Full Judgment
'Other domestic electrical appliances' figured under another heading and those electrical appliances were subject to nil rate of duty.
2. The issue involved in the present appeal is whether 'electric coil stoves' manufactured by M/s. Sunflame Industries should be treated as 'hot plates' or whether they remained exempt under the category of 'other domestic electrical appliances'.
3. The issue had come to the Tribunal on an appeal filed by the Commissioner of Central Excise, New Delhi against order-in-appeal No.386-CE/DLH/93, dated 18-11-1993 of the Commissioner of Central Excise (Appeals), Delhi wherein the Commissioner held, after reversing the decision of the Assistant Collector that electric coil stove was eligible for assessment at nil rate of duty as 'other domestic electrical appliances'. The Division Bench of the Tribunal which heard the appeal has referred the case to this Larger Bench as they were of the opinion that electric coil stove is nothing but a hot plate and was, therefore, required to pay duty at 20% as applicable to hot plates; but, this opinion was in conflict with an earlier decision of the Tribunal in the case of Collector of Central Excise, Bangalore v.Supreme Electrical Industries, Bontex Electricals 1997 (23) E.L.T. 667 (CEGAT) wherein the Tribunal held that electric coil stove was required to be assessed as 'other domestic electrical appliances' and not as 'hot plates'.
"The 'Electrical Coil Stove' manufactured by M/s. Sunflame Industries, Faridabad is an Electrical Appliance having a heating element enrobed in a metallic alloy. It is learnt that such heating element is provided to heat/cook food. In other words it may be called as a cooking plate which appears to be more akin to a 'hot plate' and as such should be covered under S. No. 5(a)(x) of the table annexed to the Notification No. 160/86, dated 1-3-1986 and chargeable to duty @ 20% ad valorem under chapter heading No. 8516.00.
The Collector (Appeals) has wrongly classified "Electrical Coil Stove" under S. No. 5(d) of the table annexed to Notification No. 160/86, dated 1-3-1986 as amended under the category, 'other domestic electrical appliances' chargeable to nil rate of duty".
5. During hearing of the case, learned DR submitted that stoves are also hot plates and therefore, should be assessed at the rates applicable to hot plates. In support of this contention, he has brought to our notice the dictionary entry relating to hot plates which is reproduced below:- "hot plate, 1. A heated metal plate for maintaining at uniform temperature anything set upon it. 2. A small portable gas or electric stove." 6. He also drew our attention to the finding in the adjudication order of the Asstt. Collector that the goods involved in the present case are different from electric stove inasmuch as heating element is exposed in electric stove while in the coil stove, the element is enclosed within tabular sheets. He also relied on the decision of the Gujarat High Court in the case of S. Tajbhai & Sons v. The State of Gujarat 1966 Sales Tax Cases Vol. XVII 133 and the final order No. 909/99-D, dated 15-10-1999 of the Tribunal in the case of Safari Industries (India) Ltd. v. CCE, Vadodara.
7. The learned Consultant appearing for the respondents submitted that hot plates and stoves are entirely different goods and trade understood them as belonging to different categories of goods. He further submitted that the Notification No. 160/86 treated various domestic electrical appliances differently for levy of central excise duty. The entry for hot plates and other appliances mentioned specifically under the heading 'domestic electrical appliances, the following' related only to goods named therein. 'Other domestic electrical appliances' had to be treated as a different category and assessed at nil rate of duty under the entry applicable to them. He also contended that goods akin or similar to hot plates were not to be treated as hot plates as the entry read 'domestic electrical appliances, the following'. He contended that only the electrical appliances specifically mentioned under the heading would be covered by the entry 'the following' and not 'similar items'. This is clear from the fact that 'other domestic electrical appliances' are listed separately.
8. The learned Consultant also drew our attention to the observations of Commissioner (Appeals) in paras 6 and 7 of his order. The learned Consultant submitted that the Commissioner had, after seeing the samples and after perusing all the records, come to the conclusion that electric coil stoves cannot be classified under SI. No. 5(a)(x) (hot plates etc.) and they will attract classification under SI. No. 5(d) which is meant for 'other domestic electrical appliances' which is taxed at nil rate of duty. With regard to the submission that dictionary includes 'stove' also as 'hot plate' and, therefore, they should be treated as hot plate for the purpose of central excise duty, the learned Consultant submitted that goods are to be subjected to duty according to their commercial identity and not according to the dictionary meaning. In support of this submission, he relied on the decisions of the Apex Court in the case of Dunlop India Ltd. and Madras Rubber Factory Ltd. v. Union of India and Ors. [ECR *C 476 SC] and in the case of Plasmac Machine Mfg. Co. Pvt. Ltd. v. CCE 1991 (51) E.L.T.161 (S.C.).
