Holding

Carbon paper, as understood in the relevant trade, was covered by tariff item 17(2) of the Central Excise Tariff in 1976 and therefore does not fall under the residuary item 68.

Summary

Krishna Carbon Paper Co. manufactured carbon paper and cleared it from its factory in 1979 without paying central excise duty. The Revenue issued a notice demanding duty, arguing that carbon paper was covered under tariff item 17(2) (coated paper) since the 1976 amendment of the Central Excise Tariff. The company contended that carbon paper was only brought within the tariff by the 1982 amendment creating sub‑item 17(3), and therefore for the 1979 period it fell under the residuary item 68. The Appellate Tribunal held in favour of the company, classifying the paper under item 68. On appeal, the Supreme Court examined the construction of fiscal language, emphasizing that where a statute uses ordinary words they must be given their popular, trade‑meaning rather than a strict technical sense. Relying on the Indian Standards Institute’s definition that carbon paper is a coated paper and on the trade understanding of the term, the Court held that carbon paper was included in item 17(2) as of 1976. Consequently, the Tribunal’s classification was erroneous. The Court allowed the appeal, remitting the matter to the Tribunal to decide the limitation issue under section 11‑A.

Issues considered

Whether carbon paper manufactured before the 1982 amendment fell within tariff item 17(2) (coated paper) or the residuary item 68 of the Central Excise Tariff.
Whether the amendment introducing sub‑item 17(3) in 1982 was merely clarificatory or created a new classification.
Whether the limitation period under section 11‑A of the Central Excises and Salt Act bars the Revenue’s claim (deferred to the Tribunal).

Legislation cited

Central Excises and Salt Act, 1944s. 11-A, s. 35(b)

Subjects

central excisetariff classificationcarbon papercoated paperpopular sense constructionstatutory interpretationlimitation periodCentral Excise Tariffitem 17(2)item 68

Judgment

A COLLECTOR OF CENTRAL EXCISE, KANPUR
v.
KRISHNA CARBON PAPER CO.

SEPTEMBER 16, 1988

B [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]

Central Excises and Salt Act, 1944: Section II-A-Central Excise
Tariff-Items 17(2), 17(3) and 68-Carbon paper whether included in
the description 'paper subjected to coating'.

C Construction of Statutes: Language in a taxing statute to be
construed in popular sense as understood by that particular trade and
not in strict technical sense.

The respondent-company was engaged in the manufacture of
Carbon Paper. It was served with a notice demanding central excise
D duty on carbon papers cleared from its factory during the period
25.3.1979 to 24.9.1979 under section Il-B of the Central Excises and
Salt Act, 1944. The respondent stated in reply that the notice was
without jurisdiction because it was only after 28.2.1982 that the product
was subjected to duty under sub-item (3) of item 17 of the Central
Excise Tariff. The Assistant Collector of Central Excise, confirmed the
£ demand. The Appellate Collector, however, accepted the respondent's
contention. The Collector (Appeals) and the Appellate Tribunal dismis-
sed the Revenue's appeals. The Tribunal upheld the contention of the
respondent that for the period before its amendment in 1982, carbon
paper fell under Tariff item 68 and not under Tariff Item 17(2), as was
contended by the Revenue.
F
Before this Court the Revenue contends that (1) carbon paper
being akin to coated paper was covered since 1976 under sub-item (2) of
item 17 of the Central Excise. Tariff which included paper which had
been subjected to coating; (2) the introduction of specific name 'carbon
paper' as sub-item (J) oHtem i7 in 1982 was with a view to subject it to
G a different rate of duty; and (3) the amendment so far as item 17(3) was
concerned was mere clariflcatory and was introduced ex abundanti
cautela. The respondent, on the other hand, contends that if carbon
paper was already included then there was no purpose of introducing
these subsequent amendments.

H Disposing of the appeal, it was,
12
COLLECTOR OF CENTRAL EXCISE v. KRISHNA PAPER 13
'--·
HELD: (I) Where no definition is provided in the statute itself for
A
ascertaining !Re correct meaning of a fiscal entry, reference to a dictio·
nary is not always safe. The correct guide is the context and the trade
meaning, which is prevalent in that particular trade where that goods i•
known or traded. [21D-EJ

(2) If a statute contains language which is capable of being B
construed in a popular sense, such a statute is not to be construed
according to the strict or technical meaning of the language contained in
it, but is to be construed in its popular sense, meaning, of course, by the
/- words "11opular sense" that which peoi>le conversant with the subject-
matter with which the statute is dealing would attribute to it. The
ordinary words in every day use are, therefore, to be construed accord-
ing to their popular sense. [23F-G]
c

