appeal but applied for revision on the ground that the appellant should have been convicted of murder and that the sentence was inadequate.
18.  The High Court thereupon convicted the appellant of murder and sentenced him to death. This order of conviction and sentence was successfully challenged by the appellant before the Privy Council. The Privy Council held that the finding at the trial ought to be regarded as of acquittal on the charge of murder and that consequently s. 439 (4) of the Code precluded the High Court from having jurisdiction upon revision to convict on that charge. Dealing with the argument that s. 439 (4) should be confined only to cases where there is complete acquittal their Lordships thought it necessary to say that ",if the learned Judges of the High Court of Madras intended to 'hold that the prohibition in s. 439, sub s. (4) refers only to cases where the trial has ended in a complete acquittal of the accused in respect of all charges or offences, and not to a case such as the present, where the accused has been acquitted of the charge of murder, but convicted of the minor offence of culpable homicide not amounting to murder, their Lordships are unable to agree with that part of their decision. The words of the sub-section are clear and there can be no doubt as to their meaning. There is no justification for the qualification which the learned Judges attached to the sub- section." It would thus be clear that any attempt to confine the operation of s. 439 (4) to cases of the so-called complete acquittal cannot be entertained; and so it would be idle to suggest that s. 423 (1) (b) (2) covers cases of implied or partial acquittal a s. 439 deals with cases of express and complete acquittal.' In setting aside the order of conviction for the offence of murder imposed....by the High Court on the appellant the Privy Council observed that the High Court had acted without jurisdiction and so it could not accept the plea that no prejudice had thereby been caused to the appellant,. This case, therefore, clearly establishes Chat in exercising the powers conferred on it by s. 423 (1) (b) the High Court cannot convert acquittal into conviction that can be done only by adopting the procedure prescribed in s. 439 of the Code.
19.  Then, as to the argument based on the specific, provision contained in s. 439(4) it is obvious that no such limitation could have been prescribed in regard to the provisions of s. 423 (1)(b) for the reason that the orders of acquittal are outside the purview of that clause. Therefore, it would be unreasonable to suggest that because there is no limitation on the power of the High Court as there is in s. 439(4) the High Court can, in dealing with an appeal against conviction, alter the finding of acuittal recorded at the Trial in favour of the accused person. We must accordingly bold that the Full Bench of the Andhra High Court was right in coming to the conclusion that Naidu, J. acted without jurisdiction in altering the finding and order of acquittal passed in favour of the respondent in respect of the offences under ss. 302 and 392 when he, was dealing with the appeal preferred by the respondent against her conviction under s. 41 1.
20.  In this connection we way incidentally refer to the observations made by Venkatarama Ayyar, J., who spoke for the Court, in Jayaram Vithoba v. The State of Bombay. ((1955) 2 S C. R. 1049) 1955 Indlaw SC 74 In dealing with the contention of the accused that the Court had no power under s.423 (1) (b) of the Code of Criminal Procedure to award a sentence under s. 148 in a case the accused was charged under ss. 324 and 148 of the Indian Penal Code., the High Court had observed that they had ample power to transpose the sentence so long as the transposition does not amount to enhancement, and this observation raised a question about the construction of s. 423 (1)(b). Dealing with the said question, Venkatararia Ayyar, J. observed there is nothing about the transposition of the sentence under s. 423 (1)(b). It only provides for altering the finding and maintaining the sentence, and that can apply only to cases where the finding of guilt under one section is altered to a finding of guilt under another. The section makes a clear distinction between a reversal of a finding and its alteration". These observations seem to take the same view of the scope and effect of the provisions of s. 423(1)(b) as we are inclined to do.
21.  As we have already indicated at the commencement of this judgment;, on the question raised for our decision in the present appeal there has been conflict of judicial opinion. We do not, however, propose to consider the several decisions to which our attention was drawn because, in our opinion, no useful purpose would be served by examining the facts in all those cases and subjecting to scrutiny the reasons adopted for arriving at different conclusions. We would, therefore, content ourselves with the broad statement that respondent has relied upon the decisions in Indra Kumar Nath v. The State ( A. I. R. (1954) Cal. 375 1954 Indlaw CAL 168). The State v. Amlesh Chandra Ray. ( r. L.R. (1953)1 Cal.302), Fulo v. State ((1956) I. L.R. 35 Pat. 144) (Full Bench), and Taj Khan v. Rex (A. I. R. 1932 All. 369.) (Ful Bench 1951 Indlaw ALL 171), whereas the appellant has relied upon the decisions in Krishna Dhan Mandal v. Queen-Empress ((1895) I.L.R. 22 Cal. 377), Queen-Empress v. Jabanulla (1896 I.L.R. 23 Cal. 975),
22.  In Re Illuru Lakshmaih, (A.I. R. 1952 Mad. 101) Golla Hanumappa v. Emperor, ((1912) I.L.R.35 Mad. 243) Re K. Bali Reddi, (1914 I. L. R. 37 Mad. 119) In Re Rangiah, (A. I. R, 1954 Mys. 122) 1953 Indlaw KAR 37 Baua Singh v. The Crown ((1942) I.L.R. 23 Lah. 129) (Full Bench) and the majority judgment in Emperor v. Zamir Qasim (I.L.R. (1944) All. 403) The minority view expressed by Mulla J. in Emperor v. Zamir Qasim(I.L.R. (1944) All. 403) contain a careful and exhaustive discussion of the topic and the respondent has strongly relied upon it.
23.  There is one more point which still remains to be considered and that is the subject-matter of the second issue referred to the Full Bench. It is urged before us by Mr. Choudhury on behalf of the State that the Full Bench itself has acted in excess of jurisdiction in entertaining the plea. arised by the respondent under s. 403, because he contends that the judgment delivered by Naidu J. could not be revised by the High Court having regard to the provisions of s. 369 of the Code. We have already mentioned that this question has also been answered in favour of respondent by the Full Bench.
