VIJAY TEXTILE Vs. UNION OF INDIA
HIGH COURT OF GUJARAT
UNION OF INDIA
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(1.) In this group of seven matters every one of the petitioners is a processor of fabrics that is task of bleaching dyeing and printing of fabrics which are already in existence is done by these processors. Three out of these petitioners are processors of art silk fabrics whereas the remaining are processors of cotton fabrics. These processors are only the owners of processing houses. They have no weaving or spinning departments. The fabric which is woven on power looms mostly is brought to them for being processed by bleaching dyeing and printing so as to make the fabric more attractive to the consumer.
(2.) The objection by these processors is to the mode of the levy of excise duty under the First Schedule to the Central Excises and Salt Act 1944 hereinafter referred to as the Act. Item 68 refers to All other goods not elsewhere specified manufactured in a factory but excluding (a) alcohol all sorts including alcoholic liquors for human consumption; (b) opium Indian hemp and other narcotic drugs narcotics; and (c) dutiable goods as defined in sec. 2(c) of the Medicinal and Toilet Preparations (Excise Duties) Act 1955 and the Explanation to Item 68 points out that in this item the expression factory has the meaning assigned to it in sec. 2(m) of the Factories Act 1948 Under sec. 2(f) of the Act manufacture includes any process incidental or ancillary to the completion of a manufactured product. Item 18-A of the Schedule to the Act refers to Cotton twist yarn and thread all sorts containing not less than nine per cent by weight of cotton calculated on the total fibre content whether sized or unsized. Item 19 of the Schedule provides for the description of goods and rates of duty. Item 19 covers cotton fabrics and is in these terms:
Cotton fabrics means all varieties of fabrics manufactured either wholly or partly from cotton and includes dhoties sarees chadders bed-sheets bed-spreads counterpanes table-cloths embroidery in the piece in strips or in motifs and fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic materials but does not include any such fabric if it contains
(i) 40 per cent or more by weight of wool;
(ii) 40 per cent or more by weight of silk;
(iii) 40 pet cent or more by weight of rayon or artificial silk or
(iv) 50 per cent or more by weight of the Jute (including Bimlipatam jute or mesta fibre):
Provided that in the case of embroidery in the piece. in strips or in motifs and fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic materials the percentages referred to in (i) to (iv) above shall be in relation to the base fabrics which are embroidered or impregnated or coated as the case may be.
Then the rates of duty are provided. Explanation I to Item 19 states:
"Base fabrics means fabrics falling under sub-item I of this item which are subjected to the process of embroidery or which are impregnated or coated with preparations of cellulose derivatives or of other plastic materials.
(3.) Sec. 3 is the charging section and says that:
"There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in or imported by land into any part of India as and at the rates set forth in the First Schedule".
By sec. 2(d) of the Act excisable goods are goods specified in the First Schedule as being subjected to a duty of excise and includes salt. It is clear when sec. 3 and sec. 2(d) are read together that if any of the goods specified in the First Schedule are manufactured or produced such manufacture or production is the excisable event on which duty of excise can be levied. If there is no production or manufacture of an excisable article or goods in the sense of goods specified in the First Schedule there cannot be any levy of excise. Art silk would fall under Item 22 which deals with man-made fabrics and the entry reads:
"Man-made fabrics means ail varieties of fabrics manufactured either wholly or partly from man-made fibres or yarn and includes embroidery in the piece in strips or in motifs and fabrics impregnated coated or laminated with preparations of cellulose derivatives or of other artificial plastic materials in each of which man-made (i) cellulosic fibre or yarn or (ii) non-cellulosic fibre or yarn predominates in weight".
It is well-known that art silk fabrics are manufactured from cellulosic fibre or yarn and therefore the entry would cover art silk of the type under Item 22. It is to be noticed that so far as embroidery in piece and strips or motifs is concerned and fabrics impregnated or coated or laminated with preparations of collulosic derivatives or other artificial plastic materials are concerned both as regards cotton fabrics as well as manmade fabrics the description is the same both under Item 19 and 22 arid in each of those two cases the Legislature has taken special care to point out that fabrics whether man-made cotton on which embroidery in piece or strips or motifs is worked out when they are impregnated coated or laminated with preparations of collulosic derivatives or other plastic materials they are deemed to be cotton fabrics if the base fabric is cotton and man-made fabric if the base fabric is man-made fabric. The whole argument before us turns upon the question whether grey cloth in the case of cotton fabrics which comes out from the production by power looms or other weaving textile mills which have no processing houses of their own and which is processed by independent processors can be said to be a newly manufactured cotton fabric or man-made fabric as the case may be when i. is processed by the processing house either by bleaching dyeing or printing carried out in the processing house. It is undoubtedly true that in the case of cotton fabrics cotton fabrics mean all varieties of fabrics manufactured from cotton and similarly under Item 11 man-made fabric means all varieties of fabrics manufactured either wholly or partly from man-made fibres or yarn. As to what exactly is meant by fabric we have now the recent decision of the Supreme Court in Porritts & Spencer v. State of Haryana Civil Appeal No. 2212 of 1977 decided by the Supreme Court on September 6 1978 The question before the Supreme Court in that case was whether dryer felts manufactured by the assessee in that case fell within the category of all varieties of cotton woollen and silken fabrics as specified in Item 13 of Schedule B to the Punjab General Sales Tax Act 1948 While dealing with this question the Supreme Court pointed out that the word textiles is not defined in the Act but it is well-settled as a result of several decisions of the Supreme Court which were mentioned in the judgment that in a taxing statute words of everyday use must be construed not in their scientific or technical sense but in the sense as understood in common parlance. It was also pointed out that the word textiles is derived from the Latin texere which means to weave and it means any woven fabrics. When yarn whether cotton silken woollen rayon nylon or of any other description or made out of any other material is woven into a fabric what comes into being is a textile and it is known as such. It may be cotton textile silk textile woollen textile rayon textile nylon textile or any other kind of textile. The method of weaving adopted may be the warp and woof pattern as is generally the case in most of the textiles or it may be any other process or technique. There is such phenomenal advance in science and technology so wondrous is the variety of fabrics manufactured from materials hitherto unknown or unthought of and so many are the new techniques for making fabrics out of yarn that it would be most unwise to confine the weaving process to the warp and woof pattern. Whatever be the mode of weaving employed woven fabric would be textile. What is necessary is no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric. In the course of the same judgment it was pointed out: But here the word textiles is not sought by the assessee to be given a scientific or technical meaning in preference to its popular meaning. It has only one meaning namely a woven fabric and that is the meaning which it bears in ordinary parlance.;
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