(3) Paper simpliciter cannot include' carbon paper because that
would not be in consonance with the popular understanding of the
expression "paper". l23G-H; 24A]
.i:>
(4) Where paper of a snecial type defined in the particular statute
as one including paper which have been subjected to various treatments
such as coating, impregnating, how that paper be understood, there
must be evidence of that understanding. [24AJ

(5) There is authority of the Indian Standards Institute's pub- E
lication "Glossary of Terms used in Paper Trade and Industry" to
the effect that carbon paper is understood as a coated paper in
trade. [23A-C]

(6) The trade notices and the,_tariff advices issued by the Board
are not relevant, as such, in construing items in Tariff Schedule. [24E-F] p
">·
(7) Understood in the accepted notion of construing entries of
fiscal Statute not from a technical or scientific point of view hut from
the point of view of the people in the trade dealing with that particular
type of goods and having regard to the evidence of the Indian Standards
Institute and in the absence of any other evidence to the contrary, on G
the basis of the definition of paper or it was in the year 1976, carbon
paper would come within item 17(2) of the Tariff Items, and would not
fall into the residuary entry. [23B-C J

Sai Giridhara Supply Co. v. Collector of Central Excise,
Bombay, [1987] 23 E.L.T. 438 Tribunal; Commissioner of Sales Tax, 11
14 SUPREME COURT REPORTS [1988] Supp. 3 S.C.R.

U.P. v. M.S.N. Brothers, Kanpur, AIR 1973 S.C. 78; King v. Planters
A Nut and Chocolate Company Ltd., [1951] C.L.R. Ex. 122; Union of
India and Anr. v. Delhi Cloth and General Mills Co. Ltd., AIR 1963
S.C. 791; Grenfell v. l.R.C., [1876] 1 Ex. D 242; Porritts & Spencer
(Asia) Ltd. v. State of Haryana, [1979] 1 S.C.C. 82; Kores (India) Ltd.
Thane v. Collector of Central Excise, Thane. 29 E.L.T. 627; State of
B Uttar Pradesh v. Mis. Kores (India) Ltd., [1977] l SCR 837; Attorney-
General v. Winstar lay .. [1901] 6 E.R. 740; Khoday Industries Ltd. v.
Union of India, [1986] 23 E.L.T. 337; Orient Paper Mills Ltd. v. Union
of India, [1969] 1 SCR 245; Mis Colgate Palmolive (India) P. Ltd.,
[1979] E.L.T. J. 567; Dunlop India Ltd. v. Union of India, AIR 1977 .'
S.C. 597; Md. Qasim Larry, Factory Mana!(er, Sasamusa Sugar Works
v. Muhammad Samsuddin, [1964] 7 S.C.R. 419, referred to.
c
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2110
of 1987.

From the Order dated 8.6.1987 of the Customs Excise and Gold
D (Control) Appellate Tribunal, New Delhi in Appeal No. ED/SB/145/
84-C in Order No. 440/87-C.
I
M.K. Banerjee, Solicitor General, P. Parmeshwaran, Mrs.
Radha Rangaswamy and Mrs. Sushma Suri for the Appellant.

J:t J .S. Kapil, Krishan Kumar and Vimal Dave for the Respondent.