24.  The judgment of the Full, Bench does not show that the effect of the provisions of s. 369 was argued before it. In substance, however, the Full Bench has held that the. order passed by Naidu J. is outside the authority conferred on the High Court under s. 423 (1)(b)(2) and as such can be treated to be without jurisdiction and therefor e a. nullity. We do not propose to decide this point in the present appeal, because we have, allowed
25.  Mr. Rama Reddy, who appeared for the'respondent at our instance, to make an application for special leave against the order passed by Naidu J. Accordingly Mr. Rama Reddy has made an application, Special Leave Petition (Criminal) No. 476 of 1961, for special leave and has prayed-for excuse of delay made in filing it. Having regard to the very unusual circumstances in which the present application has been made we feel no difficulty in condoning the delay made by the respondent in filing her application for special leave and granting her special leave to appeal against the order in question. In fairness we ought to add that Mr. Choudhury did not resist the respondent's prayer for excuse of delay in the present case. Since we are now possessed of an appeal, Criminal Appeal No. 112 of 1961, filed by special leave against the judgment and order of Naidu J. the question as to whether the Full Bench could have considered the validity of the said judgment and order has become a matter of academic importance. There can be no doubt that in. the appeal preferred by the respondent against the said order it is certainly open to her to challenge its validity, and as we have come to the conclusion that the order passed by Naidu T. is without jurisdiction we have no difficulty in allowing the respondent's appeal and setting aside the, said order.
26.  In the result Criminal Appeal No. 112 of 1961 preferred by the respondent Thadi Narayana'is allowed and the High"Court's order passed in Criminal Appeal No. 237 of 1957 by which case against her had been sent back for retrial on the original charges against her under ss. 302 and 392 of the Indian Penal Code is set aside. The conse- quence of this decision is that the order of acquittal passed in her favour by the trial court ill respect of the said offences is restored. The State has not preferred any appeal against the High Court's decision in Criminal Appeal No. 237 of 1957 where by the conviction of Thadi Narayana in respect of the offence under s. 411 and sentence imposed on her in that behalf have been set aside while ordering her retrial for the major offences under ss. 302 and 392 of the Indian Penal Code ; and so this latter order of acquittal in respect of S. 411 will stand. In the circumstances of this case this result cannot, be avoided. Criminal Appeal No. 222 of 1959 preferred by the State against the decision of 'the Full Bench therefore fails and is dismissed.
Criminal Appeal No. 11 2 of 1961 allowed.
Criminal Appeal No. 222 of 1959 dismissed


Union of India and Others v Garware Nylons Limited and Others
Supreme Court of India

9 September 1996
C.A. No. 715 of 1981 with C.A. No. 11644 of 1996 (Arising out of S.L.P. (C) Nos. 11008 of 1988, C.A. No. 7564 of 1996
The Judgment was delivered by : K. S. Paripoornan, J.
1.  The above three appeals involve a common question of law, namely, whether "Nylon Twine" can be considered as "Nylon Yarn" so as to be covered by Item 18 of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Act") as it stood prior to the Amendment of 1977.
"18 RAYON AND SYNTHETIC FIBRES AND YARN
Explanation I "Fibres and Yarn, other than Textured yarn", shall be deemed to include
(i) Man made fibres;
(ii) Man made metallic yarn;
(iii) Spun (discontinuous yarn containing not less than ninety per cent by weight of manmade fibres calculated on the total fibre content; and
(iv) Man made filament (continuous) yarn that has not been processed to introduce crimps, coils, loops or curls along the length of the filaments, but does not include bulked yarn and stretch yarn.
Explanation II "Textured Yarn means yarn that has been processed to introduce crimps, coils, loops or curls along the length of the filaments and shall include bulked yarn and stretch yarn.
Explanation III "Base Yarn" means yarn falling under sub item (i) of the this Item from which the Textured Yarn has been produced.
Explanation IV This item does not include mineral fibres and yarn."
2.  . It will be useful to note that from 1st March, 1977 a new item i.e. Item 68 was introduced to the first schedule to the Act which is to the following effect. "
3. Item 18 was also amended int he following manner:
"II. Man made filament yarns
(i) Non cellulosic
(a) other than textured
(b) textured
Explanation: "Textured Yarn" means yarn that has been processed to introduce crimps, coils, loops or curls along the length of the filaments and shall include bulked yarn and stretch yarn.
(ii) Cellulosic;
(iii) Metallized."
We heard Counsel.
3.  In this group, the main appeal is Civil Appeal No. 715/81. It is an appeal preferred by the Union of India (Revenue) against the judgment and order of the High Court of Bombay dated 9.4.1980 rendered in Special Civil Application No. 2974/78. In the other two cases, the judgment in special civil application No. 2974/78 was followed. The judgment in the said special civil application is reported in 1980 (6) E.L.T. 249 1980 Indlaw MUM 3880 (Bom.).
4.  The respondents assessees manufacture "Nylon Yarn" and "Nylon Twine". They are doing so eversince 1962. Under first schedule, Item 18 of the Act excise duty is payable in respect of "Nylon Yarn" as specified therein. The notification issued under Rule 8 of the Excise Rules provided that "Nylon Yarn", which is meant for use int he manufacture of fishing nets and parachute cords is exempt from the payment of so much of excise duty leviable under Item 18 as is in excess of Rs.4/ per kg. The assessees contended that "Nylon Twine" manufactured by them is used for the purpose of making fishing nets. Prior to 1975 they were allowed to clear Nylon Twine manufactured by them on payment of excise duty as specified under the above exemption notification.
