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PETITIONER: SIDDESHWARI COTTON MILLS (P) LTD.

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT17/01/1989

BENCH: VENKATACHALLIAH, M.N. (J) BENCH: VENKATACHALLIAH, M.N. (J) PATHAK, R.S. (CJ)

CITATION:  1989 AIR 1019            1989 SCR  (1) 214  1989 SCC  (2) 458        JT 1989 (1)   150  1989 SCALE  (1)101

ACT:     Central  Excises and Salt Act,  1944:  Section  2(f)(v), First Schedule Item No. 19(1) and Notification Nos. 230  and 231    of    1977-Cotton    fabric    if    subjected     to ’calendering’---Whether  ceases to be  ’unprocessed’  cotton fabric--Levy     of     excise     duty--Expression     ’any otherprocess’--Interpretation of.     Statutory  Construction:  ’Ejus dem  generis’  rule--Ap- plicability  of--Preceding  words to control and  limit  the subsequent words must rep resent a genus.

HEADNOTE:     The appellant manufactures cotton fabric on power looms. By virtue of two notifications issued under Rule 8(1) of the Central  Excise  Rules 1944 unprocessed  cotton  fabric  was exempt from excise duty as also additional duties. Since the appellant  was using the process of ’calendering’, the  Cen- tral Excise authorities held that the cotton fabric manufac- tured  by  it ceases to be "unprocessed". The  collector  of Central  Excise, directed the appellant to pay levy  on  the manufacture of the calendered cotton fabric, and also levied a penalty of Rs. 1,00,000 under Rule 173.     On  appeal,  the  Central Board of  Excise  and  Customs affirmed  the levy of duty, but set aside the imposition  of penalty.  The appellant preferred an appeal before the  Cus- toms,  Excise  and Gold (Control)  Appellate  Tribunal.  The Tribunal held that calendering is a finishing process and it was  not  necessary for the process of calendering to  be  a process which belonged to the same genus as those enumerated in Sec. 2(f)(v) to take the cotton fabric out of the  exemp- tion.  It  would  be sufficient that  of  calendering  is  a "process"  of cotton fabric even if it does not  partake  of the other processes specifically enumerated in the preceding expression  in section 2(j)(v)2. In that view of the  matter the Tribunal 215 dismissed the appeal preferred by the appellant.     This  appeal  under Sec. 35L of the Act is  against  the Tribunal’s Order.     On  behalf  of  the appellant,  it  was  contended  that "plaincalendering"  process  neither adds  anything  to  the

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cotton fabric nor the effect brought about by it is lasting; it  was purely a temporary finish and that having regard  to the  nature  of the process it is plainly manifest  that  it does not impart to the fabric either of the two  ingredients necessary to bring the process into the family of  processes envisaged by the preceding expressions in Sec. 2(f)(v).     On behalf of the Revenue it was submitted that since the Tribunal  had  not  specifically examined  this  aspect  and recorded  its  finding thereon, it would be  appropriate  to remit the matter to the Tribunal.     Allowing  the  appeal, and remitting the matter  to  the Appellate Tribunal for a fresh disposal, the Court,     HELD: 1. The expression ejus dem generis---’of the  same kind  or  nature’--signifies  a  principle  of  construction whereby words in a statute which are otherwise wide but  are associated  in  the  text with more limited  words  are,  by implication, given a restricted operation and are limited to matters of the same class are genus as preceding them. If  a list  or  string  or family of  genus-describing  terms  are followed  by wider or residuary or sweeping-up  words,  then the  verbal context and the linguistic implications  of  the preceding  words  limit  the scope of such  words.  But  the preceding words or expressions of restricted meaning must be susceptible of the import that they represent a class. If no class  can be found, ejus-dem-generis rule is not  attracted and  such  broad construction as the  subsequent  words  may admit will be favoured. [220F; 221A-B]     S.S. Magnhild (owners) v. Mc Intvre Bros. & Co.,  [1920] 3 KB 321; Tribhuban Parkash Nayyar v. Union of India, [1970] 216 2 SCR 732 and U.P.S.E. Board v. Hari Shankar, AIR 1979 SC 65 relied on.     Statutory  Interpretation  by  Rupert  Cross;  Statutory Construction by Francis Bennian, relied on.     2.  The  definition of "manufacture" obtaining  in  Sec. 2(f) of the Central Excise Act was amended by Act 5 of  1986 giving it an extended meaning. [220A]     Empire Industries v. Union of India, [1985] Suppl. 1 SCR 292 relied on.     3.  In  the  present case  the  expressions  ’bleaching, mercerising, dyeing,  printing, water-proofing, rubberising, shrink-proofing,  organdie  processing’ which  precedes  the expression  ’or  any other  process’  contemplate  processes which  impart a change of a lasting character to the  fabric by  either the addition of some chemical into the fabric  or otherwise.  ’Any other process’ in the section  must,  share one  or  the other of these incidents. The  expression  "any other  process" is used in the context of  what  constitutes manufacture  in  its  extended meaning  and  the  expression "unprocessed" in the exempting notification draws its  mean- ing from that context. [222G-H; 223A]

