The petitioner is an exporter of Portable Linear Scanner. The first respondent has introduced a scheme of export incentives by name Cash Compensatory Support Scheme. Under the said scheme, cash assistance has been made available against the eligible export items.
2.In pursuant to the said scheme, the first respondent issued a Circular bearing reference no.12/49/86-EAC fixing Cash Compensatory Support (hereinafter called as CCS) percentage for exports made on or after 01.07.1986 upto the period ending 31.03.1989.
Serial No.25(i) of the Annexure to the circular reads as follows:
All electronic instruments and appliances including electronic components and electronic devices 15(fifteen)"
Serial No.49(b) of the said circular reads as follows:
"surgical, medical (including electro-medical) instruments, appliances and accessories : 10(Ten)"
3.Therefore a reading of the above serial numbers would indicate that for all electronic instruments and appliances 15% of CCS has been provided and for the surgical, medical (including electro-medical) instruments, appliances and accessories coming under serial no.49(b) the same has been restricted to 10%.
4.The petitioner had exported Ultrasound Scanner with Doppler / Portable Linear Ultrasound Scanner between 04.08.1986 to 28.11.1986. A claim was made by the petitioner relying on 25(i) of the Circular dated 30.06.1986 at the rate of 15% claiming CCS of the FOB value of the exports. The said claim was accepted by the third respondent and payment has been made to the petitioner.
5.Thereafter, the Headquarters Classification Committee considered the classification in its meeting held on 14.08.1987 and it was classified that the items such as surgical / medical instruments would be coming under Serial No.49(b) carrying CCS at 10%. The said decision was again confirmed on 30.11.1987 in the subsequent meeting. Hence based upon the same, the third respondent called upon the petitioner by its letter dated 04.09.1987 to refund the excess CCS amount of Rs.17,35,519/- which was paid by the petitioner subsequently.
6.The petitioner being aggrieved against the decision of the third respondent dated 04.09.1987, filed an appeal on 07.01.1988 contending that the petitioner's case should be considered under Serial No.25(i) of the Circular. The said appeal was dismissed and the petitioner's further appeal to the second respondent was also dismissed on 06.05.1988.
7.Challenging the above said orders, the petitioner filed a writ petition in W.P.No.2282 of 1989 and the Hon'ble Division Bench in Writ Appeal No.1097 of 1998 remitted back the matter to the second respondent for fresh consideration after giving adequate opportunities to the parties. Accordingly, the second respondent passed a speaking order thereby confirming the earlier order passed by holding that the petitioner's case would be covered under Serial No.49(b) of the Circular dated 30.06.1986. Not satisfied with the same, the petitioner has filed the present writ petition.
8.The learned counsel appearing for the petitioner submitted that inasmuch as it is not in dispute that the goods exported are electronic items, the petitioner is entitled to get the benefits under Serial No.25(i) of the Circular. It is further submitted that while interpreting the Circular one has to see the object of the policy and it should be therefore interpreted in favour of the petitioner, since the object is to encourage exports. The learned counsel in support of his contention has relied upon the judgment reported in (2001) 2 SCC 139 [B.P.L. LTD. v. STATE OF A.P.] and submitted that the definition of electronic goods should be construed to include all electronic goods and therefore the petitioner is entitled to get the benefits under Serial No.25(i) of the Circular.
9.Per contra, the learned counsel appearing for the Department relying upon the counter affidavit filed, submitted that the petitioner's case would come under Serial No.49(b) alone. The learned counsel further submitted that Ultrasound Scanners contain electronic components such as printed circuit boards, integrated circuits, transistors, diodes, register,s capacitors and transducers to do the scanning and displaying process for the purpose of effective diagnosis. According to the learned counsel, for the purpose of classification the specific description will have to be preferred over generic description. Inasmuch as Ultrasound Scanners are specifically included Serial No.49(b), the same will have to taken into consideration for availing benefit under the scheme. The said goods are classified as medical/surgical instruments keeping in view the end use of the surgical instruments. The instrument in question requires high precision and accuracy and therefore it could be classified under Serial No.49(b) carrying CCS at 10%. Therefore the learned counsel prayed for the dismissal of the writ petition.