5. Thereafter, when the new item, viz Item 68 (residuary entry) was introduced in the Act, it was contended by the Excise Authority that Nylon twine manufactured by the assessees was not covered by item 18. According to the Revenue Nylon twine and Nylon yarn are two different items and Item 18 takes within its fold Nylon yarn only and not Nylon twine. The authorities claimed excise duty on "Nylon twine" under Item 68. The assessees paid such duty under protest.
6. Thereafter, the application filed by the assessees for refund before the Assistant Collector failed. He passed an order to that effect on 28.5.1976. The appeal filed was rejected by Appellate Collector on 28.9.1976. Similarly the Central Government rejected the revision by order dated 31.10.1979. It is thereafter the assessees approached the High Court of Bombay for refund of the amount paid under protest. A Division Bench of the High Court heard and disposed of the petition by judgment and order dated 9.4.1980. Sujata Manohar, J. delivered the leading judgment and Masodkar, J., though for different reasoning, agreed with the conclusion of Sujata Manohar, J.
7.  Sujata Manohar, J., after referring to the following materials viz. Encyclopaedia Britennica, Vol.X (abridged version), the Indian Standards Indstitution Standard bearing No. AIS 332 of 1967 wherein the expressions "Twine and Yarn" were dealt with, the Indian Standards Institution Standard bearing No. IS 1402 767 relating to "netting for fishing", the Manual called "Netting Materials for Fishing Gear" the manual published by the Food and Agriculture Organisation of the United Nations, the orders received by the assessees from the Director of Fisheries, Madras, two affidavits, one from the Managing Director of Maharashtra Rajya Machimar Sekhari Sangh Limited and another from a Partner of Maharashtra Fishing Material Company, concluded thus, in paragraph 14 of the judgment:
"14. There is, however, sufficient material on record which goes to show that nylon twine manufactured by the petitioners has been treated as a kind of nylon yarn by the people in the trade. It is commonly considered as yarn. Hence it can be classified under Item 18. The respondents have failed to establish that nylon twine must be taxed under Item 68, as it is not covered by Item 18 of the First Schedule. The respondents are the taxing authorities, and they must show that the item in question is taxable in the manner claimed by them. the burden is on the taxing authorities to show that the item in question is taxable in the manner claimed by them."
(Emphasis supplied)
8. The learned Judge, therefore, directed the Revenue to refund to the assessees the excess amount collected from them as Central Excise Duty on the basis that "Nylon Twine" falls under Item 68 of the First Schedule to the Act.
9.  Sri P.A. Chaudhary, Senior Advocate, appearing for the Union of India appellant, contended that Nylon Twine is different from Nylon Yarn, that Item 18 of the Act would cover only "Nylon Yarn" and not Nylon Twine; that a mere look of Nylon Twine will go to show that it is different from Nylon Yarn,; that in commercial different physical characteristics. He stressed that Nylon Twine the commodity involved int e instant case is not known as "Nylon Yarn" and so, the same is outside the purview of Item 18 of the Act. Certain decisions of general application were also cited. Counsel for the respondents assessees contended that the Nylon Twine is nothing but Nylon Yarn, other than textured yarn and referred to the Encyclopaedia Britennica, Vol X (abridged version), and the literature issued by the Indian Standards Institution and others, the trade inquiries and the affidavits filed by persons in the particular trade, would conclusively show that Nylon Twine is considered as a kind of Nylon Yarn by the traders and persons dealing with the subject matter and the High Court had abundant material to substantiate the above proposition.
10.  We do not think it is necessary, especially in this batch of cases, to refer in detail to the decisions cited by the Revenue or the text books and the literature of the Indian Standards Institution and the Manual published by the Food and Agriculture Organisation, United Nations, as to what is meant by "Twine", "yarn", "netting twine" etc. referred by the High Court. In this case, clinching evidence is afforded to demonstrate that trade and industry which deals with the goods, consider "Nylon Twine" as a kind of "Nylon Yarn".
11.  Thee are innumerable decisions of this Court which have laid down the test or the principles to be borne in mind in construing the Items or Entries in Fiscal Statutes. In recent decision in Indian Cable Company Ltd., Calcutta v. Collector of Central Excise, Calcutta and Others, [(1994) 6 SCC 610 1994 Indlaw SC 1053] a three member Bench stated the law thus:
"........ in construing the relevant item or entry, in fiscal statutes, if it is one of every day use, the authority concerned must normally, construe it, as to how it is understood in common parlance or int he commercial world or trade circles. It must be given its popular meaning. The meaning given in the dictionary must not prevail. No should the entry be understood in any technical or botanical or scientific sense. In the case or technical words, it may call for a different approach. The approach to be made in such cases has been stated by Lord Esher in Unwin v. Hanson thus:
"If the Act is directed to dealing with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language. If the Act is one passed with reference to a particular trade, business, or transaction, and words are used which everybody conversant with that trade, business or transaction knows and understands to have a particular meaning in it then the words are to be construed as having that particular meaning, though it may differ from the common or ordinary meaning of the words." We would only add that there should be material to enter appropriate finding in the case. The material may be either oral or documentary evidence."
12.  In a subsequent decision in Collector of Central Excise, Chandigarh v. Steel Strips Ltd., Sangrur, [(1935) 4 SCC 241 1995 Indlaw SC 923], another three member Bench stated the law thus:
"............... We find no evidence upon the record in regard to what happens to hot rolled steel strips before cold rolled steel strips are produced." It cannot be sufficiently emphasised that when it is the case of the Excise authorities that an article is the result of a process of manufacture and it is commercially distinct and known as such, it is for the Excise authorities to lay evidence in this behalf before the first adjudicating authority regardless of the fact that he is an officer of the Excise Department. There should, ordinarily, be article is the result of a process of manufacture; in the event of difficulty, it would be open to the Excise authorities to seek a direction requiring the assessee to set out in writing what it does to obtain the article.
