OSWAL AGRO MILLS LTD. V. CCE
1993 Supp (3) SCC 716
FACTS
The Appellants laid before Assistant Collector classification list and claimed “toilet soaps” as bath soaps under tariff Item 15(1) of the First Schedule (Household) of the Central Excises and Salt Act. By notice dated August 31, 1982, the Assistant Collector called upon the Appellants to explain the reasons why the soap couldn’t be classified under tariff Item 15(2) ‘other sorts’ and be levied excise duty at 15 per cent ad valorem (as then stood). On appeal the Collector by order dated January 21, 1983 classified them under tariff Item No. 15(1) “household”. On second appeal, the CEGAT by its order dated June 20, 1984 reversed the appellate order and upheld the Assistant Collector’s order.
ISSUE
The issue to be dealt with in the present case is whether the “toilet soap” would be household soap within the meaning of tariff Item 15(1) of the Schedule of the Central Excises and Salt Act..
RULES
Item No. 15A of the First Schedule of the Central Excises and Salt Act defines “Soap” as all varieties of the product known commercially as soap. Item I provided “Soap”, in relation to the manufacture of which any process is ordinarily carried on with the aid of power or of steam for heating”. After the amendment that took place in 1964, “toilet soap” was omitted as a separate entity and was brought as part of the genus, namely, “soap household”, as toilet soap was always considered a household soap.
JUDGEMENT AND ANALYSIS
- This Hon'ble court examined the impact of the amendment of 1964 on the item in question i.e. “Toilet Soap” After the amendment, the toilet soap was omitted as a separate category under 15(1) and was included as part of the genus namely, “soap household”. The court observed that the reliance by Revenue on varied rates of duty or departmental contemporanea expositio have no bearing. The object of classification does not show that toilet soap is not part of the genus “soap household” unless it is established otherwise.
- The court observed that the provisions of tariff do not determine the relevant entity of goods, rather they deal with whether and under what duty the identified entity attracts duty. The goods were required to be identified and classified under appropriate heading and subheadings. It was further observed that for exigibility to excise duty, the entity must be specified in positive terms under a particular tariff entry and in its absence it must be deduced from a proper construction of the tariff entry. Nothing was left to any assumption. The object of the parliament was to be gathered from the language of the statute. No application of any principle of interpretation was necessary where the words of a statute were plain and clear allowing the court to interpret them as they stand.
- On considering the term “Household”, the court determined that it signifies a family living together. However, toilet soap being used by the family as household soap is too simplistic to reach a conclusion. It was required to gather meaning in the legal sense to discover the object which the Act seeks to serve and the purpose of the amendment brought about. The court, after considering the legal setting and commercial parlance, was of the view that a toilet soap having been ripped off of its independent identity after the amendment and not being specifically included in “other sorts” found its shelter in commercial parlance under “household”. It was considered as an everyday use product and was generally used for bathing. Whenever anyone would ask for “toilet soap” in the market, they would simply ask it with the purpose of household bathing and not with industrial use. It might be true that a household consists of “soap” for purposes other than bathing such as laundry, utensils cleaning etc, but a “toilet soap” is only used for bathing purposes in a household. The “toilet soap” would, therefore, fall within the meaning of the word “household” in Item 15(1) of the Schedule of the Central Excises and Salt Act and the classification shall accordingly be adopted.
RELEVANT THEORY
The doctrine of noscitur a sociis is a legitimate rule of construction to construe words in an act of parliament with reference to words found in the immediate connection with them i.e. when two or more words are clubbed together, they are understood to be used in their cognate sense. They take as it were, colour from each other, and the meaning of the more general is restricted to a sense analogous to the less general. The philosophy behind this was that the meaning of the doubtful words may be ascertained through the meaning of the words associated with it. This doctrine is broader than that of ejusdem generis. It further stated that in ascertaining the meaning of a word or a clause or a sentence in the statute in its interpretation, everything that is logically relevant, should be admissible.