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2 147  of 1984.     From  the  Judgment and Order dated 16.3.  1984  of  the Customs,  Excise and Gold (Control) Appellate Tribunal,  New Delhi  in Appeal No. ED(SB) No. 425/82-C (Order No. 15 1  of 1984).     Soli. J. Sorabjee, M.A. Rangaswamy and Ms. Radha Rangas- wamy for the Appellant.     A.K.  Ganguli, K. Swami and C.V. Subba Rao for  the  Re- spondents.

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The Judgment of the Court was delivered by 217     VENKATACHALIAH J. This appeal under Section 35-L of  the Central Excise and Salt Act, 1944, (ACT) by Messrs  Siddesh- wari Cotton Mills (P) Ltd., preferred against the  appellate order  dated  16.3.1984,  of the Customs,  Excise  and  Gold (Control)  Appellate  Tribunal, New Delhi,  raises  a  short question  whether the appellant, which  manufactures  cotton fabric on power looms which is otherwise exempt from  duties of  excise and the additional duties of excise  respectively under  Notification No. 230/77 and 231/77  dated  15.7.1977, looses the benefit of exemption by process of  ’calendering’ on a calendering plant situated in the appellant’s premises.     The  Notification 230/77. CE dated 15.7.1977  issued  by Central  Government  under Rule 8(1) of the  Central  Excise Rules,  1944, exempts from the whole of the duty of  Excise, ’unprocessed’  cottonfabric, falling under sub-item  (1)  of item  No.  19  of the First Schedule to the  Act,  which  is manufactured on power looms (without spinning or  processing plants)  installed  and worked with the  permission  of  the Textile Commissioner. Likewise, Notification No. 231/77.  CE dated  15.7.1977 exempts such cotton fabric from payment  of the additional duties of excise.     2.  The question in the appeal is whether  such  cotton- fabric  ceases  to be "unprocessed" cotton-fabric if  it  is subjected  to  calendering.  The Tribunal has  held  in  the affirmative  and has upheld the levy of duty imposed on  the appellant.     We  have  heard  Sri Soli J.  Sorabjee,  learned  Senior Counsel  for  the appellant and Sri  A,K.  Ganguly,  learned Senior Counsel for the Revenue.     3.  The  facts which are not in dispute may  briefly  be stated.  The  Central Excise authorities held  appellant  to have  contravened  the provisions of the relevant  rules  by manufacturing   and   removing,  between  14.5.   1981   and 19.9.1981.6,09,848.47 Sq. Metres of calendered  cottonfabric falling under item 19-l(b) of the First Schedule to the  Act without payment of Rs.2,62,767.04 leviable thereon as excise duty.  The Collector of Central Excise,  Calcutta,  directed the  appellant to pay the said duty and also imposed on  the appellant  a penalty of Rs. 1,00,000 under rule  173-Q.  The Central  Board  of Excise and Customs, by  its  order  dated 24.8.1982, partly allowed the appellant’s appeal and while 218 affirming  the  levy  of the duty, however,  set  aside  the imposition  of  the penalty. The further appeal  before  the Appellate-Tribunal  preferred by the appellant  against  the confirmation  of the levy and the duty came to be  dismissed by the Tribunal’s order dated 16.3.1984 now under appeal.     4.  Before the Appellate Tribunal it was  contended  for the appellant that the process of plain-calendering to which the cotton fabric was subjected, though might, in itself, be a  process  in the larger and general sense  of  that  term, would  not, however, fall under "any other  process’  within the  meaning of Sec. 2(f)(v) the Act. It was contended  that even  after the calendering, the cotton-fabric  remained  an "unproceased"  cotton fabric and the expression  "any  other process" in Sec. 2(f)(v) must be considered  ejus-dem-gener- is,  so  as to partake of the nature and  character  of  the processes--and belong to the same genus--as those  envisaged in  the preceding expressions in that clause. Sec.  2(f)(v’) reads:               "in  relation to goods comprised in  Item  No.               19-I  of  the Schedule to the  Central  Excise               Tariff  Act, 1985, includes bleaching,  merce-

