LODHA, J. - (1.) TWO points have been urged in support of this appeal by the defendant-Union of India against the judgment and decree by the District Judge, Pali dated 27-1-1966 by which the learned Judge decreed the plaintiff-respondent's suit for Rs. 36,215. 40 paisa against the appellant by way of refund of excise duty paid by the plaintiff to the defendant-appellant on account of manufacture of yarn for the period commencing from 1-3-1961 to 30 6-1961. It has been submitted in the first instance that the yarn on which the duty has been realised is taxable as "cotton Twist" and the suit is barred by limitation. For the decision of these two points we may narrate the facts in brief giving rise to this litigation : Item No. 18-A was inserted in the First Schedule, Central Excise and Salt Act, 1944 by sec. 13 (j) of the Finance Act, 1961, which read with sec. 3 of the Central Excise and Salt Act, 1944 introduced Excise Duty on the manufacture of cotton yarn with effect from 1-3-1961. Item No. 18-A reads as follows - "18-A. Cotton Twist. Yarn and Thread. All Sorts,in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power - (1) of 35 or more counts: Fifteen naya paise per kilogram' (2) of less than 35 counts : Ten naya paise per kilogram. Explanation - For multiple fold yarn "count" means the count of the basic single yarn. " On the same day i. e. 1-3-1961 the Central Government, in exercise of the powers conferred under R. 8 (1) of the Central Excise Rules, 1944 issued Notification No. 48/1961, dated 1-3-1961 exempting cotton yarn of count exceeding 10 but not exceeding 40, if issued out of the factory in hanks from the whole of the excise duty leviable thereon. A copy of the said Notification has been placed on the record and marked Ex. 1. Another Notification dated 18-3-1961 was issued by the Central Government in supersession of its earlier Notification dated 1-3-1961 (Ex. 1) by which it exempted cotton yarn of count not exceeding forty, if issued out of the factory in hanks from the whole of the excise duty leviable thereon. This Notification has been marked Ex. 2. By a further Notification dated 1-7-1961 (marked Ex. 3) the Central Government exempted cotton yarn, " (i) Other than multiple fold yarn, whether bleached or not, and (ii) Multiple fold yarn, if unbleached, of count not exceeding forty, falling under Item No. 18-A of Act, 1944 (1 of 1944), if issued out of the factory in hanks, from the whole of the excise duty leviable thereon. " Notification Ex. 3 ofcourse has no application to the present case, but we have reproduced it as it may be of some assistance in appreciating the point in dispute between the parties.
(2.) THE only evidence placed on the record in connection with this contention is the statement of Bhawani Shankar. From side of the defendant reliance has been placed on the statement of D. W. 1 Trilokinath. THE court below has decided the point in favour of the plaintiff and held that the goods in question fell within the ambit of the term 'yarn' and not 'cotton Twist'. Learned counsel for the appellant has submitted that a multiple fold yarn is a "cotton twist," and for the purposes of the levy of Excise Duty it must be treated as "cotton Twist" and not yarn. In support of his contention he has relied upon certain definitions given in The "mercury" Dictionary of Textile Terms-compiled by the Staff of "textile Mercury" and published by Textile Mercury Limited, Manchester, England. At Page 505 of this book "twist" has been defined as under : - "twist" - Warp yarn. The number of turns per inch in yarn. The direction of twist may be either S or Z. " On the basis of this definition it is contended that a multiple fold cotton yarn constituted by a number of turns per inch in yarn is a cotton twist. We may observe straight away that there is no such term as "cotton Twist" contained in this Dictionary. However, reference may usefully be made to the following terms contained therein as they appear to have some bearing on the point at issue : "cotton - The most important of all vegetable fibres. " (Page 144) "yarn - A continuous strand of twisted fibres. whether animal, mineral, vegetable or synthetic, for use in weaving and knitting. " (Page 524) "folded Yarn - Another term for doubled yarns. Yarns may be folded to increase strength, to produce special twist effects or to produce grandrelle effects. " (Page 22b) "thread - A fine or slender cord made or two or more yarns or filaments twisted together and used for sewing pieces of material together. " (Page 496) "warp - The lengthways threads of a cloth. " (Page 515) "pick - A thread of weft placed between the warp threads in one passage of the loom shuttle through the shed. " (Page 297) "count - The number of yarns is termed the "count". The cotton system is based on 840 yards to the hank, and the number of hanks that weigh lib. (7,000 grains) equals the count. " (Page 149) There is no dispute between the parties that the yarn under consideration is multiple fold yarn, It is used for manufacturing cloth and therefore it includes both yarn used lengthways as well as the yarn placed between the lengthways, yarn of the cloth. It is, however, contended that since it is of cotton and is constituted by a number of turns per inch in yarn it is 'cotton Twist'. Here it may be relevant to point out that in the first instance there is a basic single yarn and when two single yarns are twisted they become a double-fold yarn. When more than two single yarns are twisted then they constitute a multiple-fold yarn. So far there is no dispute between the parties. However, the argument on behalf of the appellant is that the word "cotton" has not been used before the term "yarn" in Item 18a and therefore here the yarn referred to is yarn not of cotton but of other sorts e. g. silk, woollen, synthetic etc. According to the learned counsel for the appellant, therefore, a cotton yarn must come under the head "cotton Twist". In order to lend support to his argument the learned counsel has pressed in the Dictionary referred to above. In this connection we wish to point out that the word "twist" as mentioned at page 505 of the Dictionary is a technical term used in the Textile Terminology and refers to that type of yarn which is used lengthways for the manufacture of cloth. It would not be correct to say on the basis of this definition that because yarn is prepared by a continuous strand of twist fibers of cotton and therefore it is a "cotton Twist". Yarn having multiple folds does not cease to be a yarn. If a basic single yarn is called a yarn and a double yarn is also admittedly a yarn then we fail to understand how a multiple fold yarn would cease to be a yarn and