http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

CASE NO.: Appeal (civil)  4502-4503 of 1998

PETITIONER: Collector of Central Excise, Calcutta

RESPONDENT: M/s Alnoori Tobacco Products and Anr.

DATE OF JUDGMENT: 21/07/2004

BENCH: S.N. VARIAVA & ARIJIT PASAYAT.

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT, J

       These appeals are directed against the common judgment of the  Customs, Excise and Gold (Control) Appellate Tribunal, Eastern Branch,  Calcutta  (in short the ’CEGAT’) which is being assailed by the  Central Excise authorities. By the impugned judgment, CEGAT held that  tobacco powder obtained by crushing of tobacco leaves, stems, stalks  and butts are classifiable under tariff sub-heading 2401.00 as un- manufactured tobacco and not classifiable as manufactured tobacco  under sub-heading 2404.90 of the Schedule to the Central Excise Tariff  Act, 1985 (in short the ’Tariff Act’).

       Background facts in a nutshell are as follows:

       The respondents are having licence under the Central Excise and  Salt Act, 1944 (in short the ’Act’).  They are engaged in manufacture  of ’Gul’. While scrutinizing the records, the Assistant Collector of  Central Excise, Barrackpore Division, Calcutta noticed that during the  period from 1.2.90 to 31.7.90 manufactured tobacco powder/dust fall  under sub-heading 2404.90 of the schedule to the  ’Tariff Act’.  He  felt that without any justifiable reason, duty involving Rs.8,871.65  (both basic and special) was not paid, statutory records were not  maintained, thereby contravening provisions of Rules 174, 9(1), 52,  52A, 54 and 226 of the Central Excise Rules, 1944 (in short the  ’Rules’).  Show cause notice was issued on 30.1.1991 proposing to levy  the demand from 1.8.90 to 31.12.1990.  Similarly show cause notices  were also issued for the demands for the period from 1.1.1991 to  31.5.1991 and from 1.6.1991 to 24.7.1991.   

         The Superintendent of Central Excise of the concerned Range  issued show cause cum demand notice.  After hearing the respondents  the Assistant Collector held that tobacco powder/dust emerging by  crushing of un-manufactured tobacco leaves is a distinct product  having distinct name and character and fall under sub-heading 2404.90.  The demands were confirmed.  

        Appeals were preferred before the Collector of Central Excise  (Appeals), Calcutta along with an application for stay. The stay  application was rejected by the Collector (Appeals) holding that no  case for stay of realization of duty demanded was made out. Since the  stay order was not complied with by depositing the amount of duty  demanded, the appeals were dismissed for non compliance of Section  35(F) of the Act. Similar was the position in respect of demands  raised against both the  respondents.  

       The respondents preferred appeals before the CEGAT. As noted

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

above, the CEGAT was of the view that the issue involved related to  the tariff sub-heading applicable to the product.   

The respondents who were appellants before the CEGAT submitted  that the issue stood decided in view of the decisions rendered in two  cases, i.e., Sree Biswa Vijaya Industries vs. C.C.E. Bhubneshwar (1997  (96) ELT 712 (Tribunal) and Shamsuddin Akbar Khan & Co. vs.  Commissioner of Central Excise, BBSR  (Order  no. A-888/Cal/97 dt.  29.7.1997).

Learned counsel appearing for the Central Excise authorities  submitted that in Shree Chand Agarwal v. Collector of Central Excise   (1990 (48) ELT 115  (Tribunal) it was categorically held that tobacco  powder in various forms and combinations falls in the manufactured  category and therefore tobacco powder is classifiable under tariff  sub-heading 2404.90. The Tribunal noted that issue in Shree Chand’s  case (supra) related to classification of tobacco dust and not of  tobacco powder and what was stated in paragraph 16 in the said case  was not a binding precedent and was  merely in the nature of obiter  dictum. However, it held that other two decisions relied upon by the  present respondents were directly in issue. Accordingly, the appeals  were allowed.  

