Holding

Tariff items are to be given their commercial meaning; Decoplast is a plastic emulsion paint and the appeal is dismissed.

Summary

Asian Paints Ltd. manufactured a product called Decoplast and contested its classification under the Central Excise and Salt Act, 1944. The Revenue classified Decoplast as a plastic emulsion paint under Tariff Item 14(I)(3)(iv), which the appellant challenged, arguing that it was not recognized as such in trade and differed scientifically. The Customs Excise and Gold (Control) Appellate Tribunal, after examining evidence on composition, characteristics, uses, and trade reputation, held that Decoplast is a plastic emulsion paint. The appellant appealed to the Supreme Court under Section 35L, contending that the Tribunal erred in law by not considering the scientific definition. The Court held that tariff items must be interpreted in their popular or commercial sense, not by technical definitions, and affirmed the Tribunal’s finding. Consequently, the appeal was dismissed.

Issues considered

Whether Decoplast qualifies as a plastic emulsion paint for excise tariff classification.
Whether tariff items in the Central Excise and Salt Act should be interpreted using the commercial (popular) meaning rather than the scientific/technical meaning.
Whether the Tribunal erred in law or fact in classifying Decoplast as plastic emulsion paint.

Legislation cited

Central Excise and Salt Act, 1944s. 351, s. 35L

Subjects

excise classificationtariff interpretationcommercial meaningplastic emulsion paintpopular sensestatutory constructionCentral Excise Act

Judgment

ASIAN PAINTS INDIA LTD.
A
v.
COLLECTOR OF CENTRAL EXCISE

MARCH 23, 1988

[SABYASACHI MUKHARJI & S. RANGANA1HAN, JJ.] B

Central Excise and Salt Act, 1944-Section 35L and Tariff Item
Nos. 14(I)(3)(iv) and I4 (I)(v) of the First Schedule-Classification for
purpose of excise levy-Whether "Decoplast" is plastic emulsion
paint-Resort to be made to the commerc.ial and popular meaning
attached to the items by those dealing in them-Not to scientific and
technical meaning. c
Statutory Construction-Excise Act-Sales tax Act-Tariff Items
not defined-Interpretation of-To be construed in popular sense--
Commercial meaning attached to items by people who deal in them to be
given. D

The question as to whether "Decoplast" manufactured by the
appellant is plastic emulsion paint or not had been determined in the
affirmative by the Revenue, and revision application before the Gov-
-+ ernment oflndia was rejected.
E
Thereafter the appellant moved the Bombay High Court, which

- direc\ed the Customs Excise and Gold (Control) Appellate Tribunal to
hear the petition and to decide the same as an appeal before it. On
behalf of the appellant, elaborate evidence had been adduced before the
Tribunal. Reference was made to the specifications of plastic emulsion
J) . paint and the definition as given by ISi. The Tribunal addressed itself F
to the question whether "Decoplast" could be considered as plastic
emulsion paint having regard to (i) its composition; (ii) its characterist-
ics; (iii) its uses and (Iv) its reputation in trade parlance, and held that
"Decoplast" is a plastic emulsion paint.

Aggrieved by the order the appellant appealed under Section 351. G
of the Central Excise and Salt Act, 1944 to this Court, which.

Dismissing the appeal,

HELD: 1.1 The commercial meaning has to be given to the expre-
ssions in Tariff items. Where definition of a word has not been given, it H
339
.
340 SUPREME COURT REPORTS I1988] 3 S.C.R.

A must be construed in its popular sense. Popular sense means that sense
which people conversant with the subject-matter with which the statute
is dealing, would attribute to it. l343G I

1.2 In the instant case the use of these two items and their com-
position, when analysed, revealed that in essence they performed the
B same functions as plastic emulsion paint does, though there was some
difference in them. The affidavits of traders and others were examined
by the Tribunal. The Revenue did not adduce evidence in rebuttal.
Therefore, in view of the composition, characteristics, uses and how
it is known in the trade, the Tribunal came to the conclusion that
"Decoplast" was plastic emulsion paint. This is a finding of fact
arrived at on relevant and valid materials. There was no misdirec-
C tion in law. l344C-E]

2. In interpreting items in statutes like the Excise Act or Sales
Tax Act, resort should be had, not to the scientific and technical
meaning of the terms or expressions used, hut to the popular mean-
D ing, that is to say, the meaning attached to them by those dealing
in them. [343H; 344A-B]

