Case: Collector Of Central Excise, Bombay-I &amp; Anr Vs. Parle Exports (P) Ltd

These appeals are under section 35L(b) of the Central Excises and Salt Act, 1944 (hereinafter referred to as "the Act"), against the decision of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi ("the Tribunal", for short), dated October 26, 1987 The respondent-company has its factory at Chakala, Andheri, Bombay, and is engaged in the manufacture of non-alcoholic beverage bases falling under tariff item No. 68 of the Central excise tariff. During the course of an enquiry, it was found that the company had, during the period from March 1, 1975, to April 18, 1979, manufactured nonalcoholic beverage bases without holding proper Central excise licence and had cleared the said goods without payment of the duty due thereon and had thereby evaded the duty amounting to Rs. 3, 50, 963.22. According to the Revenue, prima facie it appeared that the respondent had contravened the provisions of rules 9(1), 53, 173PP(1), 173PP(3), 173PP(6) and 174 of the Central Excise Rules, 1944 ("the Rules" for short), inasmuch as, during the period from March 1, 1975, to April 18, 1979, the respondent-company had manufactured without valid licences required under section 6 of the Act read with rule 174 of the Rules, goods not elsewhere specified and falling under tariff item No. 68 of the First Schedule to the Act, viz., non-alcoholic beverage bases. The respondent-company had further cleared the said goods without filing a list of goods manufactured as required by rule 173PP(3) of the Rules. The respondent had cleared the said goods without preparing gate passes as required under rule 173PP(6) of the Rules and had further cleared the said goods without maintaining accounts as required under rule 53 of the Rules. In the circumstances, notices were issued by the relevant officer asking the respondent-company to show cause for recovery of the dues and also for imposition of penalty. When the matter came up for consideration before the Collector, Central Excise, he found that non-alcoholic beverage bases were not themselves food or food products and, accordingly, did not qualify for exemption under Notification No. 55/75 as amended. He, accordingly, confirmed the demand of Central excise duty of Rs. 3, 50, 963.22 under rule 9(2) read with rule 10 of the Rules. He also imposed a penalty of Rs. 25, 000 under rule 173Q of the Rules. Aggrieved thereby, the respondent-company filed an appeal before the Tribunal and contended that the question of the dutiability of non-alcoholic beverage bases manufactured by the respondent had been settled by the Tribunal in its decision in the case of the respondent itself, i.e., Parle Exports (P.) Ltd. v. Collector of Central Excise, Baroda [1987] 27 ELT 349, which are the subject-matter of the connected appeals, i.e, C. A. Nos. 3680-82 of 1987. The Tribunal, following its earlier order, allowed the appeal and hence the present appeal by the RevenueThe First Schedule to the Act which provides for the dutiability and the rates of duty applicable to various goods mentioned therein contains the expressions "food and beverages". It provides therein a description of various types of goods and the rates of duties applicable thereto. In the said description "food and beverages", many items are included, viz., sugar produced in a factory ordinarily using power in the course of production of sugar, (1A) confectionery, cocoa powder and chocolates, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, namely, boiled sweets, toffees, caramels, candies, nuts (including almonds) and fruit kernels coated with sweetening agent, and chewing gums, cocoa powder, drinking chocolates, etc. It also includes item (1B) prepared or preserved foods put up in unit containers and ordinarily intended for sale, including preparations of vegetables, fruit, milk, cereals, etc., and as item (1C) food products, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, namely, biscuits, pasteurised butter, pasteurised or processed cheese, aerated waters, whether or not flavoured or sweetened and whether or not containing vegetable or fruit juice or fruit pulp, etc

Court's reasoning:
We have also noted how these goods were treated by the Government as mentioned hereinbefore. There is no direct evidence as such as to how, in commercial parlance, unlike in ordinary parlance, non-alcoholic beverage bases are treated or whether they are treated as food products or food preparations. The purpose of exemption is to encourage food production and also give a boost to the production of goods in common use and need. After all, the purpose of exemption is to help production of food and food preparations at a cheaper price and also help production of items which are in common use and need like electric light and powerThe question of interpretation involves determining the meaning of text contained in one or more documents. Judges are often criticised for being tied too closely to statutory words and for failing to give effect to the intention of Parliament or the law-maker. Such language, it has been said, in Crosss Statutory Interpretation (second edition) at page 21, appears to suggest that there are two units of enquiry in statutory interpretation the statutory text and the intention of Parliament and the judge must seek to harmonise the two. This, however, is not correct. According to the tradition of our law, primacy is to be given to the text in which the intention of the law-giver has been expressed. Cross refers to Blackstones observations that the fairest and most rational method to interpret the will of the law-maker is by exploring his intentions at the time when the law was made, by signs the most natural and probable. And these signs are either the words, the context, the subject-matter, the effects and consequences or the spirit and reason of the law. We have no doubt, in our opinion that, having regard to the language used, it would not be in consonance with the spirit and the reason of law to give exemption for non-alcoholic beverage bases under the notification in question. Bearing the aforesaid purpose, in our opinion, it cannot be contended that expensive items like Gold Spot base, Limca base or Thums-Up base were intended to be given exemption at the cost of the public exchequerFor the aforesaid reasons, the appeals have to be allowed and the decision of the Tribunal reversed. We, however, need not go into the question of penalty as well as the question of limitation which have been left open by the Tribunal in its order. It will be open for the parties to urge these points afresh before the Tribunal. We express no opinion on these aspects.The appeals to the extent indicated above are allowed. There will, however, be no order as to costs. Appeals allowed.