Case: M/S. Novopan India Ltd Vs. Collector Of Central Excise &amp; Customs

of a provision concerning exemptions. There is support of judicial opinion to the view that exemptions from taxation have a tendency to increase the burden on the other unexempted class of tax payers and should be construed against the subject in case of ambiguity. It is an equally well known principle that a person who claims an exemption has to establish his case. Indeed, in the very case of Parle Exports (P) Ltd. relied upon by Shri Narasimhamurty, it was observed : (SCC p. 357, para 17) While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided. The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the legislature manifest on the statutory language. Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of the statute. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation. It appears to us the true rule of construction of a provision as to exemption is the one stated by this Court in Union of India v. Wood Papers Ltd. : (SCC p. 260, para 4)Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction...." 13. This was also the view expressed in IRC v. James Forrest where Lord Halsbury, L. C., observed : "All exemptions from taxation to some extent increase the burden on other members of the community... " and in Littman v. Barron (Inspector of Taxes), a decision of the Court of Appeal where Cohen, L. J., said "The principle that in case of ambiguity a taxing statute should be construed in favour of a tax payer does not apply to a provision giving a tax payer relief in certain cases from a section clearly imposing liability." 14. It is true that in some decisions a contrary view appears to have been expressed. In Caroline M. Armytage v. Frederick Wilkinson, a decision of the Privy Council, it was observed "Their Lordships have now to consider whether the decision of Mr Justice Molesworth upon the merits of the application to him is correct They must begin by expressing their dissent from the principle which seems to have influenced Mr Justice Molesworth in this and some of the earlier cases, viz., that the provisions of the 24th section, because they establish an exception to the general rule, are to be construed strictly against those who invoke their benefit. That principle is opposed to the rule expressed by Lord Ellenborough in Warrington v. Furbor, and followed and confirmed in Hobson v. Neale. Lord Ellenboroughs words areI think that when the subject is to be charged with a duty, the cases in which it is to attach ought to be fairly marked out, and we should give a liberal construction to words of exception confining the operation of the duty. It is only, however, in the event of there being a real difficulty in ascertaining the meaning of a particular enactment that the question of strictness or of liberality of construction need arise." 15. To the same effect is the view expressed by Sir Raymond Evershed in Routledge v. McKay. The learned Master of Rolls observed : "On the authorities, that exemption, as I understand, should be liberally interpreted." 16. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals - and in Union of India v. Wood Papers referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee - assuming that the said principle is good and sound - does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H. H. Dave that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i. e., by the plain terms of the exemption 17. Applying the above principles, we must hold that the words "unveneered particle boards" in Item 6 of the table appended to the exemption notification cannot and do not take in melamine faced particle boards. Indeed, the learned counsel for the Revenue contends, and in our opinion rightly, that the said entry does not admit of any doubt, that it is clear and specific and that it covers only unveneered particle boards and nothing else

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]It is thus difficult to say that the melamine faced particle boards can be described as "unveneered particle boards". Nobody in the trade circles or in the market would consider both the products as one and the same. From whichever way one looks at them, they appear to be different products. As stated hereinbefore, even the process of manufacturing is different. It is not a case of mere processing of particle boards for giving it strength. It is a case of manufacturing an altogether different productOn the basis of the last sentence in the above extract, the learned counsel sought to contend that melamine faced particle board is the same as the particle board and that merely covering the particle boards withd paper, with a view to lend them strength and a smooth and attractive surface do not make MFPBs a different product. We do not think that the said description in Encyclopaedia is of any assistance in the matter of classification where the test is the one indicated hereinbefore, viz., whether they are commercially different goods. The Tribunal has held that they are not and no material has been brought to our notice to take a different viewSo far as Dr. Joseph, one of the experts is concerned, the Tribunal has pointed out, and rightly in our opinion, that he has been associated with they from the beginning, as admitted by the said person himself. The other person Shri A. C. Shekhar was also found to be associated with the. Both of them deposed before the Tribunal that they did not witness the process of manufacture nor were they able to comment upon the process of manufacture contained in the brochure referred to hereinabove. From a reading of their affidavits, the Tribunal concluded that they are not independent experts and that their affidavits were prepared with a view to bolster the appellants case in these proceedings. The said experts, the Tribunal observed, did not also try to support their opinions with reference to any technical literature or authority on the subject. For all the above reasons, the Tribunal declined to accept their bare assertion that MFPBs can be described as "unveneered particle boards". We cannot say that the reasons given by the Tribunal for rejecting the said affidavits are either irrelevant or unsustainable. The said affidavits, therefore, do not advance the appellants case in any manner14. It is true that in some decisions a contrary view appears to have been expressed16. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicalsand in Union of India v. Wood Papers referred to thereinrepresents the correct view of law. The principle that in case of ambiguity, a taxing statute should be construed in favour of the assesseeassuming that the said principle is good and sounddoes not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandas v. H. H. Dave that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i. e., by the plain terms of the exemption17. Applying the above principles, we must hold that the words "unveneered particle boards" in Item 6 of the table appended to the exemption notification cannot and do not take in melamine faced particle boards. Indeed, the learned counsel for the Revenue contends, and in our opinion rightly, that the said entry does not admit of any doubt, that it is clear and specific and that it covers only unveneered particle boards and nothing else