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             rising,   dyeing,  printing,   water-proofing,               rubberising,  shrink-proofing, organdie  proc-               essing or any other process or any one or more               of these processes;" The  Appellate Tribunal did not accept this  contention.  It held:               "   ....  There is prima facie nothing in  the               language  employed  in Section 2(f)  and  item               19-1 of the CET to suggest that the words "any               other  process"  will take within  sweep  only               such  processes  as are of the same  class  or               genus as the specifically enumerated  process-               es. It may be that for the enumerated process-               es some extreneous substance may be  required.               That, however, would’not make the processes  a               class. They enumerated processes from a  group               of  disparate  and  dissimilar  processes  for               example,  bleaching and rubberising or  dyeing               and  organdie  processing.  Sigficantly,  what               follows  the  enumerated  process  is  not  an               expression like "any other like process or any               such  process",  in  which case  it  could  be               argued that the non-enumerated process  should               of the same genus or class as the enumera-               219               ted ones......."                "   .....  Admittedly, calendering is a  fin-               ishing process. The machine employed may be  a               simple or complex one. The effect ought to  be               brought  about  may be simple  or  not.  That,               however,  would not mean that  calendering  is               not  a process. In fact, from the sample  pro-               duced by the appellants before us it was  seen               that the appellants had stamped cotton  sarees               as  calendered. It was stated before  us  that               the  sarees  were sold  as  calendered.  Saree               calendering will thus fail within the ambit of               the  expression "any other process"  occurring               in Section 2(f) and Item 19-I CET particularly               when  sub-item  (b) of Item 19-1  is  read  in               juxta position with sub-item (a) which  covers               cotton fabrics not subjected to any process."     5.  In this view of the matter; the  Appellate  Tribunal did  not  accept the contention  that  though  "calendering" might be a "process", it is not any ’process’ that satisfies the  requirement  of "any other process" occurring  in  sec. 2(f)(v),  but only those processes that partake of the  same common  characteristic  of and belong to same genus  as  the processes such as bleaching, mercerising, dyeing,  printing, waterproofing,  rubberising, shrink-proofing,  or  organdie- processing occurring in Section 2(f)(v).     The  Appellate Tribunal held that it was  not  necessary for the "process" ,--process of calendering in’ the  present case--to  be  a process which belongs to the same  genus  as those  enumerated in sec. 2(f)(v) to take the  cotton-fabric out of the exemption and that it would be sufficient that if calendering is a "process" of cotton fabric even if it  does not partake of the other processing specifically  enumerated in the preceding expressions in Section 2(f)(v).  According- ly, the Appellate Tribunal did not specifically examine  the alternative  position whether the process of calendering  of the type and kind adopted by the appellant really shared the common  element  or characteristic possessed  by  the  other processes specifically enumerated. Therefore, if it is to be held that the expression "any other process" in Sec. 2(f)(v)