10.As submitted by the learned counsel appearing for the respondents when there is a specific and clear entry and when there is no ambiguity in the classification for the Portable Linear Scanner, the contention of the learned counsel appearing for the petitioner that it should be treated as electronic goods alone cannot be accepted. The description in the electronic goods is broader in nature as against the description towards surgical/medical instruments, appliances and accessories which is specific. The further contention made by the learned counsel appearing for the petitioner that the Department of Electronic Goods has certified that the Ultrasound Scanner with Doppler, Portable Linear Ultrasound Scanner would fall under the category professional electronic equipment and therefore, the petitioner's case is covered under Serial No.25(i) also cannot be accepted for the reason that the said letter issued by the another wing of the department is not binding on the respondents, more so when the said letter does not throw any light as to whether the goods of the petitioner would come under Serial No.25(i) or 49(b) of the Circular.
11.It is a well settled principle of law that the classification will have to made as per the list prepared by the respondents especially when an item is specifically included in the list. Only when there is an ambiguity then the question of interpretation would arise. Such a situation would arise when a particular goods is not included in any of the items in the circular. Since in the present case, the goods of the petitioner having been specifically included in Serial No.49(b), this Court is of the opinion that the contention of the petitioner cannot be accepted.
12.Further in order to interpret the classification of goods one has to construe the same in the sense in which the persons who deal in such goods understand it normally. The reason is that the persons who are concerned with the goods know it better, it is the sense in which they understand it which constitutes the definitive index of legislative intention. The goods must also be classified according to their popular meaning and also the commercial sense as well. The court has to select the meaning which is relevant to the context, in which it has to interpret the word. The functional test is also a relevant factor.
13.The said view has been approved by the Hon'ble Apex Court in the judgment reported in 1996 (87) E.L.T. 12 [UNION OF INDIA v. GARWARE NYLONS LTD.] wherein it has observed as follows:
"12.The law on the point as laid down by this Court (in various decisions) has been summarised in the book "Principles of Statutory Interpretation" (Sixth Edition 1996) by Justice G.P.Singh, at pages 67,70,72 and 73, thus:
".......So in construing entries of goods in Excise, Customs of Sales Tax Acts resort should normally be had not to the scientific or technical meaning but to their popular meaning viz. the meaning attached to the expressions by those dealing in them. ........ The popular meaning in the context of a Sales Tax Act is that meaning which is popular in commercial circles for the Act essentially, in its working, is concerned with dealers who are commercial men."
"The justification of the rule that the words are to be understood in their natural, ordinary or popular sense is well expressed by JUSTICE FRANKFURTER: "After all legislation when not expressed in technical terms is addressed to common run of men and is therefore to be understood according to sense of the thing, as the ordinary man has a right to rely on ordinary words addressed." In determining, therefore, whether a particular import is included within the ordinary meaning of a given word, one may have regard to the answer which everyone conversant with the word and the subject-matter of statute and to whom the legislation is addressed, will give if the problem were put to him."
"As a necessary consequence of the principle that words are understood in their ordinary or natural meaning in relation to the subject-matter, in legislation relating to a particular trade, business, profession, art or science, words having a special meaning in that context are understood in that sense. Such a special meaning is called the technical meaning to distinguish it from the more common meaning that the word may have. ............ The Supreme Court "has consistently taken the view that, in determining the meaning or connotation of words and expressions describing an article in a tariff Schedule, one principle which is fairly well settled is that those words and expressions should be construed in the sense in which they are understood in the trade by the dealer and the consumer. The reason is that it is they who are concerned with it, and, it is the sense in which they understand it which constitutes the definitive index of legislative intention."
13.Stated briefly, we should understand, the expression occurring in Item 18 of the Act, in the sense, in which the persons who deal in such goods understand it normally."
14.Similarly, the Court will have to give a greater importance to the list prepared by the Government in particularly in view of the fact that a scheme was introduced only by way of a concession and the Government is the best person to interpret it properly. In this connection, the is useful to refer the judgment of the Hon'ble Apex Court reported in 2007 (217) E.L.T. 481 [STATE OF ANDHRA PRADESH v. CONCAP CAPACITORS] has observed as follows:
20.The High Court, in our opinion, was right in observing that when the Electronic Commission had prepared a list which contained the item 'Capacitors', it had to be accepted by the Revenue and tax can be levied only on the basis of such classification. The High Court was, therefore, right when it stated:
"The contention of the learned counsel for the petitioners is that when the Government has issued classificatory memo with reference to G.O.Ms.Nos.520 and 521, adopting the list prepared by the Electronics Commission for the purpose of concessional rate of tax as electronic items or electronic components, the same holds good even for the subsequent notifications, as there was no material variation in the contents of the subsequent Government Orders except variation in the rate of tax.