Too often, as our experience in this Court and in the High Courts, before the Tribunal was established, shows, lack of evidence has led to the failure of the case of the Excise authorities and, consequently, to the loss of revenue to the State. Failure to lay the requisite evidence cannot be made up by reference to authoritative publications unless the Excise authorities inform the assessee that they propose to rely upon the same before the adjudicating authority ........... Technical evidence and authoritative publications must, therefore, be placed in the first instance before the adjudicating authority and the Tribunal. They have the requisite technical expertise to evaluate the same."
13.  The law on the point as laid down by this Court (in various decisions) has been summarised int he book "Principles of Statutory Interpretation" (Sixth Edition 1996) by Justice G.P. Singh, at, thus:
"............ So in construing entries of goods in Excise, Customs or Sales Tax Acts resort should normally be had not to the scientific or technical meaning but to their popular meaning viz. the meaning attached to the expressions by those dealing in them. ............... The popular meaning int he context of a Sales Tax Act is that meaning which is popular in commercial circles for the Act essentially, in its working, is concerned with dealers who are commercial men."
"The justification of the rule that the words are to be understood in their natural, ordinary or popular sense is well expressed by JUSTICE FRANKFURTER: "After all legislation when not expressed in technical terms is addressed to common run of men and is therefore to be understood according to sense of the thing, as the ordinary man has a right to rely on ordinary words addressed." In determining, therefore, whether a particular import is included within the ordinary meaning of a given word, one may have regard to the answer which everyone conversant with the word and the subject matter of statute and to whom the legislation is addressed, will give if the problem were put to him."
xxxx xxx xxx xxx
"As a necessary consequence of the principle that words are understood in their ordinary or natural meaning in relation to the subject matter, in legislation relating to a particular trade, business, profession, art or science, words having a special meaning in that context are understood in that sense. Such a special meaning is called the technical meaning to distinguish it from the more common meaning that the word may have.
................ The Supreme Court "has consistently taken the view that, in determining the meaning or connotation of words and expressions describing an article in a tariff Schedule, one principle which is fairly well settled is that those words and expressions should be construed in the sense in which they are understood in the trade by the dealer and the consumer. The reason is that it is they who are concerned with it, and, it is the sense in which they understand it which constitutes the definitive index of legislative intention". "
14.  Stated briefly, we should understand, the expression occurring in Item 18 of the Act, in the sense, in which the persons who deal in such goods understand it normally.
15.  In this case, apart from the meaning given to the words "Yarn", "Twine" etc., in the standard works referred to by the High Court, two items of evidence stand out prominent and clinch the issue. The first is, an order received by the assessee from the Director of Fisheries, Madras which goes to show that Nylon Twine is considered as a type of Nylon Yarn used for making fishing nets. The second is, two affidavits filed by the assessees before the authorities one from the Managing Director of Maharashtra Rajya Machimar Sekhari Sangh Limited and another from a Partner of Maharashtra Fishing Material Company, wherein it is stated that "Twine" is a category of "Yarn"> What is more the assessees made available the above persons who have sworn to the affidavits for cross examination at the time of the hearing of the applications, but the Revenue did not cross examine them. The trade inquiry received by the assessees and also the affidavits conclusively point out that Nylon Twine is considered as a kind of "Nylon Yarn" in the particular trade by persons conversant with the subject matter. The revenue has not let in any material to the contra.
16.  In our view, the conclusion reached by the High Court is fully in accord with the decisions of this Court and the same is justified in law. The burden of proof is on the taxing authorities to show that the particular case or item in question, is taxable in the manner claimed by them. Mere assertion in that regard is of no avail. It has been held by this Court that there should be material to enter appropriate finding in that regard and the material may be either oral or documentary. It is for the taxing authority to lay evidence in that behalf even before the first adjudicating authority. Especially in a case a this, where the claim of the assessee is borne out by the trade inquiries received by them and also the affidavits filed by persons dealing with the subject matter, a heavy burden lay upon the revenue to disprove the said materials by adducing proper evidence. Unfortunately, no such attempt was made.
17. As stated, the evidence led in this case conclusively goes to show that Nylon Twine manufactured by the assessees has been treated as a kind of Nylon Tarn by the people conversant with the trade. It is commonly considered as Nylon Yarn. Hence, it is to be classified under Item 18 of the Act. The Revenue has failed to establish the contrary. We would do well to remember the guidelines laid down by this Court in Dunlop India Ltd. v. Union of India (AIR 1977 SC 597 1975 Indlaw SC 3), in such a situation, wherein it was stated:
"......... When an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause."
18.  We concur with the reasoning and conclusion of the High Court. There is no substance in these appeals. The judgment s appealed against in this batch of appeals are affirmed.
19. The appeals are dismissed with costs, including Counsel's fee of Rs.5,000/ in each case.
Appeal dismissed


Chemical and Fibres of India Limited v Union of India and Others
Supreme Court of India

7 January 1997
C.A. No. 3495 of 1982 with C.A. No. 3507 of 1982 with Transferred Case No. of 1996 (Arising out of Transfer Petition (C) No. 188 of 1983)
The Judgment was delivered by: Sujata V. Manohar, J.
1. These appeals and the transferred appeal rise a common question: whether polymer chips manufactured by the assesses and used by them in the manufacture of nylon yarn can be classified, for the purpose of levy of excise duty, under Item 15A in Schedule I to the Central Excises and Salt Act, 1944, as it stood during the period 1962 to 1972. For the sake of convenience we are period 1962 to 1972. For the sake of convenience we are setting out the facts in relation to the transferred appeal pertaining to M/s. Nirlon Synthetic Fibres and Chemicals Ltd.
