COLLECTOR OF CENTRAL EXCISE, BOMBAY-I & ANR.versusPARLE EXPORTS (P) LTD.

 COLLECTOR OF CENTRAL EXCISE, BOMBAY-I & ANR.
                                                                          A
                                   v.
                   PARLE EXPORTS (P) LTD.

                       NOVEMBER 22, 1988

 [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]                            B

       Central Excises and Salt Act, 1944/Central Excise Rules,
1944: Sections 6 and 35L(b) First Schedule Tariff Item No. 68/Rules 8,
9( 1), 53, 173 and 174 and Notification No. 55175 dated March 1,
1975-Non-alcoholic beverages-Question of dutiability-Gold Spot
base/ Limca base/Thumps Up base-Not intended to be given
exemption.
                                                                          c

      Statutory Interpretation: Courts to give weight to interpretation
put upon statute at the time of its enactment.

      Fiscal Statute/ Notification-Interpretation at time of enact-       D
ment/issue-To be given due weight-Two views possible that in favour
of assessee w be odopted.

      The respondent-company was engaged in the m~n_ufacture of non-
alcoholic beverage bases falling under Tariff Item 68 of Central Excise
Tariff. According to the Revenue, the company manufactured the non- E
alcoholic beverage bases without holding proper Central Excise
Licence, and had cleared the said goods without payment of the duty
due thereon. The stand of the company was that the goods were exempt
from duty under Notification No. 55/75 C.E. dated 1st ;March, 1975
which inter alia exempted "all kinds of food products and food prepara-
tions". The Customs and Excise Collector confirmed the demand of F
central excise duty against the company. In appeal, the Customs Excise
and Gold (Control) Appellate Tribunal accepted the contention of the
company.

       The Additional Solicitor General on behalf of the appellants con-
tended that (i) non-alcoholic beverage base though having some food G
value, was not food product or food preparation, at any rate, in the
context of the Act and notification as such; (ii) the expression "food
products and food preparations" was used in contrast to "beverages"
so far as the present Act and notifications thereunder were concerned;
(iii) in ordinary common and ~llmmercial parlance also the goods in
guesti(ln were not known as food products and/or food preparations as H
                                  933
    934          SUPREME COURT REPORTS                 [ 1988] Supp. 3 S.C.R.
                                                 I
A   such, and therefore these were not to be treated as exempt under the
    notification; and (iv) how Government und.erstood a matter at the time
    of the notification, was a relevant factor and that was a factor which one
    should bear in mind.

          K.P. Verghese v: income Tax Officer Ernakulam, (1982] l SCR
B   629 and r.overnment of India's decision in Re: Asian Chemical Works,
    (1982] 10 ELT 609A, relied upon.

         On behalf of the respondent it was contended that the Tribunal
    had acted on the varied materials, and therefore, such decision of the
    Tribunal should not be altered or deviated from.
c         Collector of Customs, Bombay v. Swastic Woollen (P) Ltd.,
    [1988] 37 ELT 474, relied upon.

          Allowing the appeals, it was,

D         HELD: (1) The word 'Food' has no fixed definition of univer-
    sal application and its meaning varies from statute to statute. But
    food is one which nourishes and sustains human body for the pur-
    poses of growth, work or repair and for the maintenance of the vital
    process. (9390 I

E         Brooke Bond (India) Limited v. Union of India, [1980] ELT 65;
    Brooke Bond (India) Limited v. Union of India, (1984] 15 ELT 32 and
    The State of Bombay v. Virkumar Gulabchand Shah, (1952] SCR 877,
    referred to.

          (2) The expression 'food products' is not dermed in the Act.
F   The exemption includes 'food produCts_ and food preparations' and
    provides an inclusive dermition of 'food products' and 'food pre-
    parations'. [946E]

          (3) The words used in the provision, imposing taxes or granting
    e)lemptions, should be understood in the same way in which these are
G   understood in ordinary parlance in the area in which the law is in force
    or by the people who ordinarily deal with them. [947F]

          (4) It is a well-settled principle of interpretation that courts in
    construing a statute or notification will give much weight to the interpre-
    tation put upon it at the time of enactment or issue, and since by those
H   who have to construe, execute and apply the said enactments. [947E]
                COLLECTOR OF C.E. v. PARLE EXPORTS                     935

      (5) The notification should not only be confined to its grammati-       A
cal or ordinary parlance but it should also he construed in the light of
the context. The expression should be construed in a manner in which
similar expressions have been employed by those who framed the relev-
ant notification, [948E]
                                                                              B
     Hindustan Aluminium Corporation Ltd. v. State of Uttar
Pradesh, [1982] l SCR 129, referred to.

