Tag Archives: Product

Taxing Statute – Interpretation of a Word

The principle of statutory interpretation with regard to a word in taxing statutes are well established. In Porritts & Spencer (Asia) Ltd. v. State of Haryana, (1979) 1 SCC 82, it was laid down as under:
“Where a word has a scientific or technical meaning and also an ordinary meaning according to common parlance, it is in the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the Legislature.”
In Union of India v. Delhi Cloth & General Mills Co. Ltd., AIR 1963 SC 791, the question arose as to how the term “refined oil” occurring in tariff was to be construed. There was no competition between the tariff entry with any other, nor was there any need to reconcile and harmonise the said entry with any other provision of the tariff. The Court, therefore, considered the term “refined oil” by applying the commercial meaning or trade nomenclature test and held that only deodorized oil can be considered to be refined oil. The court also referred to the specification of “refined oil” by the Indian Standards Institution and held that:
“This specification by the Indian Standards Institution furnishes very strong and indeed almost incontrovertible support for Dr. Nanji’s view and the respondents’ contention that without deodorization the oil is not “refined oil” as is known to the consumers and the commercial community.”
In Grenfell v. IRC, (1876) LR 1 EX D 242 (DC) it was observed:
“that if a statute contains language which is capable of being construed in a popular sense such statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning of course, by the words “popular sense”, that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it. But if a word in its popular sense and read in an ordinary way is capable of two constructions, it is wise to adopt such a construction as is based on the assumption that Parliament merely intended to give so much power as was necessary for carrying out the objects of the Act and not to give any unnecessary powers. In other words, the construction of the words is to be adopted to the fitness of the matter of the Statute.”
In Holt & Company v. Collyer, it was held thus:
“If it is a word which is of a technical or scientific character then it must be construed according to that which is its primary meaning, namely, its technical or scientific meaning.”
The Court in K.V. Varkey v. STO, AIR 1956 TC 105 specifically declined to apply the popular or commercial meaning of “Tea” occurring in the sales tax statute holding that the context of the statute required that the technical meaning of “a product of plant life” required to be applied and therefore green tea leaves were tea even though they might not be tea as is known in the market. Parle Agro Private Ltd. v. Commissioner of Commercial Taxes, (2017) 7 SCC 540.

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Copywriting in an advertisement—Is an Art

What is relevant is not the literal meaning of a phrase; rather it’s impact on the consumer and if the impact tends to create humorous or hyperbolic impact and is not likely to be understood as making literal or misleading claims, the same will be permissible. Writing copy in an advertisement is an art and a copy writer will have thus, the freedom to express his own view and he will also have freedom of depicting the product in a manner which might, at the first sight appear to be obvious untruth and exaggeration, however, it’s final impact on the reader/consumer is humorous. Such an expression may sound as an obvious untruth or an exaggeration, however, if it ultimately causes an impact on the reader/consumer which is humorous or hyperbolic, the expression would be within the Advertising Code. Aditya Kumar Jha v. Union of India, 2017 (121) ALR 66.

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Marketability – A decisive test for dutiability

In APSEB v. CCE, (1994) 2 SCC 428, it was held thus:
“marketability is an essential ingredient in order to be dutiable under the Schedule to the Act.”
The marketability is thus essentially a question of fact to be decided on the facts of each case. There can be no generalization.
Marketability is a decisive test for dutiability. It only means ‘saleable’ or ‘suitable for sale’. It need not be in fact ‘marketed’. The article should be capable of being sold or being sold, to the consumers in the market, as it is – without anything more.
In Moti Laminates (P) Ltd. v. CCE, (1995) 3 SCC 23 the court held that an intermediate product, namely, resols, not being marketable would not be exigible to duty. The court held:
“Although the duty of excise is on manufacture or production of the goods, but the entire concept of bringing out new commodity etc, is linked with marketability. An article does not become goods in common parlance unless by production or manufacture something new and different is brought out which can be bought and sold. In Union of India v. Delhi Cloth and General Mills Co. Ltd., (1977) 1 ELT 199, while construing the word ‘goods’, it was held as under:
“These definitions make it clear that to become “goods” an article must be something which can ordinarily come to the market to be bought and sold”. Therefore, any goods to attract excise duty must satisfy the test of marketability. The tariff schedule by placing the goods in specific and general category does not alter the basic structure of leviability. The duty is attracted not because an article is covered in any of the items or it falls in residuary category but it must further have been produced or manufactured and it is capable of being bought and sold.”
In Union of India v. Sonic Electrochem (P) Ltd., (2002) 7 SCC 435, the question whether the plastic body of electro mosquito repellant was excisable goods was decided thus:
“The germane question is whether it has marketability. The plastic body is being manufactured to suit the requirements of EMR of the respondents and is not available in the market for being bought and sold. It is not a standardized item or goods known and generally dealt with in the market. It is being manufactured by the respondents for its captive consumption. It is not a product known in the market with any commercial name.
Marketability of goods has certain attributes. The essence of marketability is neither in the form nor in the shape or condition in which the manufactured articles are to be found, it is the commercial identity of the articles known to the market for being bought and sold. The fact that the product in question is generally not being bought and sold or has no demand in the market would be irrelevant. The plastic body of EMR does not satisfy the aforementioned criteria. There are some competing manufacturers of EMR. Each is having a different plastic body to suit its design and requirement. If one goes to the market to purchase the plastic body of EMR of the respondents either for replacement or otherwise, one cannot get it in the market because at present, it is not a commercially known product. For these reasons, the plastic body, which is a part of EMR of the respondents, is not ‘goods’ so as to be liable to duty as parts of EMR under Para 5 (f) of the said exemption notification. Escorts Ltd. v. CCE, (2015) 9 SCC 109.

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Words “Type” and “Form” – Have different meanings

In common parlance, the two words “type” and “form” are not of the same import. According to the Oxford Dictionary, whereas the meaning of the expression “types” is “kind, class, breed, group, family, genus”; the meaning of the word, “form”, is “visible shape or configuration of something”, or the “style, design and arrangement in an artistic work as different from its content”. Similarly, Macmillan Dictionary defines “type” as “a group of people or things with similar qualities or features that make them different from other groups” and “form” as “the particular way in which something appears or exists or a shape of someone or something”. Therefore, “types” are based on the broad nature of the item intended to be classified and in terms of “forms”, the distinguishable feature is the particular way in which the items exist. An example could be the item “wax”. The types of wax would include animal, vegetable, petroleum, mineral or synthetic wax whereas the form of wax could be candles, lubricant wax, sealing wax etx. State of Jharkand v. LA OPALA RG Ltd., (2014) 15 SCC 136.

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