       Learned counsel appearing for the appellant submitted that  the only question that the CEGAT could have decided related to the  propriety of dismissal of the appeals by the Collector (Appeals) when  there was non compliance of the order in terms of Section 35(F) of the  Act.  It could not have gone into the merits. Even otherwise when  there is a categorical finding recorded by the adjudicating authority  that the tobacco powder was a different commercial commodity and an  article having distinct name and character, this factual finding could  not have been disturbed by the CEGAT without any material to the  contrary. The decisions in the two cases relied upon by the CEGAT were  based on different factual premises.  

       In response, learned counsel for the respondents submitted  that the factual position was identical and, therefore, the CEGAT was  justified in placing reliance on the two decisions referred to above  and to hold that tobacco powder was not a different product from  tobacco leaves.

       It is undisputed that the First appeals filed by the present  respondents were dismissed on the ground of non compliance with the  requirements of Section 35(F) of the Act.  The CEGAT should have  primarily considered that aspect. No finding has been recorded by the  CEGAT.  Additionally, we find that unlike the two cases relied upon by  the CEGAT there was a categorical finding recorded on facts by the  adjudicating authority that the tobacco powder obtained by crushing of  un-manufactured tobacco leaves is a different commercial product  having a distinct name and character.  In the cases relied upon by the  CEGAT it was categorically noticed that there was no material placed  by the Central Excise authorities to show that a different commercial  product had come into existence.   

Courts should not place reliance on decisions without discussing  as to how the factual situation fits in with the fact situation of the  decision on which reliance is placed. Observations of Courts are  neither to be read as Euclid’s theorems nor as provisions of the  statute and that too taken out of their context. These observations  must be read in the context in which they appear to have been stated.  Judgments of Courts are not to be construed as statutes. To interpret  words, phrases and provisions of a statute, it may become necessary  for judges to embark into lengthy discussions but the discussion is  meant to explain and not to define. Judges interpret statutes, they do  not interpret judgments. They interpret words of statutes; their words

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

are not to be interpreted as statutes. In London Graving Dock Co. Ltd.  V. Horton (1951 AC 737 at p.761), Lord Mac Dermot observed:

       "The matter cannot, of course, be  settled merely by treating the ipsissima  vertra of Willes, J as though they were  part of an Act of Parliament and  applying the rules of interpretation  appropriate thereto. This is not to  detract from the great weight to be  given to the language actually used by  that most distinguished judge."

       In Home Office v. Dorset Yacht Co. (1970 (2) All ER 294) Lord  Reid said, "Lord Atkin’s speech.....is not to be treated as if it was  a statute definition It will require qualification in new  circumstances." Megarry, J in (1971) 1 WLR 1062 observed: "One must  not, of course, construe even a reserved judgment of  Russell L.J. as  if it were an Act of Parliament." And, in Herrington v. British  Railways Board (1972 (2) WLR 537) Lord Morris said:

       "There is always peril in treating  the words of a speech or judgment as  though they are words in a legislative  enactment, and it is to be remembered  that judicial utterances made in the  setting of the facts of a particular  case."

       Circumstantial flexibility, one additional or different fact may  make a world of difference between conclusions in two cases. Disposal  of cases by blindly placing reliance on a decision is not proper.  

       The following words of Lord Denning in the matter of applying  precedents have become locus classicus:

       "Each case depends on its own  facts and a close similarity between  one case and another is not enough  because even a single significant  detail may alter the entire aspect, in  deciding such cases, one should avoid  the temptation to decide cases (as  said by Cordozo) by matching the  colour of one case against the colour  of another. To decide therefore, on  which side of the line a case falls,  the broad resemblance to another case  is not at all decisive."

                               ***             ***             ***

       "Precedent should be followed  only so far as it marks the path of  justice, but you must cut the dead wood  and trim off the side branches else you  will find yourself lost in thickets and  branches. My plea is to keep the path  to justice clear of obstructions which  could impede it."   

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

In view of the undisputed position that the CEGAT did not  consider the relevant aspects and proceeded to decide the appeals on  merits without examining the propriety of dismissal of appeals by the  Collector (Appeals) for non compliance with the requirements of  Section 35(F) of the Act,  the impugned judgments  are unsustainable  and are set aside. We remit the matter back to the CEGAT for  adjudication afresh in accordance with law. The appeals are  accordingly disposed of with no order as to costs.