      (6) The question of interpretation involves determining the
meaning of ~·text coniained in one or more documents. Judges are
often criticised for being tied too closely to the statutory words and
for failing to give effect to the intention of the Parliament or the          C
law-maker. [949C]


      (7) According to the tradition of our law, primacy is to be given to
the text in which the intention ofthe law-giver has been expressed. [9490 I
                                                                              D
      (8) The principle is well-settled that when two views of a notifica-
tion are possible, it should be construed in favour of the subject as
notification is part of a fiscal enactment avoiding, however. as absurd
meaning. [948F]

     Caroline M. Armytage & Ors. v. Frederick Wilkinson, [1978] 3 E
A.C. 355, referred to.

      (9) The notification must be read as a whole in the context of the
other relevant provisions. When a notification is issued in accordance
with power conferred by the statute, it has statutory force and validity
and, therefore, the exemption under the notification is, as if it were        F
contained in the Act itself. [947G-H]

     Orient Weaving Mills (P) Ltd. v. Union of India, [1962] Supp. 3
SCR 481 and Kai/ash Nath v. State of U. P., AIR 1957 SC 790, referred
to.
                                                                              G
     (10) The purpose of exemption is to encourage food production
and also give boost to the production of goods in common use and need.
After all, the purpose of exemption is to help production of food and
food preparations at cheaper price and also help production of items
which are in common use and need, like electric light and power. [949A-B]
                                                                              H
     936         SUPREME COURT REPORTS               (1988] Supp. 3 S.C.R.
A         ,(11) Having regard to the language used it would ltot be in con·
     sonance with the spirit and the reason 11f law to give ·exemption for
     non-alcoholic beverage bases under the noilficatlon. Bearing the
     aforesaid purpose, it cannot be contended that expensive items like
     Gold spot-base, Limca-base or Thumps up-base were inte~ded to be
     given exemption at the cost of the public exchequer. [949E-F]
B
           (12) Non-alcoholic beverage bases in India cannot be treated or
     understood as new 'nutritive material absorbed or taken into the body
     of an organism which serves for the purpose of growth, work or repair
     and for the maintenance of the vital process' and an average Indian will
     not treat non-alcoholic beverage bases as food products or food pre-
C    paratlons in that light. [948G-H]

        · CIVIL APPELLAIB JURISDICTION: Civil Appeal Nos. 379/
     1988 and 3680-82/ 1987.

          From the Judgment and Order dated 26.10.87 and 26.9.86 of the
D    Customs Excise and Gold (Control) Appellate Tribunal in Appeal
     Nos. ED/943/83-D Order No. 838/87-D and ED(SB)(T) A. No. 411
     and 412/81-D 'and 787/80-D in Order No. 786 to 788/86-D.

          Kuldip Singh, Additional Solicitor General, A.K. Srivastava
     and P. Parmeswaran and Mrs. Susbma Suri for the Appellants.
B
         Soli J. Sorabjee, S. Ganesh, J.R. Gagrat, P.O. Gokbalei B.R.
     Agarwala and C.M. Mehta for the Respondents.

        · The Judgment of the Court was delivered by

}'         SABYASACm MUKHARJI, J. These appeals are under Section
     35L(b) of the Central Excises and Salt Act, 1944 (hereinafter referred
     to as 'the Act') against the decision of the Customs Excise and Gold
     (Control) Appellate Tribunal, New Delhi ('Tribunal' for short) dated
     26t~ October, 1987.