But, on the other hand, the contention of the department is that unless a particular item operates on electronic principle the same would not be considered as "electronic goods" or component for the purpose of concessional rate of tax. We are unable to accept the said contention of the Revenue on the first principle. If a particular item of goods or component, part or material is not specified in the list either in the Government Order or in the list of electronic items that are prepared by the Electronics Commission, then only the question would arise for consideration whether a particular item can be treated as an electronic goods or component or material, depending upon its operating principle, but not otherwise.
Admittedly, the list of electronic items prepared by the Electronics Commission shows that there are as many as 16 sub-headings under which various items that are listed or specified. In the present case, we are concerned with "plastic film capacitors". The said item finds place under the sub-heading "electronic components". In the list of items prepared by the Electronics Commission the plastic film capacitors is specified at 13.39. Similarly, there are other capacitors such as paper capacitors at 13.38, ceramic capacitors at 13.42, and mica capacitors at 13.43. Therefore, it is clear that the item in question is clearly specified as one of the electronic items contained in the list prepared by the Electronics Commission. In fact, when similar issue came up for consideration before this Court in Amara Raja Batteries, [1998] 111 STC 664, while considering G.O.Ms.Nos.520 and 521, referred and relied upon the list prepared by the Electronics Commission as was ordered to be adopted by the Government by its memo dated June 1, 1989. As batteries, which fell for consideration, was found under item 13.93, the division Bench accepted the claim of the assessee and upheld the decision of the Tribunal where the Tribunal allowed the claim of the assessee treating the batteries as electronic component. But, however, this decision was distinguished by the Tribunal in the impugned orders on unsustainable grounds".(emphasis supplied)
21.To us, the High Court was also right in indicating that when the item has been specifically included in the list prepared by Electronic Commission, the Tribunal could not have applied 'functional test' 'operating principle' or 'user test'. A limited inquiry which was required to be made by the Tribunal was whether the item had been included in the list prepared by the Electronic Commission. If any item is included in the said list, it has to be treated as such and tax has to be levied on that basis. But if the item is not included in the list, it is open to the Tribunal to consider its placement on the basis of 'functional test' as to whether such item could be said to be 'electronic goods'. The item 'Capacitors' has been expressly included in the list prepared by the Electronic Commission and hence it was not open to the Tribunal to apply 'operating principle' or 'user test' and the High Court was wholly justified in interfering with the order passed by the Tribunal."
15.The Division Bench of the Kerala High Court reported in (2005) 139 STC 504 [SOUTHERN GAS LTD. v. STATE OF KERALA] has held as follows:
"14.The goods must be classified according to their popular meaning or as they are understood in their commercial sense and not as per the scientific or technical meaning. How the product is identified by the class or sections of people dealing with or using the product is also a test when the statute itself does not contain any definition and commercial parlance would assume importance when the goods are marketable. These principles are well-settled by the decisions of the Supreme Court in Dunlop India Ltd. v. Union of India AIR 1977 SC 597, Indo International Industries v. Commissioner of Sales Tax [1981] 47 STC 359, P.A.Thillai Chidambara Nadar v. Additional Appellate Assistant Commissioner [1985] 60 STC 80 and Chiranjit Lal Anand v. State of Assam [1985] 60 STC 89. The dictionary meaning of a word can be looked into where the word has not been statutorily defined or judicially interpreted to ascertain the meaning of a word in common parlance bearing in mind that a word is used in different senses according to its context and the court has to select the particular meaning which is relevant to the context in which it has to interpret the word. State of Orissa v. Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213 (SC); AIR 1985 SC 1293.
15.There is no definition of the word "medicine" in the Act nor any judicial interpretation given to the said word was brought to our notice. Black's Law Dictionary defined the word "medicine" thus:
"Medicine.- The science and art dealing with the prevention, cure and alleviation of diseases; in a narrower sense that part of the science and art of restoring and preserving health which is the province of the physician as distinguished from the surgeon and obstetrician. Bruke v. Kansas State Osteopathic Ass'n., C.C.A. Kan, 111 F.2d 250, 253. The term is not limited to substances supposed to possess curative or remedial properties. People v. Kabana 32 III APP. 158, 52 N.E. 2D 320."