should be considered as "cotton Twist". In our opinion, therefore, a multiple fold yarn of cotton is a 'yarn'. The other argument that 'yarn' occurring in this item refers to yarn other than cotton yarn is to be stated only to be rejected. Cotton yarn is sought to be brought to tax under this very item and we fail to see how it serves the interests of the appellant to say that cotton yarn is not included in Item 18-A. The conclusion to which we have come on the basis of the definitions referred to above is also supported by the statement of P. W. 2 Bhawani Shanker, a Textile Expert examined by the plaintiff. He has stated that he passed Licentiate Textile Manufacture Examination from the Victoria Jubilee Textile Institute in the year 1920 and has worked as a Spinning Superintendent in highly reputed and big Mills in Bombay for a long Period upto 1957 and has thereafter set up private practice as a Textile Consultant. He has also stated that he used to draw salary at Rs. 4000/- per month in 1957 when he gave up the job and took to private practice as a consultant. He goes on to state that he has been a Member of the Advisory Board of the Textile School of Mafatlal Gagal Bhai Group and that he was a Member of the Indian Standard Institute (Textile Section) Delhi upto 1957. No cross-examination has been directed to this witness so as to question his special knowledge and competence to the subject. He has stated that a single yarn is produced from raw cotton fibres, twisted together, and made into strand. He has further stated that when a number of single yarns are folded together it becomes a multiple-fold yarn. Such multiple fold yarn is also called ply yarn but multiple fold yarn is nevertheless a yarn. As regards the term 'twist' he has stated that twist means a number of turns put in for the manufacture of a single yarn and that twisted and multiple fold yarn are not one and the same thing. He goes on to state that there is no such commodity as "twist" in textiles nor he has come across any such commodity known as "twist" in textile literature. When asked as to what is "cotton twist", he has stated that when cotton is twisted it becomes a 'roving' (Puniya) (as it is colloquially called ). He has also stated that roving cotton is not yarn, but it is a process preparatory to yarn. We may point out here that inspite of our best efforts we were not able to lay our hands on the definition of the term "cotton twist". Ofcourse the term roving' does occur at page 431 of the Mercury Dictionary, and it has been defined as. "the product of the roving frame. An attenuated strand of fibers from which yarn is spun. " In the Oxford English Dictionary - Vol. XI, under the Heading "twist" it is mentioned inter alia as follows - "1805 East Rep. V. 175. The Battier received orders from abroad for cotton twist. " In no other standard dictionary reference has been made to any such term as "cotton Twist". However, it appears that cotton before it takes the shape of yarn goes through some process and during that process it may be called 'cotton Twist' and that is a stage from which yarn is spun. But the moment the cotton takes the shape of a yarn by a process of continuous strand of twisted fibres it ceases to be a 'cotton Twist'. We are thus inclined to accept the statement of P. W. 2 Bhawani Shanker. Unfortunately the appellant-defendant has not produced any expert to rebut the testimony of P. W. 2 Bhawani Shanker. As we have already stated above the defendant has examined D. W. 1 Triloki Nath. He has not thrown any light on the point at issue. He is an Inspector of Central Excise Department and has at no time acquired any special knowledge regarding Textiles. He has stated that when two or more than two yarns are twisted together, then it becomes a 'cotton Twist' or multiple fold yarn'. We are constrained to say that no assistance, whatsoever can be derived from the statement of this witness.
(3.) THE interpretation which we have put on the two terms, namely "cotton Twist" and 'multiple fold yarn' is further reinforced by the language of the Notification Ex. 3. It exempts cotton yarn other than multiple fold yarn whether bleached or not and also multiple yarn, if unbleached. Thus according to the language of this Notification multiple fold yarn is a species in the general category of cotton yarn. In other words multiple fold yarn is included in the term 'cotton yarn' and that is why the expression used is cotton yarn other than multiple fold yarn. The matter can be looked at, yet, from another point of view. Assuming without accepting that multiple fold yarn though a yarn can still fall within the ambit of the term "cotton Twist" then since yarn of a particular type with which we are concerned is exempted under the Notifications Ex. 1 and Ex. 2, it cannot be brought to tax even if by any stretch of imagination it can fall within the definition of the term "cotton Twist" which is taxable. In other words if an item comes under the category of exempted articles then exemption must be granted even though by a certain stretch of imagination it may fall under dutiable articles also. In this view of the matter also the exemption upheld by the court below is correct. We may state here that it is conceded by the learned counsel for the appellant that if it is held that the multiple fold yarn is a 'yarn' and not a 'cotton Twist' then the exemption upheld by the lower court cannot be called into question. This brings us to the second contention of the learned counsel, namely that the suit is barred by limitation, under sec. 40 (2) of the Central Excise and Salt Act, 1944. The admitted position is that if the period of limitation for a suit like the present is held to be six months then it is admittedly barred by time and if it is held that sec. 40 (2) has no application then the suit is admittedly within time. It is, therefore, not necessary to go into the details regarding the date of accrual of the cause of action and the date of the filation of the suit, The suit is also admittedly for the return or refund of duty alleged to have been illegally recovered. Now in order to appreciate the contention raised on behalf of the plaintiff we may reproduce S. 40 of the said Act - "40. Bar of suits and limitation of suits and other legal proceedings - (1) No suit shall lie against the Central Government or against any officer of the Government in respect of any order passed in good faith or any act in good faith done or ordered to be done under this Act. (2) No suit, prosecution, or other legal proceeding shall be instituted for any thing done or ordered to be done under this Act after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of. " ;