2. At all material times the company manufactured nylon yarn, a synthetic man-made fibre under an industrial licence under an industrial licence granted by the Government of India. For the manufacture of nylon yarn, the company imported caprolactum monomer. The company paid customs duty as well as countervailing duty on its import of caprolactum monomer. This raw material was used by the company for manufacture of nylon yarn. In the course of processing of caprolactum monomer the company obtained at an intermediate stage a product called 'Polymer Chips', also known as Nylon 6 Chips, which were consumed in the manufacture of the finished product, namely, nylon yarn. The question relates to the levy of excise duty on these polymer chips. The only question which now survives for our determination is whether these polymer chips can be classified under Item 15A of Schedule I to the Central Excises and Salt Act, 1944 as it stood during the period 1962-1972, since this period covers all the appeals.
3. The assessee has described the process employed in its factory for polymerisation of caprolactum monomer. Once caprolactum is polymerised, it becomes nylon. In order to change the form of this substance and give it the required properties which enable textile yarn to be produced from it further processing is required in the course of which, at an intermediate stage, polymer chips are produced. The chips are obtained for the purpose of removing the remnant monomer so that the subsequent processing becomes more convenient. These chips which are otherwise called Nylon 6 Chips, are then dried, melted and spun into continuous filament by the process of extrusion. The spun filament undergoes further processing in order to get yarn in a saleable form. Polymer chips which are produced by the assessees companies have a relative viscosity of 2.22 to 2.30. The average molecular weight ranges from 10,000 to 18,000. These chips are suited only for the manufacture of textile fibres and are used exclusively for that purpose.
4. With this background, let us examine whether these polymer chips fall under Entry 15A. Entry 15A was amended on 18th of February, 1974. We, therefore, are required to consider Entry 15A as it existed prior to 28-2-1964 and the Entry as it existed after 28.2.1964.
I
Entry 15A as it existed prior to 28-2-1964 was as follows:
"Entry 15A: PLASTICS, ALL SORTS:
(i) Moulding powers, 25% ad valorem granules and flakes (thermosetting and thermoplastic).
(ii) Polythelene fixer, Layflat tubings and P.V.C. sheets (that is to say, polyvinyl chloride sheets),
(iii) Not otherwise specified."
The assessee contends that polymer chips or nylon 6 chips manufactured by the assessee are not known in the trade as plastics and hence they cannot be classified under Entry 15A which deals with plastics all sorts.
Encyclopaedia Britannica, Volume 18, while dealing with "plastics" has this to say on the subject:
"The articles called "plastic" generally require shaping by heat during their fabrication by moulding or extrusion. Since the newer synthetic products can frequently be used inter-changeably as coatings or as mouldings, the distinction between resins and plastics become less pronounced. Moreover modern technology shows that the materials which are designated as rubber, fibres, resins and plastics are of a similar molecular structure and by appropriate chemical and physical treatment, it is possible to interconvert any of these materials.
It follows that certain structural features are common to all these products and being common they relate to similarity in physical properties between materials which are not necessarily chemically related. It might be argued that rubber is a plastic, since it can be fabricated by procedure similar to those employed in moulding plastics; but rubber is not generally considered to be a part of the plastics industry Similarly the fibre industry is considered to be independent of the plastics industry and here again the same raw-materials, polyamides (nylon) cellulose and cellulose acetate are used by both industries. Plastics are also divorced from the self-supporting type of film production such as the manufacture of photographic film and celluphone. The term plastic, therefore, is essentially a commercial classification to which no strictly scientific definition can be applied."
[underlining ours]
5. The term 'plastic', therefore, is a commercial classification which covers various kinds of natural or synthetic materials which can be shaped by heat during their fabrication either by moulding or by extrusion and which will retain that shape during use. It is also made clear that normally, rubber or synthetic material which is used for the manufacture of fibres and yarn, or for the manufacture of photographic film and celluphone, is not commercially considered as plastic.
6. In the book "Polymers and Resins" by Brage Golding, 1959 Edition, "plastic" is defined as under:
"A plastic has been defined in a limited sense as any of a large group of organic substances, whether natural or synthetic, which can be moulded (Plastikos = fit for moulding). The noun 'Plastic' is usually applied to all polymers which are not considered to be elastomers or fibres; i.e. which exhibit neither the long range elasticity of elastomers nor the very high crystallinity of most fibres. In the engineering sense, however, a plastic is a mixture containing one or more resins compounded with fillers, plasticizers, lubricants, dyes etc. which has been subsequently fabricated.
Commercial nylon fibres are linear and have molecular weight averages of the order of 12,000 to 20,000. If the average molecular weight is below 6,000 little or no fibre formation is possible; fibres formed from polymers with an average molecular weight of about 6,000 to 10,000 are weak and brittle. As the average molecular weight increases above this range, the fibre becomes stronger. However, if the molecular weight runs much over 20,000 the polymer becomes too difficult to melt or dissolve. Therefore, the process of polymerisation must be stopped in the desired average molecular weight range."
7. Chamber's Dictionary defines 'plastics' as "generic name for certain natural and synthetic substances which under heat and pressure become plastic and can then be shaped or cast".