C.I. T., Andhra Pradesh v. M/s. Taj Mahal Hotel, Secunderabad
I1972] I SCR 168 and Indo International Industries v. Commissioner of
Sales Tax, U.P., [1981] 3 SCR 294, referred to.
E
King v. Planter's Co., 11951] CLR (Ex.) 122 and 'Two Hundred Chests
of Tea', [1824] 6 L.Ed. 128, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2456
-
of 1987.
F
From the Order dated 27.5.1987 of the Customs Excise and Gold
(Control) Appellate Tribunal, New Delhi in Appeal No. E-2312/85-C

K.K. Venugopal, R. Narain, S. Ganesh, R. Shah, R.K: Ram and
D.N. Mishra for the Appellant.
G
The Judgment .of the Court was delivered by

SABYASA CHI MUKHARJI, J. In this appeal under section 35L
of the Central Excise and Salt Act, 1944 (hereinafter called 'the Act'),
the question involved is whether "Decoplast" manufactured "by the
H Asian Paints Itldia Ltd., the appellant herein, is plastic emulsion. paint
ASIAN PAINTS v. COLLECTOR OF CENTRAL EXCISE [MUKHARJI,J.] 341
\ and, therefore, classifiable under Tariff Item 14(I)(3)(iv) of the First
A
Schedule of the Act as plastic emulsion paint or it should be classifi-
able under Tariff Item No. 14(1)(v) that is as "paints not otherwise
specified".

The Customs Excise and Gold (Control) Appellate Tribunal

-.·I (hereinafter called 'the CEGAT'), by the impugned Order challenged
in this appeal held that Decoplast is plastic emulsion paint. The appel-
lant felt aggrieved thereby. In so holding the Technical Member of the
B

Tribunal observed that in view of its composition, characteristics and
uses, Decoplast should be considered as emulsion paint. The Judicial
Member of the Tribunal was of the view that the Revenue had not
adduced any evidence of rebuttal of the evidence adduced by the
appellant as the commercial understanding but the evidence adduced
c
by the appellant was intrinsically untrustworthy. Therefore, inspite of
the affidavits and absence of evidence in rebuttal, he agreed with the
other member that Decoplast is plastic emulsion paint and the appeal
before the Tribunal should be dismissed.
D
It appears that the appellants had filed revmon application
before the Government of India against the Order of the Revenue
authorities. Ultimately, the same was rejected by the Government of
India. It is not necessary to set out in detail all the events. The appel-
lant had moved the High Court of Bombay against the Order of the
Government of India and the High Court by its Order directed as E
follows:

- "The order dated 17th December, 1979 passed by the
Govt. of India in revision in the Petitioners' case is set aside
inasmuch as the Revision Authorities have not controver-
ted or rebutted the evidence in the form of affidavits relied F
on by the Petitioners to show that their product could not
be regarded as a plastic emulsion paint amongst persons
dealing in such products. The Revision order thus failed to
follow the well established rule of interpreting entries in
the Excise Tariff namely to classify products by their com-
mon parlance and trade understanding and not by their G
scientific or technical meaning. It is necessary that the mat-
ter be remanded to the Revision Authorities to decide the
same afresh according to law. However, as the Revision
Authority under the demanded Central Excise and Salt Act
has been replaced· by the Customs Excise and Gold (Con-
trol) Appellate Tribunal, the said Tribunal is directed to H
342 SUPREME COURT REPORTS [1988] 3 S.C.R.

hear the Petitioners' Revision Petition and to determine
'1
A
the same as an appeal before it. The Tribunal shall give an
opportunity to both the petitioners and the Excise Authori-
ties to rely on any evidence and material either on record
or otherwise which they may lead or produce in support of
their case. The parties will be given full opportunity of
B affidavits if any during the hearing".
>~
In pursuance to the said Order, the matter came before the Tri-
bunal, Before the Tribunal it was contended on behalf of the appellant
that the manufacture was water thinable paint but the same could not
be held to be plastic emulsion paint for the product was not known in
the trade as plastic emulsion paint nor was it bought and sold so. -1-
c