9. We have perused the records and have considered the submissions made by both the sides. It is clear from the grounds of appeal that the Revenue's contention is based on the fact that stove is a cooking plate which appears to be 'akin' to a hot plate. The appeal does not state that the electric coil stove is a hot plate. It only maintains that it is 'akin' to a hot plate. The adjudication order of the Assistant Collector held that in trade parlance, the type of coil stove manufactured by the respondents "is equated with hot plate". The order also distinguished the product in question from 'other electric stove' by holding that "the heating element is embedded in tubular sheaths and as such it is not an electric stove with open element".
10. As against the above findings and submissions in the order-in-original and in the appeal, the finding in the impugned order of the Commissioner (Appeals) is as under :- "6. No evidence documentary or otherwise has been relied upon by the Asstt. Collector while coming to this conclusion. No market/trade enquiry appears to have been conducted to ascertain his conclusion.
However, the appellants have produced some affidavits which indicate that the electrical coil stove manufactured by the appellants is known as such in the market.
7. A sample of the product in question was produced at the time of personal hearing before the Collector (Appeals). It was noted that the element of the said stove was found enrobed in a metallic alloy.
It was explained that the heating element, whether sheathed or otherwise retains the essential characteristics of the element and functions only as a heating element. The sample does not appear to fall under any of the specification as explained in SI. No. 5(a)(x) of the Table to the said notification. As the product in question cannot be classified under SI. No. 5(a)(x), it will attract classification under SI. No. 5(d), which is meant for "other domestic electrical appliances" and which is taxed at nil rate." 11. The scheme of notification No. 160/86 is to tax different domestic electrical appliances at different rates. The items specifically mentioned under heading (a) 'domestic electrical appliances, the following' includes 'hot plates'. Electric coil stove is not one of the items listed under that heading. The electrical appliances not listed under the heading 'the following' cannot be taxed under that heading because the scheme of the notification is to tax at different rates domestic electrical appliances specifically named under heading (a) and 'other domestic electrical appliances' mentioned at (d); Domestic electrical appliances which are akin or similar to the items mentioned under the heading 'domestic electrical appliances, the following' cannot be brought under that heading as that heading covers only the items mentioned therein and not products which are alike, similar or akin.
12. The appeal itself admits that electric coil stove is a different product from hot plates when it states that stove is akin to hot plate and not the same as hot plate. The relevant observations of Commissioner (Appeals) in the impugned order have been reproduced earlier in this order. The Commissioner has clearly stated that no evidence documentary or otherwise has been relied upon by the Assistant Collector while coming to the conclusion that electric coil stove was a hot plate. There was no market enquiry in support of such a finding.
The Collector has seen the sample, considered the evidence produced by the respondents and came to the conclusion that electric coil stove in question was different from hot plate and cannot be classified as a hot plate and that it fell in the category of 'other domestic electrical appliances'. Therefore, the finding in the impugned order that electric coil stove is a different product from hot plate is not, in any way, controverted by the records of the case. The present appeal of the Commissioner has also adduced no evidence on that score.
13. The submission that dictionary includes stoves under the term 'hot plate' is no ground for holding that electric coil stove should be subjected to duty as a hot plate. It is settled law that in interpreting the words in a taxing statute, the acceptation of a particular word and its popular meaning should command itself to the authority. The learned Consultant has rightly relied on the decision of the Supreme Court in the case of Dunlop India Ltd. and Madras Rubber Factory Ltd. (supra) in this regard. The position also remains further clarified by the decision of the Apex Court in the case of Plasmac Machine Mfg. Co. Pvt. Ltd. (supra).