In Webster's Third New International Dictionary 'plastic' has been described as under:
"Plastic (1) a substance that at some stage in its manufacture or processing can be shaped by flow (as by application of heat or pressure) with or without fillers, plasticizers, rainforcing agents, or other compounding ingredients and that can retain the new solid, often rigid, shape under conditions of use;
(2) any of a large group of materials of high molecular weight that usually contain as the essential ingredient a synthetic or semi-synthetic organic substance made by polymerization or condensation (as polystyrene or a phenol-formaldehyde resin) or derived from a natural material by chemical treatment (as nitrocellulose from cellulose), that are molded, cast, extruded, drawn, or laminated under various conditions (as by heat in the case of thermoplastic materials, by chemical condensation in the case of thermosetting materials or polyesters, or by casting during polymerization of monomers) into objects of all sizes and shapes including films and filaments."
8. Our attention is also drawn to the American Society for Testing Material Standard which makes a distinction between "nylon" and "nylon plastics" -including the former under the heading 'Definition of Textile Terms' and the latter under the heading 'Plastics Nomenclature'. The Indian Standard Institute Glossary also makes a distinction between "nylon" and "nylon plastics" and similarly classifies "nylons" under the glossary of textile terms and "nylon plastics" under the glossary of terms used in plastic industry.
9. It is, however, urged on behalf of the Revenue that the chemical composition of the polymer chips (Nylon 6 Chips) which are produced by the assessee is similar to the chemical composition of material used in plastic industry. And hence, going by the chemical composition of this material, it can be appropriately classified as a plastic. This contention will have to be examined in the light of the wording of Entry 15A. Entry 15A does not use any scientific or technical term. It deals with "plastics, all sorts". As Encyclopaedia Britinnica has described, the term 'plastic' is a commercial classification. When this kind of a term in commercial use is used in an excise entry which deals with marketable commodities which are manufacture and which are subject to the levy of excise, we will have to examine that term in the light of how it is understood in the trade. If, however, strictly technical or scientific words are used, the approach for their interpretation may be different.
10. We will refer to only some of the authorities which have been cited before us in this connection. As far back as in 1891, in the case of Unwin v. Hanson ([1891] 2 Q.B. 115 at 119), the court observed,
"If the Act is directed to dealing with matters affecting everybody generally, the words used have the meaning attached to them in the common and ordinary use of language: if the Act is one passed with reference to a particular trade, business, or transaction, and words are used which everybody conversant with that trade, business, or transaction, knows and understands to have a particular meaning in it then the words are to be construed as having that particular meaning, though it may differ from the common or ordinary meaning of the words."
11. In the case of Ramavatar Budhaiprasad etc. v. Assistant Sales Tax Officer, Akola ([1962] 1 SCR 279 1961 Indlaw SC 351), the Court was concerned with the scope of the word 'vegetables' occurring in C.P. and Berar Sales Tax Act, 1947. The Court said that betel leaves cannot be classified as vegetables although botanically they may fall in that category, because betel leaves are not commonly understood as vegetables.
12. Again in the case of The Commissioner of Sales Tax, Madhya Pradesh, Indore v. M/s. Jaswant Singh Charan Singh (AIR 1967 SC 1454 1967 Indlaw SC 464) the Court held that the Entry "Coal" under the Madhya Pradesh General Sales Tax Act would cover charcoal also. The Court said that while "Coal" is technically understood as a mineral product while charcoal is manufactured by human agency from products like wood and other things, it is now well-settled that while interpreting items in statutes like the Sales Tax Act , resort should be had, not to the scientific or the technical meaning of such terms, but to the meaning attached to them by those dealing in them. (See in this connection South Bihar Sugar Mills Ltd. etc. v. Union of India & Ors. [(1968) 3 SCR 21 1968 Indlaw SC 249] and Dunlop India Ltd. v. Union of India & Ors. [(1976) 2 SCR 98 1975 Indlaw SC 3]).
13. In the case of Asian Paints India Ltd. v. Collector of Central Excise (1988 (35) ELT 3 1988 Indlaw SC 415), Sabyasachi Mukharji J. (as he then was) has summed up the rule of interpretation in the following words:
"It is well-settled that the commercial meaning has to be given to the expressions in Tariff Items. Where definition of a word has not been given it must be construed in its popular sense. Popular sense means that sense which people conversant with the subject-matter with which the Statute is dealing, would attribute to it that in interpreting items in statutes like the Excise Act or Sales Tax Act, whose primary object was to raise revenue and for which purpose to classify diverse products, articles and substances, resort should be had not to the scientific and technical meaning of the terms or expressions used but to their popular meaning, that is to say, the meaning attached to them by those dealing in them.
In the present case, since Entry 15A as it then stood, uses a commercial term "plastics" which is well-known in the trade and is used in the trade, we should not go into the technical analysis of the composition and character of a plastic product. We should go by the meaning which is attached to the term 'plastics' in the trade parlance. Plastics as understood in the trade cover all kinds of synthetic materials. As the Encylopaedia Britannica. Sets out very clearly, there is a distinction made in commercial parlance between materials used in the production of plastics and materials used in the production of fibres, films or rubber although they may share certain structural features. The assessee has also filed affidavits from people in the trade to say that polymer chips of the kind manufactured by the assessee are not considered as plastics by those dealing in plastics.
Prior to the assessee's manufacturing these chips in its own plant, the assessee used to import similar chips for the purpose of manufacture of nylon yarn from BASE. The product imported was caprolactum Ultramid BS. Our attention is drawn to the catalogue of BASF products of July 1961, in which captrolactum Ultramid BS is shown under "Raw materials for synthetic fibres", while there is a separate head for "Plastics and auxiliaries for plastics" under which other material such as Ultramid A, Ultramid AK, Ultramid B and Ultramid BM are shown. This also indicates that material which is used for the production of nylon yarn is not considered in the trade as a plastic material. The assessee, therefore, is right when it contends that Item 15A as it stood prior to 28.2.1964 does not cover polymer chips manufactured by it.