The Judgment of the Court was delivered by

SABYASACHI MUKHARJI, J. The Collector of Central
Excise, Kanpur, is the appellant in this appeal under section 35L(b) of
F the Central Excises and Salt Act, 1944 (hereinafter called 'the Act').
The period involved in this appeal is the assessment period from 25th
March, 1979 to 24th September, 1979, a period of about six months.
The respondent M/s. Krishna Carbon Paper Company was engaged in
the manufacture of carbon papers. During the period from· 25th
March, 1979 to 24th September, 1979 the respondent manufactured
G and cleared from its factory a quantity of 5601 boxes, 20,288 reams and
45 packets of carbon papers for a t<ital value of Rs. 7,67,498.40 without
payment of any duty under the Act. The Superintendent of Central
Excise Lakhimpur Kheri, issued notice to the respondent demanding
centrai excise duty on carbon paper cleared during the aforesaid
period under section 11-A- of the Act. The respondent submitted a
H: written reply stating that the notice was without jurisdiction because
1 COLLECTOR OF CENTRAL EXCISE v. KRISHNA PAPER [MUKHARJI, J.] 15
>-
the respondent had taken out the central excise licence immediately on
the direction of the department and it was only after February 28, 1982
...
that the product was subjected to duty under sub-item (3) of item 17 by,_
the Central Excise Budget of 1982. In support of this contention, the
respondent relied on Notifications Nos. 187/82 and 69/82, both dated
28th February, 1982. It was contended that the carbon paper was a
new item which was specified under sub-item (3) of item 17 of C.E.T. B
According to the revenue, however, that the recasting of Tariff Item
17 in .1976 was irrelevant and that the carbon being akin to coated
paper (one side or bmh side) was covered under sub-item (2) of item
/- 17 of the C.E.T. since 1976. The submission of the respondent was that
sub-item (3) of item 17 of the C.E. T. covering the carbon paper includ-
ing copy paper was inserted by the Central Excise Budget 1982, but it
does not make any retrospective change. It was, according to the c
appellant, an introduction of specific name or variety of paper for
being subjected to a different rate of duty. The carbon paper remained
a coated paper already covered under sub-item (2) of item 17 of
C.E.T. The Assistant Collector of Central Excise, Sitapur, by his
order dated 27/30th April, 1983, confirmed the demand for basic D
excise duty amounting to Rs.1, 15, 124,76 and special excise duty of
Rs.5,756.23 on carbon 'paper cleared during the period from 25th
.... March, 1979 to 24th September, 1979. The Appellate Collector, how-
ever, set aside the order of the Assistant Collector and was of the view
that the carbon paper could not be classified under Tariff Item 17(2) of
the Act, as it was before 1982. The Collector (Appeals) accepted the E
respondent's contention that the carbon paper was brought under the
purview of Tariff Item 17 for the first time in 1982 when it was intro-
duced as sub-item (3) of Item 17 of the First Schedule to the Act with
effect from 1st March, 1982. Being aggrieved thereby the appellant
preferred an appeal before the Appellate Tribunal. The Appellate
Tribunal dismissed the appeal. Hence, this appeal. F
...
The question for decision in this appeal is whether carbon paper
before the introduction of Central Excise Budget in 1982 and conse-
quential amendment in tariff, fell under item 68 of the First Schedule
to the Act, as held by the Tribunal or under item 17(2) of the Tariff
Item, which was claimed by the Collector of C,11.tral Excise. Following G
its previous decision in the case of Sai Giridhara Supply Co. v. Col-
lector of Central Excise, Bombay, [1987] 23 E.L.T. 438 Tribunal, the
Tribunal upheld the contention of the respondent and held that for the
period before the amendment of Central Excise Budget, iri 1982,
carbon paper fell under Tariff Item 68 and not under Tariff Item 17(2),
as it then was. The Tribunal did not go into the question of the limita- H
16 SUPREME COURT REPORTS [1988] Supp. 3 S.C.R. ;
•
A tion, namely, whether the claim was barred in any event by the lapse of
time in view of section 11-A 0f the Act. The Tribunal came to the
finding that the carbon paper in question fell under Tariff Item 68 of
the Central Excise Tariff. Shri Kapil on behalf of the respondent sub-
mitted before us that the claim, in any event, was barred by lapse of
time in view of section 11-A of the Act. In view of the fact that the
6 Tribunal did not decide this question if we are persuaded to reject the
revenue's contention in this appeal, the matter has to be remanded
back to the Tribunal to decide this question as to limitation, as there is
· no decision of the Tribunal on this aspect of the matter.

Before the contentions are appreciated, it will be appropriate to
c refer to the position of Tariff Item 17 at three different phases,
namely, in 1975, after the amendment in 1976 and after the further
amendment to item No. 17 by the Finance Act of 1982. Item No. 17
was amended with effect from 27th February, 1982 and two specific
entries were added. These were (3) and (4). It is necessary to set out in
D the position at different points of time. It was as follows:

"Tariff Item 17-Position in 1975 ..;

Item No. Description of goods Rate of Duty
E
l7. Paper, all sorts (including paste board,
mill-board, strawboard and cardboard), in
or in relation to the manufacture of which
any process is ordinarily carried on with
F the aid of power
-~
(1) Cigarette tissue Rs.3 per kg.
(2) Blotting, toilet, target tissue other Re.land 20
than cigarette tissue, teleprinter, paisc per kg.
typewritting; manifold, bank, bond,
art paper, chrome paper, tubsized
paper, cheque paper, stamp paper,
cartridge paper, (waxed paper, poly-
thelene coated paper), parchment
and coated board (including art
board, chrome board and for playing
cards)
COLLECTOR OF CENTRAL EXCISE v. KRISHNA PAPER IMUKHARJJ, J .] 17

(3) Printing and writing paper, packing 90 paise per kg.
and wrapping paper, strawboard and A
pulp board, including grey board,
corrugated board, duplex and triplex
boards, other sorts
(4) All other kinds of paper and paper Re.1and20
board, not otherwise specified, paise per kg. B

Position in 1976
17. Paper and Paper Board, All sorts
(including paste-board, mill-board
straw-board, cardboard and corru-
gated board}, in or in relation to the c
manufacture of which any process is
ordinarily carried on with the aid of
power

(1) Uncoated and coated print and Twenty-five per D
writing paper (other than poster cent ad valorem
, .. paper)

(2) Paper board and all kinds of paper Thirty per cent
(including paper or paper boards ad valorem
which have been subjected to various E
• treatments such as coating, impre-
gnating corrugation, creping and
design printing), not elsewhere
specified.

