Case: Rohit Pulp and Paper Mills Limited Vs. Collector of Central Excise, Baroda

2. The assessee is having a factory at Khadki in which different varieties of paper and paper boards are manufactured. The factory does not have a bamboo pulp plant. It uses waste paper and cereal straw which are considered to be unconventional raw materials for the manufacture of paper and paper board. The pulp used by the assessee contains more than 50 per cent weight of pulp made from these unconventional rawPaper and paper board are goods falling under Item 17(1) of the First Schedule to the Act. Two notifications were issued on 1st March, 1984 under Rule 8(1) of the Central Excises Rules, 1944 in respect of the above item. The first of them, being Notification No. 24 of 1984, restricted the excise duty on items falling under the aforesaid item in the mannerDescription RateNo1. Printing and writing paper. 10 per cent ad valoremRs. 1005 per metric tonne2. All sorts of paper commonly 10 percent ad valoremas kraft paper Rs. 1385 per metricrds of the type knownum) of ato or exceedingper square metre3. Paper board of the following 10 per centnamely, pulp board valoremboard and triplex board Rs. 1810 per metric tonne4. Paper and paper boards, other 10 per centthose specified in S. Nos. valorem plus Rs.to 3. per metric tonne4. The second notification, Notification No. 25 of 1984, is the one with which we are directly concerned here. It provides for a concession in respect of paper and paper boards falling under Item 17(1) of the Schedule, manufactured out of pulp containing not less than 50 per cent by weight of pulp made from materials (other than bamboo, hardwoods, softwoods, reeds or rags) and cleared on or after April 1 in any financial year. The concessional rates prescribed were as belowTABLES. No. Description Rate Conditions1. (i) Printing and Rs. 450 per Provided thatpaper metric tonne totaly, ofds inor onom one ort exceed 3,tonnes(ii) All sorts of Rs. 450own asds of thef a65 gramsmetre(iii) Others Rs. 560tonne2. (i) Printing and Rs. 730 per Provided thatr metric tonne totalf paper &, byrom oneom a factoryof one ort didic tonnes(ii) All sorts of Rs. 730own asds of thea substanceams perOthers Rs. 900tonne(3) (i) Printing and Rs. 900 per Provided that thepaper quantity of clearancess of paper and, byom one orm a factoryof one oric tonnes6, 500) All sorts of Rs. 900own asds ofrs orto orre metre(iii) Others Rs. 1, 120tonne4. [This para, added by Notification No. 92/84 dated 18-4-1984 added another concessional rate where the clearances exceeded 10, 500not exceed 24, 000s on thesame lines as above but this does not need to be set outThe grant of the above concessional rates were, however, subject to certain important conditions set out in the provisos to the notification. These provisosthat the factory does not have a plant attached thereto for making bamboo or wood pulpProvided further that the exemption contained in this notification shall not apply to cigarette tissue, glassine paper, grease proof paper, coated paper (including waxed paper) and papersubstance not exceeding 256. Another Notification No. 45 of 1985 dated 17-3-1985 has been relied upon in support of the contention of the Union of India and hence this may also be set out here. It prescribed rates on paper and paper board falling under Item 17(1) in the following mannerNo. Description Rate1. Printing and writing paper -(i) coated paper 10 per cent ad valorem1505 per metric tonne(ii)substance not 10 per centare metre. Rs. 1505 per metric tonne(iii) Others 10 per centper metric tonne2. All sorts of paper commonly 10 per centas kraft paperg Rs. 1930 per metricer orce equal65 gramsmetre3. Coated paper (including waxed 10 per centand paper of valoremRs 1930 per metricr thanin S. No. 1)4. Glassine paper, cigarette, 10 per centand grease proof valoremRs. 1930 per metric tonne5. Paper board of the following 10 per centnamely, pulp board, valoremboard and triplex board. Rs. 1810 per metric tonne6. Paper and paper boards, other 10 per centthose specified valoremS. No. 1 to 5. Rs. 1430 per metricThe assessee seems initially to have paid excise duty on the goods manufactured by it in terms of Notification No. 24/84 but later seems to have thought of claiming the concessional rates prescribed by Notification No. 25/84. The company was manufacturing art paper and chromo paper. It is common ground that these two types of paper fall under category "printing and writing paper". It is also common ground that these two articles also fall under the description "coated paper" used in the second proviso. Since coated paper is taken by the proviso out of the purview of the Notification No. 25 of 1984, the excise department refused to permit the assessee to avail of this concession in respect of its manufactured goods. This treatment by the excise department has also been confirmed by the Central Excise and Gold Control Appellate Tribunal (CEGAT). The Tribunal disposed of the matter very briefly. ItThat brings us to the second question whether art paper and chromo paper were eligible for the exemption granted under notification No. 25 of 1984. We have carefully considered arguments of the appellants. We have perused the Notification No. 24 of 1984 as amended and note that the second proviso excludes from the exemption, among others, coated paper (including waxed paper). There is no denial that art paper and chromo paper are coated papers. It may be correct that these are not, like other papers mentioned in second proviso, industrial varieties of papers and are writing and printing varieties. All the same when the proviso, as it is worded, is clear there is no warrant for us to supply words to the proviso to the notification. We, therefore, find against the appellants in this regard and hold that art and chromo paper would not be eligible for exemption under Notification No. 25 of 1984."assessee is aggrieved by this order of the Tribunal and hence the present appeals

