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PETITIONER: UNITED OFFSET PROCESS PVT. LTD.

       Vs.

RESPONDENT: ASSTT. COLLECTOR OF CUSTOMS, BOMBAY AND ORS.

DATE OF JUDGMENT14/10/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) SHETTY, K.J. (J)

CITATION:  1989 AIR  622            1988 SCR  Supl. (3) 531  1989 SCC  Supl.  (1) 131 JT 1988 (4)   198  1988 SCALE  (2)1022

ACT:     Customs  Tariff  Act: Schedule Entries  90.10,90.25  and 84.35--  Colour Scanner Chromagraph C-299--Assessability  to customs   duty--  Whether  printing  machinery--No  specific technical  definition--Meaning attributed to the  expression used by those dealing in it.

HEADNOTE:     The appellant imported Colour Scanner Chromagraph  C-299 under the Import Trade Control Policy for the year  1981-82, under the caption "printing machinery" and filed the  papers for  clearance  under Tariff Item No. 84.35.  The  Assistant Collector  assessed the goods under Tariff heading  90.25(i) and levied customs duty at the rate of 40% plus 5% auxiliary duty  plus 8% c.v.d. After payment of duty as  assessed  the goods were cleared by the appellant. Later, on the Assistant Collector  issued a notice to the appellant for recovery  of Less  Charges  Demand  amounting to  Rs.7,60,032.72  on  the ground  that  the  Colour Scanner is  assessable  under  the heading  90.10 at the rate of 100% plus 20% plus  8%  c.v.d. The  contentions of the appellant that it was used  only  in printing  industry  and  definitely not  in  photography  or cinematagraphy laboratories and that it was capable of being used  as ancillary equipment in the printing industry  only, failed  before the Assessing  Authority.  ............,,that the goods in question could not be considered such goods  as to  attract  duty under any of the Entries 84.35,  90.07  or 90.25,  and held that the only possibility left was that  of Entry 90.10 under which the goods would attract duty. In  an appeal before this Court the question involved in the matter was  as to what was the proper tariff entry under which  the goods in question fell and were as such classifiable.     Allowing  the  appeal and remanding the  matter  to  the Tribunal,this Court,     HELD: There is no specific technical definition as  such provided  in the Customs Tariff Act or in the  notification. If there is no meaning attributed to the expressions used in the particular enacted statute then the items in the customs entries should be judged and analysed on the                                                   PG NO 531                                                   PG NO 532

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basis  of  how these expressions are used in  the  trade  or industry or in the market or, in other words, how these  are dealt  with by the  people who deal in them,  provided  that there is a market for these  types of goods. This  principle is  well-known  as  classification on the  basis   of  trade parlance.   It  is  a  well-known  principle  that  if   the definition of a particular expression is not given, it  must be understood in its  popular or common sense, viz., in  the sense how that expression is used  everyday by those who use or deal with those goods. [535C-E]     In  incorporating  items in the  statutes  like  Excise, Customs  or  Sales-tax  whose primary  object  is  to  raise revenue  and  for   which  to  classify  diverse   products, articles  and  substance, resort  should be had not  to  the scientific and technical meaning of substance  but to  their popular  meaning,  viz.,  the  meaning  attached  to   these expressions by those dealing in them. [535E-F]     In  the  instant case, there is no evidence  as  to  how these  goods are dealt with in the trade or industry.  There is no technical  definition of the expressions used. In that view  of  the  matter, the true  approach  of  the  Tribunal should have been to find out to the correct  meaning of  the items,  i.e., the meaning attributed to the expression  used by those dealing with it in the trade. [536A-B]     C.I.T.   Andhra   Pradesh  v.  M/s  Taj   Mahal   Hotel, Secunderabad,  [1972] I SCR 168; King v. Planter’s  Company, [1951]  CLR  (EX.) 122; Two Hundred Chests of Tea, [1824]  6 L.ed. 128; State of West  Bengal & Ors. v. Washi Ahmed etc., [1977]  3  SCR 149; Union of India  v. Delhi  Cloth  &  Gen. Mills,  [1963] Suppl 1 SCR 586; Ramavatar   Budhaiprasad  v. Assistant S.T.O. Akola, [1962] 1 SCR 279; South Bihar  Sugar Mills Ltd. v. Union of India, [1968] 3 SCR 21 and Porritts & Spencer  (Asia) Ltd. v. State of Haryana, [1979] 1  SCC  82, referred to.