There was further amendment to Item No. 17 by the Finance Act F
of 1982. Item 16 was amended with effect from 27.2.1982, and two
specific entries were added. They are (3) and (4) which are reproduced
below:

Item No. Description of goods Rate of duty
G
17. . xx xx xx
(3) Carbon and other copying papers 32 1/2% ad
(including duplicator stencils) and valorem
transfer papers, whether or not cut to
size and whether or not put to in
boxes H
18 SUPREME COURT REPORTS [1988] Supp. 3 S.C.R.

(4) Boxes, cartons, bags and other 321/2% ad
A packing containers (including valorem
flattened or folded boxes and flat-
tened or folded cartons), whether or
not printed and whether in assembled
or unassembled conditions."
a
The short question• with which we are concerned is, whether
during the relevant period, namely, 25th March, 1979 to 24th
September, 1979 when the position mentioned above was prevailing,
whether carbon papers could be included in "all kinds of paper includ-
ing the paper which have been subjected to coating", would come
within sub-item (2) of item 17 as mentioned hereinbefore or under
c residuary item 68 of the Central Excise Tariff.

The Tribunal followed a previous decision in Sai Giridhara
Supply Co. v. Collector of Central Excise, Bombay, (supra). There,
the Tribunal had discussed the various aspects of the matter and felt
O itself bound by the decisio1\ of the Kamataka High Court to which
reference will be made later. The Tribunal has referred to the observa-
tions of Buckley L.J. where the Lord Justice observed that once a
precedent was hejd to be a binding one, then no deviation therefrom
was permissible within the judicial polity except in the well accepted
categories of cases enumerated in the jupgment. Those contingencies,
Ii. the Tribunal found, were not applicable to the facts of this case .
•
It is well-settled that in order to ascertain the correct meaning of
a fiscal entry reference to a dictionary is apt to be a somewhat delusive
guide, as it gives all the different shades of meaning. In the instant
case, our attention was drawn to the extract from the Oxford English
F Dictionary, Volume III, page 436 where the meaning of the word
"paper" has been given. It reads as follows:

"Paper (pei'per), sb. Also 4 papure, 4-6 papir, 5 papire,
papyre, (paupire, 5-6 pauper, 5-7 papyr, 6 papre. [ a. AF.
papir = OF, Papier (=Pr. Papier, Cat. Paper, Sp. papel
G 'paper', It. papira papyrus), ad. L. papyrus the papyrus or
paper-reed of the Nile, also writing-material made of it, a
Gr. nanvpos the papyrus-reed. From the writing-sheets
made of the thin strips of papyrus the name was transferred
to paper made of cotton, and thence to paper of linen and
other fibres. These extensions took place before the word
H became English, so that here its application to papyrus is
only a later retrospective use.]
COLLECTOR OF CENTRAL EXCISE v. KRISHNA PAPER [MUKHARJI, J.] 19

I. The simple word. *Without a or pl. (exc. as denoting a
A
particular kind).

I. A substance composed of fibres interlaced into a com-
pact web, made (usu.ally in the form of a thin flexible sheet,
most commonly white) from various fibrous materials, as
linen and cotton rags, straw, wood, certain grasses, etc., B
which are macerated into a pulp, dried, and pressed (and
subjected to various other processes, as bleaching, colour-
ing, sizing, etc., according to the intended use); it is used
) (in various forms and qualities) for writing; printing, or
drawing on, for wrapping things in, for covering the in-
terior of walls, and for other purposes."
c
Our attention was also drawn to the meaning of the carbon paper
in 'Pulp and Paper-Manufacture', second edition. volume II which has
been described as follows:

"Carbon paper is made by coating paper with a mixture D
consisting principally of a wax and a pigment. The color is
obtained from the pigment, usually a carbon black of low
I.
oil absorption, plus toners, usually lake pigments or oil-
soluble dyes, which are added to increase the blackness.
The wax, which acts as a binder for the pigment, must have
a viscosity low enough to permit slight penetration into the E
paper, but not so low that the wax strikes through or sweats
oil. Waxes with a melting point between 105 to 120 F. and a
viscosity of about 60 or 70 Saybolt at 210' F. are generally
used. The principal wax used is carnauba, although some
ceresin, beeswax, candelilla, ozokerite, ouricury, and
synthetic waxes are also used. Special grades of micro- F
crystalline waxes may be added to soften the coating and
improve the printing qualities. In addition to the above
ingredients, non-drying oils (mineral oils) are used to
soften the coating and control the amount of coating trans-
ferred to the copy. Oleic acid is sometimes used as a
solvent for oil-soluble dyes. G

All carbon papers must be free of offset, flaking,
wrinkles, curl, or other defects, and must give a good
impression on the copy paper. The coating must be hard
enough not to smear in hot weather, but the exact degree of
; hardness depends upon the intended use, that is, whether H
20 SUPREME COURT REPORTS [ 1988] Supp. 3 S.C.R.