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must be understood and construed ejus-dem-generis, then  the question  whether the "process" of calendering  employed  in the present case belongs to the same genus as the  processes envisaged in the preceding expressions in the section  would have to be examined afresh. 220     6.  The  definition of "manufacture" obtaining  in  Sec. 2(f)  of the Act was amended by Act 5 of 1986 giving  it  an extended  meaning.  In  repelling the  contention  that  the extended meaning was introduced as an artificial concept  of "manufacture"  not  belonging to, but outside, Entry  84  of List  1  of the Seventh Schedule to the  Constitution,  this Court in Empire Industries v. Union of India, [1985]  Suppl. 1 SCR 292 held:               "As  has  been noted, processes  of  the  type               which  have been incorporated by the  impugned               Act  were not so alien or foreign to the  con-               cept  of  "manufacture" that these  could  not               come within that concept."                                                      (p.323)     If, accordingly, the processes such as bleaching, merce- rising,  dyeing,  printing,   water-proofing,   rubberising, shrink-proofing,  organdie-processing, are not unrelated  to the concept of manufacture and bring .about such a change in the  cotton-fabric as to render it a commercially  different product, then by parity of reasoning, "any other process" in Sec.  2(f)(v) which is a part of the scheme of the  extended meaning of "manufacture" must also share the same character- istic  of  those other expression. That apart, even  if  the amendment  is beyond Entry 84 of List 1 and  is  supportable under or referrable to the residuary Entry 97 of List 1,  on the principles of construction appropriate to the  provision in  Sec.  2(f)(v), is "any other process" in  Sec.  2(f)(v), though otherwise of wide import, must share the characteris- tics of and be limited by the preceding expressions.     7. The expression ejus-dem-generis, ’of the same kind or nature’--signifies a principle of construction whereby words in a statute which are otherwise wide but are associated  in the test with more limited words are, by implication,  given a  restricted  operation and are limited to matters  of  the same  class  or genus as preceding. If a list or  string  or family  of genus-describing terms are followed by  wider  or residuary or sweeping-up words, then the verbal context  and the linguistic implications of the preceding words limit the scope of such words. In ’Statutory Interpretation’ Rupert Cross says:               "  ......  The draftsman must be taken to have               inserted  the general words in case  something               which  ought to have been included  among  the               specifically   enumerated   items   had   been               omitted  .....  "                        (Page               116) 221     The  principle  underlying this  approach  to  statutory construction is that the subsequent general words were  only intended  to guard against some accidental omission  in  the objects of the kind mentioned earlier and were not  intended to  extent to objects of a wholly different kind. This is  a presumption  and  operates  unless there  is  some  contrary indication.  But the preceding words or expressions  of  re- stricted meaning must be susceptible of the import that they represent a class. If no class can be found, ejus-dem-gener- is rule is not attracted and such broad construction as  the subsequent  words may admit will be favoured. As  a  learned author puts it:

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             "   .....   if a class can be found,  but  the               specific words exhaust the class, then  rejec-               tion  of the rule may be favoured because  its               adoption would make the general words unneces-               sary;  if, however, the specific words do  not               exhaust  the class, then adoption of the  rule               may  be favoured because its  rejection  would               make the specific words unnecessary."               [See: Construction of Statutes by E.A. Driedg-               er  p.95  quoted  by Francis  Bennion  in  his               Statutory Construction page 829 and 830]. Francis Bennion in his Statutory Construction observed:               "For  the ejus dem generis principle to  apply               there  must  be a sufficient indication  of  a               category  that can properly be described as  a               class  or genus, even though not specified  as               such  in the enactment. Furthermore the  genus               must be narrower than the words it is said  to               regulate. The nature of the genus is  gathered               by  implication from the express  words  which               suggest it  ....  "                                                                 [p .               830]               "     It is necessary to be able to  formulate               the  genus; for if it cannot be formulated  it               does not exist. ’Unless you can find a catego-               ry’,  said Farwell L J, ’there is no room  for               the  application of the ejus dem generis  doc-               trine’."               [p. 831]     In SS. Magnild (Owners) v. Macintyre Bros. & Co., [1920] 3 KB 321 Mc Cardie J said: 222               "So far as I can see the only test seems to be               whether the specified things which precede the               general words can be placed under some  common               category. By this I understand that the speci-               fied  things  must  possess  some  common  and               dominant feature."     In Tribhuban Parkash Nayyar v. Union of India, [1970]  2 SCR 732 the Court said:               "   .....   This rule reflects an  attempt  to               reconcile incompatibility between the specific               and general words, in view of the other  rules               of interpretation, that all words in a statute               are  given effect if possible, that a  statute               is  to  be construed as a whole  and  that  no               words  in a statute are presumed to be  super-               fluous  ....  "                                                    [p. 740]     In U.P.S.E. Board v. Hari Shanker, AIR 1979 SC 65 it was observed:               "  .....  The true scope of the rule of  "ejus               dem generis" is that words of a general nature               (following   specific  and  particular   words               should be construed as limited to things which               are of the same nature as those specified. But               the rule is one which has to be "applied  with               caution and not               pushed too far"  .....  "                                                                 [p .               73]     8. The preceding words in the statutory provision which,

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under  this  particular rule of  construction,  control  and limit  the meaning of the subsequent words must represent  a genus  or  a family which admits of a number of  species  or members.  If there is only one species it cannot supply  the idea of a genus.     In the present case the expressions bleaching, merceris- ing, dyeing, printing, water-proofing, rubberising,  shrink- proofing, organdie processing’ which precede the  expression ’or any other process’ contemplate processes which impart  a change  of a lasting character to the fabric by  either  the addition of some chemical into the fabric or otherwise. ’Any other  process’ in the section must, share one or the  other of  these incidents. The expression "any other  process"  is used  in the context of what constitutes manufacture in  its extended  meaning  and the expression "unprocessed"  in  the exempting notification draws 223 its meaning from that context. The principle of construction considered appropriate by the Tribunal in this case  appears to  us to be unsupportable in the context in which  the  ex- pression "or any other process" has to be understood.     9.  It was then contended by Sri Sorabjee  that  "plain- calendering"  process neither adds anything to  the  cotton- fabric nor the effect brought about by it is lasting. It is, according to learned counsel, nothing more than pressing the cotton-fabric by running it between plain Rollers to improve its appearance. Learned counsel submitted that it was purely a  temporary finish and that having regard to the nature  of the  process it is plainly manifest that it does not  impart to  the  fabric either of the two ingredients  necessary  to bring the process into the family of processes envisaged  by the preceding expressions in the section. Sri A.K.  Ganguly, learned  counsel for Revenue, however, submitted  that  this aspect  requires  investigation of the factual  aspects  and that since the Appellate-Tribunal had not specifically exam- ined this aspect and recorded its finding thereon, it  would be appropriate to remit the matter to the Appellate Tribunal for  a  fresh  disposal of the appeal in the  light  of  the pronouncement of this Court on the proper rule of  construc- tion  to be applied in the understanding of  the  expression "any other process" in Sec. 2(f)(v) and to consider  whether the particular process of calendering adopted by the  appel- lant  would  satisfy that requirement. We  think  we  should accept this submission of Sri Ganguly.     10.  In  the result, this appeal is allowed,  the  order under  appeal is set-aside, and the appeal No. 151  of  1984 before the Appellate Tribunal is remitted to it for a  fresh disposal  in accordance with law. There will be no order  as to costs in this appeal. G.N.                                 Appeal allowed. 224