JUDGMENT:     CIVIL  APPELLATE  JURISDICTION Civil Appeal  No.2129  of 1984     From  the  Judgment  and Order dated  13.3.1984  of  the Customs  Excise and Gold (Control) Appellate  Tribunal.  New Delhi in  Appeal No. CD (SB) 153/8JB (Order No. 196/84-B).     Harish Salve Mrs. H. Wahi and Rajiv Shakdhar for the Appellant.     V.C. Mahajan C.V. Subba Rao and Arun Madan for the Respondents.                                                   PG NO 533 The Judgment of the Court was delivered by     SABYASACHI MUKHARJI, J. This is an appeal under  section 130E(b)  of the Customs Act, 1962 (hereinafter  called  ‘the Act’)  which arises from the judgment and order  dated  13th March, 1984  passed by the Customs Excise and Gold (Control) Appellate Tribunal  (hereinafter called ‘the Tribunal ). The appellant imported Colour  Scanner Chromagraph C-299) by air on  20.4.1980  The  same is allowed  to  be  imported  under Appendix 2 of the Import Policy for the year  1981-82 (under the  caption printing machinery" at 12(3) of Appendix  2  of the  Import Trade Control Policy for the year  1981-82)  The appellant filed the Bill of Entry for clearance under Tariff Item  84.35. The  Assistant Collector divided  the  imported chromograph  C-299 under 4  sub-heads in the Bill  of  Entry and  assessed the same under Tariff  heading 90.25  (i)  and levied  customs  duty thereon at the rate of  40%  plus   5% auxiliary  duty  plus 8% c.v.d. The  appellant  cleared  the

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cargo  after  payment of duty as assessed on 13  5.1980  The Assistant   Collector of Customs, thereafter, on 26th  July, 1980 sent a Less Charge  Demand for a sum of  Rs.7,60,032.72 on  the ground that Colour  Scanner is assessable under  the heading  90.10 at the rate of 100% plus  20% plus  c.v.d  at the rate of 8% as against the original assessment  under the heading  90.25 (i) and issued the said notice under  Section 28  of the Customs Act to show cause why the  amount  should not  be   recovered In reply forwarded by the  appellant  on 28.8.1980, it was  stated that the imported scanner is  used only  in  printing  industry and   definitely  not  used  in photography   or  cinematagraphy  laboratories.   It   never produces copies of any document either by photography or  by thermocopying process. The appellant s contention  was  that this colour scanner being intended to analyse the colour  of a   composite  transparency or colour  bromide  and  finally produce  four  different positives and negatives on  graphic art  films  and that the  colour scanner also  analyses  any transparency  into four basic colours viz,  yellow  magenta, black  and  blue The appellant further contended  that   the colour  scanner  imported  was  capable  of  being  used  as ancillary  equipment  in  the  printing  industry  only  The assessing  authorities,  however. as mentioned  hereinbefore did  not  accept this contention and  had  inserted  heading 90.25 (i) of the Customs Tariff Act. The  appellant-  dealer was contending that the said goods would only be  classified either  under  Entry 84.35 The Tribunal held that  the  said goods could not be classified under Entry 84.35 The Tribunal found that  the classification of the goods by the appellant under  Entry 84.35 could not be sustained if  the  catalogue submitted was analysed which  provides as follows:                                                   PG NO 534     "We present the new Chromograph 299 for all scanner  and process  camera operators, and hope to help in  snaping  the future  of  your  process operations. Let us  state  at  the outset that the Chromograph 299 does not replace the  expert operator.  But with this modern high-performance  "tool"  he can  more effectively and more economically apply his  know- how to production".     The  Tribunal  also  found in  another  portion  of  the catalogue that:     "The Chromograph 299 produce colour separations  rapidly and   reliably  without  accessory  equipment  and   without intermediate  negatives  or  colour  duplicates  This  means reduced  material  costs  and at  the  same  time  increased productivity ".     Entry  84.35 refers only to ’other  printing  machinery" The  Tribunal  was  right in holding  that  the  particulars gathered   from  the  catalogue did not  indicate  that  the machinery  in question  could be called as one ancillary  to printing. It was urged by the  appellant before the Tribunal that   in  trade  and  industry  and  in   scientific    and technological  parlance that equipment is used  in  printing industry only  There is, however, no evidence or clear proof to that effect. As  mentioned hereinbefore, the function  of the  scanner  was only to  prepare  colour  separation  sets which  might  be  useful for  printing  The   Tribunal  also considered Entry 19.07 and held that it did not apply in the instant  case  because  it was not a  camera;  much  less  a photographic   camera.  The Tribunal also  referred  to  the contention  about Entry 19.25  and on analysis came  to  the conclusion that the said goods could  not be considered such goods  as to attract duty under Entry 19.25 The Tribunal  on an  analysis  was of the opinion that the  only  possibility left  was  that of Entry 19.10 under which the  goods  would