A the paper is designed as a pencil carbon, a typewriter
carbon, or a one-time carbon. The amount of coating varies
from a very thin coating used in making one-time carbons
to a very heavy coating used in making high-grade typewri-
ter carbons for multiple use. The latter, in which the paper
may be reused up to 40 to 50 times, must have a coating of
B very high color value and the coating must be compounded
so that only a small amount is transferred to the copy sheet.
A simplified formula for a typewriter carbon would be as
follows:

Carnauba was ................................... 34%
c Ozokerite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Deeswax ....................................... 7%
Petrolatum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Mineral Oil ..................................... 25%
Carbon black ................................... 13%
Toners ......................................... 6%
D Oleic acid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%

In the coating of carbon paper, the molten was
mixture is applied to the paper at a temperature of about
200' F. Coating is done on a carbon paper coater which
consists of an inking roll which is supplied with coating
E directly from a bath or from a heated fountain. The inking
roll revolves in a direction opposite to that of the paper
web. Excess coating is scraped off the paper by an equa-
lizer rod and the sheet then passed over a water-cooled
clylinder to chill and harden the coating. Crystallization of
the wax occurs upon chilling, and this process continues
f over a period of several days. For this reason, it is custo-
mary for carbon manufacturers to age their coated paper .,
for two to seven days before shipping.

It is absolutely essential that the coating be absorbed
evenly by the paper. Therefore, the paper must have a
G smooth surface, uniformly high density, good formation,
and above all, be free of pinholes. Further requirements
are high strength, low basis weight, and freedom from
flaws such as slime spots and dirt specks. Because of these
rigid requirements, the base stock for carbon tissue is
difficult to make. The best grades are made from new
H cotton or linen rags, or from manila hemp. whereas the
/. COLLECTOR OF CENTRAL EXCISE v. KRISHNA PAPER [MUKHARJI, J.] 2i

cheaper grades are made from sulfate and sulfite pulps.
The stock is beaten for a considerable period of time, often A
up to thirty hours, in order to develop maximum strength.
The stock is only lightly sized. Calcium carbonate is often
used as a filler, but the ash should not be over 5%. The
basis weight is usually 4, 5 1/2, 7, or 10 lb. per ream (20 x
30-500). The 4-lb. paper is used when a large number of B
copies is to be made; the 5-and 7-lb. papers are suitable
for ordinary work.
/
Carbon paper under the specifications of the Indian Standard
Institute, is described as follows:

"Carbon Paper-Paper coated (generally on one side) with c
a pressure transferable pigmented layer, used for making
copies at the same time as an original manuscript or
typescript is made."

It is well-settled, as mentioned before, that where no definition is D
provided in the statute itself, as in this case, for ascertaining the
correct meaning of a fiscal entry reference to a dictionary is not always
safe. The correct guide, it appears in such a case, is the context and the
trade meaning. In this connection reference may be made to the obser-
vations of this Court in Commissioner of Sales Tax, U.P. v. Mis. S.N.
Brothers, Kanpur, AIR 1973 S.C. 78 at page 80 para 5. E

The trade meaning is one which is prevalent in that particular
trade where that good is known or traded. If special type of goods is
subject matter of a fiscal entry then that entry must be understood in.the
context of that panicular trade, bearing in mind that particular word.
I . Where, however, there is no evidence either way then the definition F
given and the meaning following from particular statute at particular
time would be the decisive test.

1n the famous Canadian case in King v. Planters Nut and Chaco-
late Company Limited, [1951] C.L.R. Ex. 122 Cameron J. observed
that it is not botanist's conception as to what constitutes a fruit or G
vegetable .... but rather what would ordinarily in matters of com-
merce in Canada be included there should be the guide. Similarly, this
Court has held in Union of India and Anr. v. Delhi Cloth and General
Mills Co. Ltd., A.LR. 1963 S.C. 791 at page 794 para 12 that the view
. i of the Indian Standard Institute as regards what is refined oil as known
to the market in India must be preferred in the absence of any other H
22 SUPREME COURT REPORTS [1988] Supp. 3 S.C.R.

reliable evidence. lt must be emphasised in view of he arguments
A advanced in this case that the meaning should be as understood in the
particular trade. In this case, we are construing not paper as such but a
particular brand of paper with a meaning attributed to it. Sub item (2)
of item 17 as was the position in 1976 paper referred to all kinds of
paper including paper or paper boards which have been subjected to
B various treatments such as coating, impregnating. So, therefore, if all
kinds of paper including coated paper is the goods, we have to find out
the meaning attributed to those goods in the trade of those kinds of
paper where transactions of those goods take place.