14. The course to be followed for ascertaining the correct meaning of a fiscal entry is a well settled issue. The Apex Court also considered this issue in their Judgment in the case of Collector of Central Excise, Kanpur v. Krishna Carbon Paper Co. 1988 (37) E.L.T. 480 (SC) and held as under :- "8. It is well settled, as mentioned before, that where no definition is provided in the statute itself, as in this case, for ascertaining the correct meaning of a fiscal entry is the context and the trade meaning. In this connection reference may be made to the observations of this Court in Commissioner of Sales Tax, U.P. v. S.N. Brothers, Kanpur (AIR 9. The trade meaning is one which is prevalent in that particular trade where that goods is known or traded. If special type of goods is subject matter of a fiscal entry then that entry must be understood in the context of that particular trade, bearing in mind that particular word. Where, however, there is no evidence either way then the definition given and the meaning following from particular statute at particular time would be the decisive test." 15. This issue had earlier been considered by the Supreme Court in the case of Commissioner of Sales Tax, U.P. v. S.N. Brothers, Kanpur [AIR 1973 Supreme Court 78] and held that entries should be construed in their own context and in the sense, as ordinarily understood and attributed to these words by people usually conversant with and dealing in such goods. With regard to the meaning to be given to the words 'food colours' and 'syrup essences', their Lordships observed that those words which are descriptive of the class of goods the sales of which are to be taxed under the Act have to be construed in the sense in which they are popularly understood by those who deal in them and who purchase and use them. It was also observed that dictionary cannot serve as a safe guide in construing the words used in the list in the notification and that dictionary is apt to be a somewhat delusive guide in understanding the meanings of the words and expressions which are used in their context. We read paragraphs 5, 6 & 7 of that judgment for a clear understanding of the principle :- "5. In our opinion the Random House Dictionary cannot serve as a safe guide in construing the words used in the List in the Notification in question for the purpose of deciding whether or not the words used in entries nos. 10 and 37 cover food colours and syrup essences: indeed this Dictionary is apt to be a somewhat delusive guide in understanding the meanings of the words and expressions with which we are concerned in the context in which they are used. This Dictionary gives all the different shades of meanings attributable to the words referred but that is hardly helpful in solving the problem raised in the present controversy. The words "dyes and colours" used in entry no. 10 and the words "scents and perfumes" used in entry no. 37 have to be construed in their own context and in the sense, as ordinarily understood and attributed to these words by people usually conversant with and dealing in such goods. Similarly the words "food colours" and "syrup essences" which are descriptive of the class of goods the sales of which are to be taxed under the Act have to be construed in the sense in which they are popularly understood by those who deal in them and who purchase and use them. The respondent's learned counsel has in support of this view referred us to some decided cases. In Kishan Chand Chellaram v. Joint Commercial Tax Officer, Chintradripet, (1968) 21 STC 367 (Mad) a Bench of the Madras High Court held that Terylene, Terene, Decorn, Nylon, Nylex, etc., came within the expression "artificial silk" occurring at item no. 4 in the Third Schedule to the Madras General Sales Tax Act, 1959. In the course of the judgment in that case it was observed that the import and content of those words have not been defined in the Sales Tax Acts and the Courts are bound to have recourse to the meaning attributable to such words by persons who are dealing in and utilising such goods.
The extreme, peculiar and scientific meaning of the goods which might sometimes deviate from the popular meaning, cannot prevail.
The meaning which the trade, Government officials and statutes attribute to the words "artificial silk" was considered by the High Court to be the ordinary and popular meaning of that expression. In Sarin Chemical Laboratory v. Commr. of Sales Tax, (1970) 26 STC 339 : AIR 1971 SC 65 this Court held tooth powder to be a "toilet requisite" and liable to sales tax at a single point under S. 3A of the Act read with entry no. 6 of the notification, with which we are also concerned in the present case, it being observed that the names of the articles, sales and purchases of which are liable to be taxed, given in a statute, unless defined in the statute, must be construed not in a technical sense but as understood in comman parlance. In this decision reference was made to an earlier decision of this Court by five Judges in Ramvatar Budhiprasad v. Assistant Sales Tax Officer, Akola, (1961) 12 STC 286 : AIR 1961 SC 1325 in which 'betel leaves' were not considered as 'vegetable'. In Commr.