'
According to the appellant, the paint essentially comprised of pigment
and a binder or a vehicle and that while the binder and the vehicle
were interchangeable, it was stated that the binder generally referred
to solid part which in this case was synthetic resin and the solvent could
be water or some other diluent. There was elaborate evidence adduced
D before the Tribunal on behalf of the appellant. Reference was made to
the specifications of plastic emulsion paint as given by ISi. It was
contended on behalf of the appellant that Decoplast could not be
considered as plastic emulsion paint for reasons, inter a/ia, as follow:

i) Plastic emulsion paint comprises of one emulsion as against
two contained in Decoplast;
t-
E

ii) In the case of plastic emulsion drying takes place by evap-
oration of water whereas in the case of decoplast by oxida-
tion of alkyd;
-
F iii) Trade did not recognise decoplast as plastic emulsion paint;

iv) In the literature published by them, decoplast was not
described as plastic emulsion paint;

v) Decoplast was substitute for cement paint;
G
vi) Even though decoplast could be used both for interior and
exteriof use, it was a product inferior to plastic emulsion
paint;

vii) In case of plastic emulsion paint, primer had to be applied to
H the surface to be pained while in the case of Decoplast on
ASIAN PAINTS v. COLLECTOR OF CENTRAL EXCISE [MUKHARJI, J. I 343

coating on Decoplast itself serves as a primer.
A
In support of appellant's contention, affidavits had been filed by
them and the same were considered in extenso by the Tribunal. Refer-
ence has also been made to the Book "Outlines of Paint Technology"
by W.M. Morgan. On the other hand, on behalf of the Revenue, it was
stated that it was not disputed that Decoplast is a water soluble paint B
and that it had got two resins in emulsion form, namely, Polymer
Vinyle Acetate and copolymer alkyds. Attention was drawn to the
Indian Standard Specification for plastic emulsion paint, which is as
follow:

"The material shall consist of pigments with suitable
extenders in suitable proportions, in a medium consisting c
of any state synthetic polymer emulsion in water with other
suitable ingredients as may be necessary to produce a mate-
rial so also satisfy the requirements of this standard."

Our attention was also drawn to the definition given by ISI, D
which is as under:

"Generally, a paint in which the medium is an 'emulsion'
or an emulsion-like dispersion of an organic binder in
water. Industrially the same is mainly restricted to those
paints in which the medium is an 'emulsion' of a synthetic E
resin. The medium may also be called a latex by analogy

- with a natural rubber latex, polyvinyl acetat emulsion paint
is a typical example".

The Tribunal addressed itself to the question whether Decoplast
could ·be considered as plastic emulsion paint in view of (i) its com- F
position; (ii) its characteristics; (iii) its uses; and (iv) its reputation in
trade parlance.

It is well settled that the commercial meaning has to be given to
the expressions in Tariff items. Where definition of a word has not
been given, it must be construed in its popular sense. Popular sense G
means that sense which people conversant with the subject-matter
with which the Statute is dealing, would attribute to it. See-C.J. T.,
Andhra Pradesh v. Mis. Taj Mahal Hotel, Secunderabad, [1972] 1 SCR
168. This Court observed in Inda International Industries v. Commis-
sioner of Sales Tax, U.P., [1981] 3 SCR 294 that in interpreting items
in statutes like the Excise Act or Sales Tax Acts, whose primary object H
344 SUPREME COURT REPORTS I1988] 3 S.C.R.

A was to raise revenue and for which purpose to classify diverse pro-
ducts, articles and substances, resort should be had, not to the scien-
tific and technical meaning of the terms or expressions used but to
their popular meaning, that is to say, the meaning attached to them by
those dealing in them;
B
Justice Cameron of the Canadian Exchequer Court in King v.
Planter's Co., [1951] CLR (Ex.) 122 and the decision of the United
States Supreme Court in 'Two Hundred Chests of Tea', [1824] 6 L.Ed.
128 emphasised that commercial understanding in respect of the tariff
items should be preferred. It was observed that the legislature does not
suppose our merchants to be naturalists or geologists, or botanists.
-
c
In this case the use of these two items and their composition
when analysed, revealed that in essence they performed the same func-
tions as plastic emulsion paint does, though there was some difference
in them. Affidavits of traders and others had been filed. These were
examined and accepted by the Technical Member and these were not
0
rejected by the Judicial Member. The Revenue did not adduce any
evidence in rebuttal. Therefore, in view of the composition, charac-
teristics, user and how it is known in the trade, the Tribunal came to
the conclusion that Decoplast was plastic emulsion paint. Tiris is a
finding of fact arrived at on relevant and valid materials. There was·no
E misdirection in law. Therefore, there is no ground for interference
with the said Order.

In the aforesaid view of the matter, we decline to entertain the
appeal under section 35L of the Act. The appeal is, therefore,
dismissed.
-
F
G.N. Appeal dismissed. _,.L