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attract  duty .The  Tribunal was of the opinion that if  the scanner was an apparatus or  equipment used in  photographic and cinematographic laboratories then  this heading would be appropriate.  The Tribunal on an analysis of  the   evidence found  that the scanner produces colour  separation  rapidly without intermediate negative or colour duplicates. In  that view of  the matter the Tribunal was of the opinion that the machinery would  come under Entry 19.10. In this connection? the  Tribunal  also  referred  to  Notification  No.  36/81. There,  it has been stated that exemption has  been  granted for import of such machines when used in printing   industry The  exemption  was also sought on behalf of  the  appellant under Notification No 112/77. However, the Tribunal  pointed out   that  that notification would be  applicable  only  to                                                   PG NO 535 machines  attracting  duty under Entry 84.35. Further,  this notification  contemplated   "process  cameras  within   its ambit". It was conceded on behalf of the  appellant that the colour  scanner imported was not a process camera.   In  the premises,  the  Tribunal  was of the  opinion  that  it  was assessable under Entry 19.10.     The  question involved in this matter is as to  what  is the  proper tariff entry under which the goods  in  question fall  and  are  as such classifiable. There is  no  specific technical definition as  such provided in the Customs Tariff Act  or  in  the  notification.  If  there   is  no  meaning attributed to the expressions used in the particular enacted statute  then  the items in the customs  entries  should  be judged  and  analysed on the basis of how these  expressions are  used in the trade or  industry or in the market or,  in other  words,  how these are dealt with  by the  people  who deal  in  them, provided that there is a market  for   these types   of   goods.   This  principle   is   well-known   as classification  on the basis of trade parlance. This  is  an accepted  form of  construction. It is well-known  principle that  if  the definition of particular   expression  is  not given,  it  must  be understood in  its  popular  or  common sense,  viz.,  in  the sense how  that  expression  is  used everyday by those  who use or deal with those goods. See, in this  connection, the  observations of this Court in  C.I.T. Andhra Pradesh v. M/s. Taj Mahal Hotel Secunderabad,  [1972] 1  SCR  168. In incorporating items in   the  statutes  like Excise,  customs  or Sales-tax whose primary  object  is  to raise  revenue and for which to classify  diverse  products, articles   and  substance resort should be had  not  to  the scientific and technical  meaning of substance but to  their popular   meaning  viz.,  the  meaning  attached  to   these expressions  by those dealing in them See  the  observations in  King v. Planter’s Company, [1951] CLR (Ex) 122  and  Two Hundred Chests of,Tea[1824] 6 L.ed.128. In the former  case, Justice Cameron referred to the reason for the adopting  the test  of  commercial understanding in respect of the  tariff items  or an Excise  Act and observed that  the  legislature did  not  suppose  our  merchants   to  be  naturalists,  or geologists,  or botanists These principles  were adopted  by this  Court  in State of West Bengal & Ors. v.  Washi  Ahmed etc.,  [1977]  3 SCR 149. See also Union of India  v.  Delhi Cloth  &   Gen. Mills, [963] Suppl I SCR 586  and  Ramavatar Budhaiprasad v.  Assistant S.T.O., Akola, [1962] 1 SCR  279. See  also South Bihar Sugar  Mills Ltd. v. Union  of  India, [1968]  3  SCR 21. This principle was   reiterated  by  this Court  by Bhagwati, J., as the learned Chief  Justice   then was, in Porritts & Spencer (Asia) Ltd. v. State of  Haryana, [1979]1  SCC 82.                                                   PG NO 536

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   However, in the instant case, as noticed above, there is no  evidence  as to how these goods are dealt  with  in  the trade  or  industry There is no technical definition of  the expressions  used.  In   that view of  the  matter,  in  our opinion, the true approach of the  Tribunal should have been to  find  out the correct meaning of the items,   i.e.,  the meaning attributed to the expressions used by those  dealing with it  in the trade.     The  Tribunal should now find that out. In that view  of the  matter we allow the appeal, set aside the order of  the Tribunal  and   remand the matter to the Tribunal  with  the direction to find out  how these goods are dealt with by the people  who  deal  in  them after   giving  both  sides  due opportunity  of  adducing  evidence  and  then  decide   the question  according  to  this Judgment.     The appeal is disposed of accordingly. There will be  no order as to costs. R.P.D.                             Appeal allowed.