Item 15A, however, as amended after 28.2.1964 was as follows:-
15A. ARTIFICIAL OR SYNTHETIC RESINS AND PLASTIC MATERIALS, AND ARTICLES THEREOF. Twenty percent ad valorem.
(1) Artificial or synthetic resins and plastic materials in any form, whether solid, liquid or pasty, or as powder, granules or flakes, or in the form of moulding powders, the following, namely:-
(i) Condensation, Poly-condensation and Poly-addition products, whether or not modified or polymerised; including Phenoplasts, Aminoplasts Alkyds, Polyurethane, Polyallyl Esters ad other Unsaturated Polyesters;
(ii) Polymerisation and Copolymerisation products including Polyethylene and Polytetrahaloethylene, Polyisobutylene, Polystyrene, Polyvinyl chloride, Polyvinyl acetate, Polyvinyl Chloroacetate and other Polyvinyl derivatives, Polyamides, Polyacrylic and Polymethacrylic derivatives and Coumarone-Indene resins; and
(iii) Cellulose acetate (including di-or tri-acetate), Cellulose acetate butyrate and Cellulose propionate, Cellulose acetatepropionate, Ethyl cellulose, and Benzyl cellulose whether plasticised or not, and plasticised Cellulose nitrate.
(2) Articles made of plastics, all sorts, including tubes, robs, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexbile, including layflat tubings and Polyvinyl chloride sheets. Explanation:For the purpose of sub-item(2), 'plastic' means the various artificial or synthetic resins or plastic material included in sub-tem (1)."
14. The main heading of this item is now changed to read "Artificial or synethic resins and plastic materials and articles thereof". Cl. (1) refers to artificial or synethic resins and plastic material in any form, "among them the following" which are described in sub-clauses (i), (ii) and (iii). These sub-clauses describe the technical process by which the end product is derived. Thus in subcl. (i) for example, the processes which are referred to, inter alia, are condensation, poly-condensation and polyaddition and products resulting therefrom. Sub-cl. (ii) refers, inter alia, to polyamides. All these are technical and scientific terms and processes. The Revenue contends that in the strict sense of the term, polymer chips or Nylon 6 Chips which are manufactured by the assessee are artificial or synthetic resins as they fall in the category of polyamides in sub-cl. (ii) of Cl. (I) of Item 15A. The assessee, however, contends that artificial or synthetic resins which are covered by Item 15A refer only to plastics and they do not refer to those artificial or synthetic materials which may be processed in the manner described in sub-cls. (i) to (iii), but which give rise to products used for the textile industry such as the polymer chips manufactured by the assessee.
15. The assessees have pointed out that the words "the following" in Cl. (1) of Item 15A which precede subcls. (i) to (iii) clearly indicate enumeration or description of the kinds of artificial or synthetic resins and plastic materials in different forms in sub-cls. (i) to (iii). Therefore, all products covered by sub-cls. (i) to (iii) must answer the basic description of "Artificial or synthetic resins and plastic materials". These sub-clause cannot cover materials not known as artificial or synthetic resins or plastic material. The assessees further contend that "synthetic resins" is a term used to describe basic material in plastic industry. It does not refer to basic raw material used in other industries.
16. The question, therefore, which we have to decide is whether artificial or synthetical resins should be confined only to those resins which ultimately produce material having plastic qualities or whether they would include within their scope other kinds of material derived by similar processes which are described in sub-clauses (i), (ii) and (iii), but which are suitable for use in other kinds of industries such as rubber industry, textiles or films.
17. Are the words "artificial or synthetic resins" interchangeable with or linked with the words "plastic material"? Brage Golding in his treatise on "Polymers and Resins", in Chapter I which deals with introductory concepts and definitions, after stating that it is unfortunate that there are no explicit definitions of the words resins and plastics, the meanings being understood by those who use them, has attempted to define these expressions as follows:
"Probably the closest one can come to a definition of resins is that it is a solid or semi-solid, natural or synthetic organic substance of relatively high molecular weight (not necessarily a polymer) which exhibits no sharp melting point, breaks with a conchoidal fracture, and usually (but not always) is predominantly amorphous in structure. A plastic has been defined in a limited sense as any of a large group of organic substances, whether natural or synthetic, which can be molded (plastikos fit for molding)." He goes on to observe: "The term 'resin' originally referred to natural products (particularly of vegetable origin) but now includes the man-made substances. As will be seen from the physical descriptions of the polymers given in later chapters, the above definitions of both resin and plastic include many of these polymers, and the terms are now often used interchangeably."
18. Webster's Dictionary defines "Resins (synthetic)" as:
"any of a large class of synthetic products (as alkyd resins or phenolic resins) usually of high molecular weight that have some of the physical properties of natural resins but typically are very different chemically, that may be thermoplastic or thermosetting, that are made by polymerization or condensation, and that are used chiefly as plastics or the essential ingredients of plastics, in varnishes and other coatings, in adhesives, and in ion exchanges (when the resin itself is capable of being shaped into a finished article without a plasticizer, as polystyrene), the terms resin and plastic are interchangeable for that material in industrial terminology the unfabricated material is sometimes called a resin and the fabricated article a plastic.
(underlining ours).
19. Apart from the portion underlined, the reference to thermoplastic and thermosetting qualities of such resins is also a reference to their plastic qualities.
20. The British Plastics Year Book of 1967 describes synthetic resins as "resins produced by chemical reactions, they are of different chemical composition and behaviour from natural resins. The term is now generally applied to all polymeric plastics materials with the possible exception of cellulosic and casein materials. Synthetic resins are classified by the initial reacting materials, e.g., as phenolic amino, acrylic or vinyl resins, or on chemical composition, e.g., polyester ad epoxy resins."