It is a well-settled principle of construction, as mentioned
before, that where the word has a scientific or technical meaning and
c; also an ordinary meaning according to common parlance, it is in the
latter sense that in a taxing statute the word must be held to have been
used, unless contrary intention is clearly expressed by the legislature.
This principle is well-settled by a long line of decisions of Canadian,
American, Australian and Indian cases. Pollock J. pointed out in
I]) Grenfell v. I.R.C., [1876] 1 Ex. D 242 at 248 that if a statute contains
language which is capable of being construed in a popular sense, such a
statute is not to be construed according to the strict or technical mean-
ing of the language contained in it, but is to be construed in its popular
sense, meaning, of course, by the words "popular sense" that which
people conversant with the subject-matter with which the statute is deal-
B ing would attribute to it. The ordinary words in ev'ery day use are,
therefore, to be construed according to their popular sense. The same
view was reiterated by Story, J. in200 Chests of Tea, [1824] 9 Wheaton
US 435 at 438 where. he observed that the legislature does not suppose
our merchants to be naturalists, or geologists, or botanists. See the
observations of Bhagwati, J. as the learned Chief Justice then was, in
F Porritts & Spencer (Asia) Ltd. v. State of Haryana, [1979] 1 S.C.C. 82.
But there is a word of caution that has to be borne in mind in this
connection, the words must be understoo.c:\ in popular sense, that is to
say, these Illus! be confined to the words used in a particular Statute
and then if in respect of that particular items, an artificial definition is
given in the sense that a special meaning is attached to particular
G words in the Statute then the ordinary sense or dictionary meaning
would not be applicable but the meaning of that type of goods dealt
with by that type of goods in that type of market, should be searched.
In the instant case, we have "all kinds of papers including papers
subjected to coating, impregnating etc". If there is a market meaning
or trade meaning of that kind of a paper that should ~e adhered to. In
H this case, there is no direct evidence how these peculiar goods are dealt
/• COLLECTOR OF CENTRAL EXCISE v. KRISHNA PAPER IMUKHARJI, J.] 23

with in the particular market dealing with those goods. But there is
A
evidence how these are to be unaerstood in ·the light of the specifica-
tions of the Indian Standard Institute which we have mentioned
before. It is instructive to refer in this connection a passage of the
Tribunal's decision in Kores (India) Ltd. Thane v. Collector of Central
Excise, Thane, (29 E.L.T. 627, where the Tribunal observed that on
the point whether carbon paper is understood as a coated paper in B
trade, there is authority of the Indian Standards Institute's publication
"Glossary of Terms used in Paper Trade and Industry"-IS: 4661.
J Therefore, understood in the accepted notion of construing entries of
fiscal Statute not from a technical or scientific point of view but from
the point of view of the people in the trade dealing with that particular
type of goods and having regard to the evidence of the Indian Standard
Institute and in the absence of any other evidence to the contrary, the c
Tribunal was justified in holding that on the basis of the definition of
paper as it was in the year 1976 carbon paper would come within item
17(2)of the Tariff Items.

Learned counsel for the respondent placed reliance on the obser- D
vations of this Court in State of Uttar Pradesh v. Mis. Kores (India)
Ltd. , [977] 1 SCR 837 where this Court was concerned with a notifica-
tion under section 3-A of the U .P. Sales Tax Act, 1948. The question
fell for consideration before this Court in that case was whether carbon
paper was taxable as paper and further whether ribbon was accessory
or part of typewriter. This Court reiterated that a word which is not E
defined in an enactment has to be understood in its popular 11I1d
commercial sense with reference to the context in·which it occurs. The
word has to be understood according to the well established canon of
construction in the sense in which persons dealing with and using the
article understand it. For this principle this Court relied on the obser-
vations of Lord Tenterden in Attorney-General v. Winstanley, [1901] 6 F
E.R. 740 and the observations of Pollock, J. in Grenfell v. CommiSI
sioners of Inland Revenue, [1876] 1 Ex. D 242 at 248. Pollock, J. was
construing the Stamp Act, where he correctly emphasised that the
words should be construed in popular sense meaning thereby the sense
in which people conversant with the subject-matter with which the
Statute is dealing, would attribute to it. That is the correct test. This G
Court observed further at page 839 of the report that in popular
parlance, the word 'paper' is understood as meaning a substance which
is used for bearing, writing, or printing, or for packing, or for drawing
on, or for decorating, or covering the walls. Carbon paper is not
. i commonly understood as paper. This Court thus held that paper
simpliciter cannot include carbon paper because that would not be in .H
24 SUPREME COURT REPORTS [ 1988] Supp. 3 S.C.R.

consonance with the popular understanding of the expression "paper".
A
But where paper of a special type defined in the particular statute as
one including paper which have been subjected to various treatments
such as coating, impregnating, how that paper be understood, there
must be evidence of that understanding. In the absence of that
evidence, the natural meaning following from the expression used in
B the statute should be adhered to. In that light, it appears to us that in
view of the facts of this case and in the principles of law as prevailing in
1976 papers of all kinds including paper with coating and impregnating
and the views of the Indian Standard Institute, would include carbon
papers.