G          The respondent-company bas its factory at Chakala Andheri and
     is engaged in the manufacture of non-alcoholic beverage ·bases falling
     under Tariff Item 68 of Central .Excise Tariff. During the course of
     enquiry, it was found that the eompany bad during the period from 1st
     March, 1975 to 18th April, 1979 manufactured non-alcoholic beverage
     bases without holding prope1 Central Excise licence and bad Cleared
H    tlie said goods without paymen!._Qf the_ d~ty due thereon and had
                           0

       COLLECTOR OF C.E. "'v. PARLE EXPORTS [MUKHARJI, J.]        937

thereby evaded the duty amounting to Rs.3,50,963.22. According to A
the revenue, prima facie it appeared that the respondent had con-
travened the provisions of Rules 9(1), 53, 173 pp(1), 173 pp(3), 173
pp(6) and 174 of the Central Excise Rules, 1944 ('Rules' for short)
inasmuch as during the period from 1st Morch, 1975 to 18th April,
1979 the respondent-company had manufactured without valid
licences required under Section 6 of the Act read with Rule 174 of the B
Rules, goods not elsewhere specified and falling under Tariff Item 68
of the First Schedule of the Act, viz., non-alcoholic beverage bases.
The respondent-company had further cleared the said goods without
filing list of goods manufactured as required by Rule 173 pp(3) of the
Rules. The respondent had cleared the said goods without preparing
gate passes as required under Rule 173 pp (6) of the Rules, and had
further cleared the said goods without maintaining accounts as c
required under Rule 53 of the Rules. In the circumstances, notices
were issued by the relevant officer asking the respondent-company to
show cause for recovery of the dues and also for imposition of penalty.
When the matter came up for consideration before the Collector,
Central Excise, he found that non-alcoholic beverage bases were not D
themselves food or food products and accordingly did not qualify for
exemption under Notification No. 55/75 as amended. He accordingly
confirmed the demand of central excise duty of Rs.3,50,963.22 under
Rule 9(2) read with Rule 10 of the Rules. He also imposed a penalty of
Rs.25,000 under Rule 173Q of the Rules. Aggrieved thereby, the
respondent-company filed an appeal before the Tribunal and con- E
tended that the question of the dutiability of non-alcoholic beverage
bases manufactured by the respondent had been settled by the
Tribunal in its decision in the case of respondent itself, i.e., Parle
Exports (P) Ltd. v. Collector of Central Excise, Baroda, [1987] 27 ELT
349 which are the subject matter of the connected appeals, i.e. C.A.
Nos. 3680-82 of 1987. The Tribunal following its earlier order allowed F
the appeal and hence the present appeal by the Revenue.

     The First Schedule of the A.ct which provides for the du!iability
and the rates of duty applicable to various goods mentioned therein
contains the expressions "Food and Beverages". It provides therein.
description of various types of goods and the rates of duties applicable G
thereto. In the said description "Food and Beverages" many items are
included, viz., sugar produced in a factory ordinarily using power in
the course of production of sugar, ( 1A) confectionary, cocoa powder
and chocolates, in or in relation to the manufacture of which any
process is ordinarily carried on with the aid of power, namely, boiled
sweets, toffees, caramels, candies, nuts (including aL1onds) and fruit H
    938         SUPREME COURT REPORTS                 [1988] Supp. 3 S.C.R.

    kernels coated with sweatening agent, and chewing gums, cocoa
A
    powder, drinking chocolates etc. It also includes items (lB) prepared
    or preserved foods put up in unit containers and ordinarily intended
    for sale, including preparations of vegetables, fruit, milk, cereals, etc.,
    and as item (IC) food products, in or in relation to the manufacture of
    which any process is ordinarily carried on with the aid of power,
B   namely, biscuits, pasteurised butter, pasteurised or processed cheese,
    aerated waters, whether or not flavoured or sweetened and whether or
    not containing vegeiable or fruit juice or fruit pulp etc.

           Tariff Item 68 of the First Schedule of the Act provides for duty
    on "All other goods not elsewhere specified and manufactured in a
    facto.ry" but excluding, inter alia alcohol, all sorts, including alcoholic
c   liquor for human consumption and other items not necessary for our
    present purpose. The exemption Notification No. 55/75 C.E. dated 1st
    March, 1975 reads as follows:

                "In exercise of powers conferred by sub-rule (10) of rule 8
D               of the Central Excise Rules, 1944, the Central Government
                hereby exempts goods of the description specified in the
                Schedule annexed hereto and falling under Item No. 68 of
                the First Schedule to the Central Excises and Salt Act, 1944
                ( 1 of 1944), from the whole of the duty of excise leviable
                thereon.
E
                                        THE SCHEDULE

                I. All kinds of food products and food preparations,
                including-

F                 (i) meat and meat products;

                 (ii) dairy products;

                (iii) fruit and vegetable products;
    •
G                (iv) fish and sea foods;

                  (v) bakery products; and

                 (vi) grain mill products.