Mitra's Legal and Commercial Dictionary by A.N.Saha gives the meaning the word "medicine" thus:
"Medicine" or "drug" includes-
(i) all medicines for internal or external use of human beings or animals,
(ii) all substances, intended to be used for or in the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals,
(iii) all substances intended to be used for or in the maintenance of public health, or the prevention or control of any epidemic disease among human beings or animals,
(iv) insecticides, germicides, fungicides, weedicides and all other substances intended to be used for the protection or preservation of plants.
(v) all chemical substances which are ordinarily used as intermediates in the preparation or manufacture of any of the medicines or substances above referred to. Patents Act, 1970,
section 2(1)."
A Dictionary of Modern Legal Usage by Bryan A.Garner defined the word "Medicine" as follows:
" 'Medicine', 'medication' 'medicament' Medication has traditionally meant ' the action of treating medically', but, through SLIPHOD EXTENSION, has recently come to mean 'a medical substance medicament' a sense that careful writers avoid. Medicament (= a substance taken internally or used externally in curative treatment) are synonymous with the loose meaning of medication."
The Concise Oxford Dictionary of Current English, Fifth Edition defines the word "Medicine" as follows:
"Art of restoring and preserving health, especially by means of remedial substances and regulation of diet, etc., ........ one taken internally.........,"
Collins Cobuild English Dictionary for Advanced Learners, Major New Edition, defined the word "Medicine" thus:
"Medicine is the treatment of illness and injuries by doctors and nurses ; is a substances that you drink or swallow in order to cure an illness."
16.The common user of the gases in question is also relevant in applying the common parlance theory. In the instant case, as already noted, the assessee, who is the manufacturer of "medical oxygen" and "nitrous oxide", has clearly stated that these two items are manufactured only for the use in hospitals and that the dominant user of these two items are only as medicines. There is also a well-known test to be applied in interpreting the entry, which is the functional test. There is no dispute that "medical oxygen" is used for administering it on patients. Similarly, the function of "nitrous oxide" is to act as an anesthetic agent. Thus, going by the user test and the functional test, it is evident that "medical oxygen" and "nitrous oxide" are served as medicines."
16.In the said case, it was observed that the "Medical Oxygen" being a medicine it has to be assessed as a special item and not a general one. This Court is of the view that the ratio laid down therein is applicable to the present case as well.
17.The Hon'ble Supreme Court in the judgment reported in AIR 1973 SC 194 [V.V.IYER v. JASJIT SINGH] has held as follows:
"10.In view of these two decisions of this Court which are binding on us, we have no manner of doubt that the High Court of Bombay was quite right in accepting the conclusions and findings of the Customs authorities about the proper scope of Item 74 (vi) of the I.T.C. Schedule. In our opinion, there is nothing in the decision of the Collector which can warrant its condemnation as perverse or unreasonable. Even if it be assumed that because of the language used in the two items viz., Items 74 (vi) and 74 (x) of the I.T.C. Schedule, there is some room for confusion, it would not be competent for the High Court to interfere in a writ petition with the conclusion or finding of the Collector of Customs regarding the scope and ambit of those items."
18.A reading of the judgment impugned would show that the second respondent has taken into consideration of the relevant materials available on record and decided the same. The decision has been rendered by the respondents earlier based upon the decision made at the Headquarters Classification Committee. When such a decision is made by a Committee which is competent to go into the same, this Court cannot act as an Appellate Authority and adjudicate upon the same. In the judgment reported in 2009 (238) E.L.T. 230 [ASSTT. COMMR. OF C.EX., TIRUCHIRAPALLI v. INDIAN HUME PIPE CO. LTD.] the Hon'ble Division Bench of this Court was pleased to hold that while exercising the extraordinary and discretionary jurisdiction under
Article 226 of the Constitution of India, the High Court cannot act as an Appellate Authority in the absence of any mistake apparent on the face of the record.
19.Therefore taking into consideration of the above said factual and legal position, this Court is of the considered view that the writ petition is liable to be dismissed and accordingly, the same is dismissed. No costs.
sri To
1.Union of India The Secretary Ministry of Commerce Department of Commerce Parliament Street, New Delhi.
2.Additional Director General of Foreign Trade Directorate General of Foreign Trade Udyog Bhavan New Delhi 110 011.
3.The Joint Director General of Foreign Trade 197, Peters Road Royapettah, Madras 600 014