Learned counsel drew our attention to the decision of the
c Karnataka High Court in Khoday Industries Ltd. v. Union of India and
Ors., [1986] 23 E.L.T. 337 where the learned single Judge held that
carbon paper is an article of statutory classifiable under item 68 of the
Central Excise Tariff and not under item 17(2) as coated paper prior to
its amendment with effect from 27th February, 1982. He took into
D account the Trade Notice No. 56176 and Tariff Advice No. 5/76. The
Trade Notice No. 56/76 issued by the Collector was based on the instructions
issued by the Board as per Tariff Advice No. 5/76. Carbon paper was
commercially recognised only as an article of stationery falling under
item 68 of the Central Excise Tariff and not under Item 17(2). This was
in respect of the position as it stood prior to 1976 when paper did not
E include coated paper or impregnated paper. It appears from the said
judgment of the High Court that the Trade Notice 56176 was issued by
the Collector on 2nd March, 1976 and Item 17 was amended on 27th
May, 1976 and sub-clause (2) as amended among other things included
coated paper. The trade notices and the tariff advices are not relevant,
as such, in construing items in Tariff Schedule. In this connection,
F reference may be made to the observations of this Court in Orient
Paper Mills Ltd. v. Union of India, [1969] 1 S.C.R. 245 where this
Court observed that a quasi-judicial body exercising quasi-judicial
power is not bound by the directions of the Board. There is no
provision in the Act empowering the Board to issue directions to the
assessing authorities or the appellate authorities in the matter of decid-
G ing disputes between the persons who are called upon to pay duty and
the department. Therefore, trade notices as such issued by the Board
are not relevant considerations.

The point which Shri Kapil, further, urged is that Item No. 17
was amended by the Finance Act of 1982 and two specific entries were
\ '
H added, namely, Items nos. 17(3) and 17(4) we have noted before. His
/. COLLECTOR OF CENTRAL EXCISE v. l\RISHNA PAPER {MUKHARJI, J.] 25

contention was that if the carbon paper was already there then there
A
was no purp.ose of introducing these subsequent amendments,. Shri
Kapil relied on a Full Bench decision of the Government of India in the
case· of Mis. Colgate Palmolive (India) (P) Ltd., [1979] E.L.T. J 567
where the Government of India observed that it was well settled law
that the proper rule of construction applicable to items and entries
occurring in Excise Schedule should be to construe not in scientific or B
technical sense but in the sense as understood by the parties dealing
with or commercially conversant with them. The Government of India
relied on the observations of this Court in Dunlop India Ltd. v. Union
of India, A.LR. 1977 S.C. 597. So far as that principle is concerned,
this is applicable. It 111ust be understood by the persons dealing with
this particular type of goods. We are concerned here not with paper
simpliciter or how it is understood in common parlance but paper with c
a particular definition at the relevant time, namely, all kinds of paper
(including paper or paper boards which have been subjected to various
treatments such as coating, impregnating) stated in that context. In
that context, it cannot be said that carbon paper cannot be coated
paper as such. Shri Kapil submitted that if carbon paper was there then D
there was no purpose for introducing two sub-items by the Finance Act
of 1982. The Finance Minister, however,_ observed in his speech
(extract of para 123 at page 38-39 of Part 'B' dated 27th February, 1982)
as follows: · -

"123. I also propose to rationalise and restructure the E
tariff relating to paper and paper boards, the primary
objectiVe being to exempt small scale paper converters
from payment of excise duty and to release them from
excise control. In order to recoup the oonsequent loss in
revenue, I propose to raise the basic excise duty on indust-
f rial varieties of paper and paper boards by a small margin F
of 2 1/2 per cent ad valorem. However, certain converted
papers of high value-added categories are proposed to be
subject to basic excise duty at 32 1/2 per cent ad valorem.
Similarly, specified articles made of paper and paper board
are proposed to be brought within the purview of the tariff
item but effectively restricting the levy to printed cartons G
and printed boxes."

It appears that the Finance Minister was adding two items, one
was 17(3)-carbon and other copying papers and the second was
; 17(4)-boxes, cartons, bags and other packing containers. He men-
tioned in his speech that in order to recoup the consequent loss in H
26 SUPREME COURT REPORTS (1988] Supp. 3 S.C.R.