21. Sorenson and Campbell in their book "Preparation Methods of Polymer Chemistry" in Chapter 7 'Cross-linked synthetic Resins' have said: "Today, 'resin' covers a multitude of polymer types, including the classical phenolformaldehyde condensation and the relatively recent epoxy resins, vinyl polymers such a polystyrene and poly methyl methacrylate and condensation polymers of the polyamide or polyester class. Most of the application of the term 'resin' is to those linear or cross-linked (or cross-linkable) polymers that are used in molding, casting, or extruding operations and in surface coatings; and, to most crosslinked (or cross-linkable) polymers, no matter what the end use (as in adhesives, textile finishes, etc.). Thus poly methyl methacrylate and various polyamides, both essentially linear polymers, are termed molding resins when directed to a molding end use. However, polyamides would not be termed resins by the synthetic fibre industry in their usage of the material.
22. In other words, "synthetic resin" is a term used in plastic industry and possibly in other industries, but not in the textile industry to refer usually to unfabricated material out of which the end product is made.
23. While the first three descriptions/definitions of synthetic resins emphasise the plastic quality of synthetic resins, the last description clearly brings out the fact that in the synthetic fibre industry, polyamides which are used as raw material would not be termed as resins. The term 'synthetic resins', therefore, appears to be used in connection with plastic materials. The British Plastics Year Book of 1967 quoted earlier also emphasises that the term 'synthetic resins' is now generally applied to all polymeric plastic materials with the possible exception of cellulosic and casein materials. Webseter's Dictionary has also described synthetic resins as those which may be thermoplastic or thermosetting these being typical characteristics of plastic material and has clearly said that synthetic resins are used chiefly as plastics or essential ingredients of plastics as also in varnishes and other coatings and in adhesives and ion exchanges. There is no reference here to their being used in the manufacture of yarn. Webseter's Dictionary also states that the terms 'resin' and 'plastic' are interchangeable and some times the unfabricated material is called resins and the fabricated material is called a plastic. This perhaps explains why the words "artificial or synthetic resins" were added in Entry 15A to "plastics" in order to refer to and cover the raw material which goes into the manufacture of plastic materials. Encyclopaedia Britannica also which was quoted earlier by us, states that while the designation "plastic" is broader generally than the term "resin", both terms are used indiscriminately with respect to synthetic products.
Therefore, the reference material which is produced before us indicates that synthetic resins are used in connection with plastic material and that often the unfabricated material is referred to as resin while the fabricated article is referred to as a plastic. Polyamides which are used for the purpose of manufacture of yarn are not referred to as synthetic resin in the textile industry.
24. The term 'synthetic resin or artificial resin', therefore, far from being scientifically precise, seems to be as elusive to define as the term "plastic". The preponderance of view appears to be, however, that the term 'synthetic resin' is used in connection with material which is used for producing articles of plastic and is not used to refer at least to material used in the textile industry.
25. Our attention has been drawn to "Concise Guide to Plastics" by Simmonds and Church in which a passage under the heading Polyester Resin is as follows:
"In the broad sense of the term polyester resins include many types of resinuous condensation products and collectively represent a broad and expanding field in the plastics industry... As indicated in other section, alkyd resin are basically polestar. Saturated liner polyester resins can be film or fibre forming material, for example, polyethelene, terephathalate".
26. This passage, however, does not assist us in the sense that it does not tell us what the terms "synthetic resins" or "artificial resins" generally refer to. It does, however, indicate that the term "polyester resin" represents the broad and expanding field in the plastic industry and satured liner polyester resins can be fibre forming. From the passage it is not clear whether the latter are commonly referred to as synthetic resins or not. By and large, therefore, one can come to the conclusion that the term 'artificial and synthetic resin' in used in the plastic industry to refer to various materials derived by the processes which are referred to sub-clauses (i), (ii) and (iii) of Entry 15A for the purpose of producing material or products which are suitable in the manufacture of plastics.
The processes which are described in sub-clauses (i), (ii) and (iii) are undoubtedly technical, scientific or chemical processes and the products which are derived as a result of these processes are also described in technical terms in the said sub-clauses. Polyamides, for example, which are relevant in the present case, would cover, by themselves a wide range of products. However, these sub-clauses come under the main heading of artificial or synthetic resins or plastic materials. Polyamides of textile grade are not plastic materials nor are they referred to as synthetic resins in the textile trade. Hence polyamides of textile grade would not fall under either "Artificial or synthetic resins" or under "plastic material". They would be outside the ambit of Entry 15A. The polymer chips which are manufactured by the assessee would not, therefore, come under the category of artificial or synthetic resins also. Polyamides, however, which are capable of producing plastic materials are known in the plastic trade as synthetic resins and would be covered by Item 15A.
27. Since the technical literature and dictionaries which have been cited by us have emphasised the conjunction of artificial or synthetic resins with plastics, it is not possible for us to ignore this association. Therefore, even if the term "Artificial or synthetic resin" is construed as covering products derived by processes technically described in sub-clauses (i), (ii) and (iii) of Cl. (1) of Entry 15A, that product must answer the basic description as "artificial or synthetic resin". Polyamides in the form of polymer chips of textile grade are not known as synthetic resins. They are also not plastics. Hence Entry 15A does not cover them. The assessee is, therefore, entitled to succeed.
28. The appeal of the assessee in C.A. No. 3495/82 is allowed and the appeals of the revenue in Transferred Case No. /96 (arising out of T.P.(C) No. 188/83 being O.A. No. 84 (arising out of T.P. (C) No. 188/83 being O.A. No. 84 of 1970 of the Bombay High Court) and Civil Appeal No. 3507 of 1982 are dismissed. In the circumstances of the case, there will be no order as to costs.
Appeals disposed of.