Court's reasoning:
12. The principle of statutory interpretation by which a generic word receives a limited interpretation by reason of its context is well established. In the context with which we are concerned, we can legitimately draw upon the "noscitur a sociis" principle. This expression simply means that "the meaningrd is to be judged by the company it keeps." Gajendragadkar, J. explained the scope of the rule in State of Bombay v. Hospital Mazdoor Sabha ( 1960 (2) SCR 866  in the following words : (SCR pp.rule, according to Maxwell, means that, when two or more words which are susceptibles meaning are coupled together they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. The same rule is thus interpreted in "Words and Phrases" (Vol. XIV, p. 207) : "Associated words take their meaninger under the doctrine of noscitur a sociis, the philosophy of which is that the meaningul word may be ascertained by reference to the meaning of words associated with it; such doctrine isthe maxim ejusdem generis". In fact the latter maxim "is only an illustration or specific application of the broader maxim noscitur a sociis". The argument is that certain essential features or attributes are invariably associated with the words "business and trade" as understood in the popular and conventional sense, and it is the colour of these attributes which is taken by the other words used in the definition though their normal import may be much wider. We are not impressed by this argument. It must be borne in mind that noscitur a sociis is merely a rule of construction and it cannot prevail in cases where it is clear that the wider words have been deliberately used in order to make the scope of the defined word correspondingly wider. It is only where the intention of the legislature in associating wider words with worded of narrower significance is doubtful, or otherwise not clear that the present rule of construction can be usefully applied. It can also be applied where the meaning of theer import is doubtful; but, where the object of the legislature in using wider words is clear and free, the rule of construction in question cannot be pressed into service."principle has been applied in a number of contexts in judicial decisions where the Court in clear in its mind that the larger meaning of the word in question could not have been intended in the context in which it has been used. The cases are too numerous to need discussion here. It should be sufficient to refer to one of them by way of illustration. In Rainbow Steels Ltd. v. CST ( 1981 (2) SCC 141  this Court had to understand the meaning of the word old in the contextn entry in a taxing tariff which readdiscarded, unserviceable or absolute machinery, stores or vehicles including waste productsthe tariff item started with the use of the wide word old, the Court came to the conclusion that "in order to fall within the expression old machinery occurring in the entry, the machinery must be old machinery in the sense that it has become non-functional or non-usable". In other words, not the mere age of the machinery, which would be relevant in the wider sense, but he condition of the machinery analogous to that indicated by the words following it, was considered relevant for the purposes of thed of proceeding on the premise that it is not necessary to look for any reason in a taxing statute, it is necessary to have a closer look at the wording of the proviso. If the proviso had referred only to coated paper, no special object or purpose would have been discernible and perhaps there would have been no justification to look beyond it and enter into a speculation as to why the notification should have thought of exemption only coated paper manufactured by these factories from the purview of the exemption. But the notification excepts not one but a group of items. If the items mentioned in the group were totally dissimilar and it were impossible to see any common thread running through them again, it may be permissible to give the exceptions their widest latitude. But when four of them - undoubtedly, at least three of them - can be brought under an intelligible classification and it is also conceivable that the government might well have thought that these small scale factories should not be eligible for the concession contemplated by the notification where they manufacture paper catering to industrial purposes, there is a purpose in the limitation prescribed and there is no reason why the rationally logical restriction should not be placed on the proviso based on this classification. In our view, the only reasonable way of interpreting the proviso is by understanding the words coated paper in a narrower sense consistent with the other expressions usedIn the view we have taken it is unnecessary to consider the other contentions urged before us : (i) whether the words "(including waxed paper)" aree of the limitation sought to be placed on the words "coated paper" or they are only intended to make it clear that even paper impregnated with wax will not be entitled to exemption; and (ii) whether, if the notification is capable of two equally plausible interpretations, the one in favour of the subject should be upheld or the one taken by the Tribunal should be confirmed