A revenue, he proposed to raise the basic excise duty on industrial
varieties of paper and paper boards by a small margin of 2 1/2 per cent
ad valorem. Tariff Advice No. 5/76 contained the following statement:

"TARIFF ADVICE No. 5/76-

(BOARD'S LETTER F. No. 61/2/73-CX. 2 dated 12.2. 76.)

Sub: Paper-Carbon paper and Stencil Paper-Whether
excisable under Item No. 17 of.

A doubt has been raised whether carbon/stencil
paper, produced by conversion of duty paid base paper,
should be treated as paper falling under tariff item 17(4) of
Central Excise Tariff or as on item of stationery, outside
the scope of item No. 17 of C.E. Tariff.

2. The matter was considered in the Central Excise
Tariff Conference held at Cochin on the 13th to 15th
November, 1975. It was reported that carbon paper/stencil
paper is sold in the market mostly cut to size by retail
stationers. The Indian Customs Tariff Guide has also
treated Carbon paper as an item of stationery 1nd not as
paper. The Conference was theretore, of the view that
carbon paper/stencil paper, were ·commercially recognised
only as articles of 'tationery.

3. The Board is accordingly advised that carbon .
paper and stencil paper should be treated as articles of
stationery, and therefore outside the purview of item
No. 17-C.Ex. Tariff.

4. Receipt of this letter may kindly be acknow-
ledged."

These are relevant or proper materials to apply to construe the
meaning of the Tariff Item. Moreover, in proper light these do not
militate against the view that carbon paper in 1976, was included in the
special type of paper, as defined at that time.

H In the aforesaid view of the matter, we are of the opinion that as
< (. COLLECTOR OF CENTRAL EXCISE v. KRISHNA PAPER [MUKHARJI, J .J 27

at the relevant time the definition of paper being paper board and all
kinds of paper (including paper or paper boards which have been A
subjected to various treatments such as coating and impregnating and
in the light of the LS. specifications as noted hereinbefore and there
being no other reliable evirlence as to how coated paper is understood
in the market, except the opinion of the Indian Standard Institute in its
specifications, in our opinion, the Tribunal was not right in the vie\v it B
took.

The Tribunal in Kores (India) Ltd., Thane, v. Collector of Cent-
ral Excise, Thane, (supra) expressed the view that carbon would fall
under item 17(2) of the Tariff' Items relying on ISI specifications.
There was authority of the Indian Standards Institute's publication
"Glossary of Terms used in Paper Trade and Industry"-IS 4661. In c
view of the facts as appeared in paragraph 14 of the Tribunal's judg-
men! in Kores (India) Led., Thane, v. Collector of Central Excise,
Thane, (supra), where the basis of the classifications of ISI in its
specifications is explained, we are of the opinion that the carbon paper
fell under item 17(2) as it stood at the relevant period germane for this D
appeal, before 1982, and not in residuary item No. 68 of C.E.T.

Learned Solicitor General submitted that this amendment so far
as item 17(3) was concerned was mere ciarificatory and was introduced
ex abundanti cautela. Our attention was drawn to the decision of this
Court in Md. Qasim Larry, Factory Manager, Sasamusa Sugar Works E
v. Muhammad Samsuddin and Anr., [1964] 7 S.C.R. 419 where the
Court was concerned with the question whether the term "wages" as
defined by section 2(vi) of the Payment of Wages Act, 1936 including
wages fixed in an industrial dispute between the employer and the
employee. The question had to be answered in the light of the defini-
tion prescribed by section 2(vi) before it was amended in 1958. The F
subsequent amendment expressly provided by section 2(vi)(a) that any
remuneration payable under any award or settlement between the
parties or order of a Court, would be included in the main definition
under section_2(vi). In the view we have taken on the construction of
the expression as it stood in the relevant time, it is not necessary to rest
our decision on the question whether the amendment was clarificatory G
or not.

In the light of the evidence referred to by the Tribunal in Kores
(India) Ltd. Thane v. Collector of Central Excise, Thane, (supra) .and
f in the light of the definition of paper in C.E.T. Item 17(2) as it stood at
the relevant time, it is sufficient to hold that it was covered by item H
28 SUPREME COURT REPORTS I1988] Supp. 3 S.C.R.
A 17(2) of C.E.T. and would not fall into the residuary entry.

In that view of the matter, the decision of the Tribunal cannot be
sustained·on this point and the appeal must be allowed. However, as
the point of limitation has not been decided by the Tribunal, we
remand the case back to the Tribunal to decide that question having
B regard to the facts found in this case. The appeal is, therefore,
disposed of in the light of what is stated aforesaid. In the facts of this
case, the parties will pay ~nd bear their own costs.

R.S.S. Appeal disposed of.

c