of Sales Tax, M.P., Indore v. Jaswant Singh Charan Singh, (1967) 19 STC 469 : AIR 1967 SC 1454 the word "coal" was held by this Court to include "charcoal", it being observed that, while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or technical meaning of such terms, but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. In the course of the judgment, after referring to certain decisions, including the decisions from Australian, Canadian and English Courts, it was observed: "The result emerging from these decisions is that while construing the word "coal" in entry 1 of Part ID of Schedule n, the test that would be applied is what would be the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word. A sales tax statute, being one levying a tax on goods must, in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in comman parlance. Viewed from that angle both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include 'charcoal' in the term 'coal'. It is only when the question of the kind or variety of coal would arise that a distinction would be made between coal and charcoal; otherwise both of them would in ordinary parlance as also in their commercial sense be spoken as coal." It may be pointed out that the entry in the case cited read "coal including coke in all its forms". In Sales Tax Commissioner, U.P. v. Ladha Singh Mai Singh, (1971) 28 STC 325 : AIR 1971 SC 2221 cloth manufactured by means of powerlooms was held by this Court not to fall within the words "cloth manufactured by mills" in the Notification dated June 8,1948, issued under S. 3A of the Act and the sale of such cloth was held not liable to be taxed at the higher rate of 6 Ps. in a rupee. According to this decision powerloom cloth in popular language is never associated with mill cloth. In view of these and some other decisions the learned counsel for the appellant, it may be said in fairness, did not dispute that the words with which we are concerned must be construed in the sense which is imputed to them by the persons who deal in and who consume such articles.
6. "Food colours" and "syrup essence" being themselves known articles of common use, the question arises whether the words and expressions used in entries 10 and 3 of the List are intended to take within their fold goods popularly known in comman parlance by the names of "food colours" and "syrup essences".
7. It cannot be gainsaid that "food colours" and "syrup essences" are edible goods whereas "dyes and colours and compositions thereof and "scents and perfumes" as specified in entries nos. 10 and 37 of the List do not seem prima facie to connote that they are edible goods. This is the reasoning of the High Court and it appears to us to be both logical and rational. Indeed, except for items, like 'salt' in entry No. 34, the "sugar manufactured by mills" (entry no.
40) and "Banaspati, including refined coconut oil" (entry No. 43) which is capable of being used as medium for cooking is prima facie edible there does not seem to be any other edible article included in the List. Item no. 25 speaks of "oils of all kinds other than edible oils manufactured on Ghanis by human or animal power". This scheme, suggests that, apart from the undoubted edible goods, in cases where the import of the specified goods is wide enough to include both edible and non-edible category then the intention has been clearly expressed whether or not to include edible goods. Now in the case of entries nos. 10 and 37 we are inclined to think in agreement with the High Court that these entries are not intended to extend to edible colours like food colours and to edible essences like syrup essences. It would indeed be straining the meanings of the words and expressions in those entries as understood in popular commercial sense to include edible colours and essences. If the intention of the State Government was to include food colours in entry No. 10 and syrup essences in entry no. 37 then in our view the goods could easily have been specified by their own popularly known description. In any event assuming that another view as to the meaning of these entries is possible we have not been pursuaded to hold that the view taken by the High Court is so grossly erroneous that we should interfere on special leave appeal under Article 136 of the Constitution." 16. The Tribunal had considered the specific issue of assessment of 'electric coil stove' in depth in its decision in the case of Supreme Electrical Industries, Bontex Electricals (supra). It noted that hot plates and stoves are recognised as different products under the ISI specifications and that they are traded differently and they are understood as different items by customers and based on these facts, the Tribunal came to the conclusion that 'electric coil stove' would fall under the category of 'other domestic electrical appliances' and would not be liable to duty as 'hot plates'. This decision was rendered also after noting that heating elements are enclosed in a tubular metallic sheath. Heating elements are the function part of all electric heating appliances. That is true of hot plate and stove also. It is of no relevance for classification of stove or hot plate as to whether the heating element is bare or has been sheathed. The assessment has to depend upon whether they are hot plates or not. If they are hot plates, they will be classifiable as such and if they are not, they will be classifiable as 'other domestic electrical appliances'. That the stoves are akin or similar to hot plates is of no consequence. There is no dispute that trade, commerce and customers understood hot plates and stoves as different products. Their understanding, and not dictionary meanings, should govern the excise classification of the goods.
17. In view of what has been stated above, we find no basis in facts or in law to accept the appeal of the Revenue. We hold that the issue relating to eligibility of electric coil stove to assessment at nil rate of duty under notification No. 160/86 as amended from time to time was correctly decided by the Division Bench of the Tribunal in the case of Supreme Electrical Industries; Bontex Electricals (supra). We confirm that decision. And the reference is answered accordingly.
18. In the light of our decision on the reference, the appeal of the Revenue fails and is rejected.