H                2. Electric light and power."
       COLLECTOR OF C.E. v. PARLE EXPORTS [MUKHARJI, J.J            939

      The question is, whether by the notification of exemption non-
alcoholic beverage bases have been exempted from payment of duty.          A
The only question, therefore, in other words, is whether non-alcoholic
beverage bases are 'food products' or 'food preparations' covered by
the exemption notification No. 55/75 CE of !st March, 1975. We are
not concerned with the question whether in a broad general sense
non-alcoholic beverage base is food or not. Jn Brooke Bond (India)         B
Limited v. Union of India, [1980] ELT 65 the question arose before a
learned Single Judge of the High Court of Andhra Pradesh whether
coffee-chicory blend was food product and is an item which fell under
Tariff Item 68 of the Tariff. The identical notification involved herein
came up for consideration in that case. The question was whether it
was food product or food preparation, and as such exempt from excise
duty. It was held by the learned Single Judge that what was exempt         C
under the said notification was not food but food products and food
preparations and it was furt!!er held that coffee-chicory blend was
neither food nor food preparation. Therefore, it was not exempt from
payment of excise duty under the said notification. The word 'food'
has no definition of universal application and it varied from statute to   o
statute. In some cases the dividing line between the two might be thin
and in some cases it might be varied but so far as coffee-chicory blend
was concerned there was little doubt that it was beverage and not food.
The learned Judge referred to paragraph 1093 of Volume 18 of Hals-
bury's Laws of England (4th Edn). Jn that paragraph, coffee-chicory
products are mentioned under the general heading 'Food, Dairies and        E
Salaughter Houses' and sub-heading 'Food Generally'.·Coffee-chicory
blend is also mentioned in that paragraph. But the coffee and coffee
products under the heading 'Food generally' were in the context of the
law of Food Adulteration and the Coffee and Coffee-Produce Regula-
tions, 1967 in force in England. Reference was also made by the
learned Judge to Corpus Juris Secundum, Volume 36 at page 1041.            F
The learned Judge, in our opinion, rightly observed that the aforesaid
passage from the Halsbury's Laws of England and Corpus Juris Secun-
dum could not be mechanically imported into the present case more
particularly when we are concerned with the situation under the Tariff
Schedule. 'Food', as has been noted, has no fixed definition of univer-
sal application and its meaning varies from statute to statute. The        G,
dividing line, the learned Judge observed, between the beverage and
food might be thin and in some case it might overlap: The learned
Judge, however, observed that it was beverage rather than food. He
accordingly held that the notification exempted not food but food
products and food preparations and as such coffee-chicory blend <lid
not come within the purview of the exemption. The said decision was        H
    940         SUPREME COURT REPORTS                [1988] Supp. 3 S.C.R.

    affirmed by the Division Bench of that Court in Brooke Bond (India)
A
    Limited v. Union of India & Ors., [1984] 15 ELT 32. The Division
    Bench after exhaustively discussing the points in controversy and after
    referring to several authorities referred to the decision of Justice
    Vivian Bose of this Court in The State of Bombay v. Vir Kumar
    Gulabchand Shah, [1982] SCR 877, wherein he had observed in his
B   own and inimitable language at pages 880-883 of the report as under:

               "Much learned Judicial thought has been expended upon
               this problem-what is and what is not food and what is
               and what is not a foodstuff, and the only conclusion I can draw
               from a careful consideration of all the available material is
               that the term 'foodstuff' is ambiguous. In one sense it has a
c              narrow meaning and is limited to articles which are eaten as
               food for purposes of nutrition and nourishment and so
               would exclude condiments and spices such as yeast, salt,
               pepper, baking powder and turmeric. In a wider sense, it
               includes everything that goes into the preparation of food
D              proper (as understood in the narrow sense) to make it more
               palatable and digestible. In my opinion, the problem posed
               cannot be answered in the abstract and must be viewed in
               relation to its background and context. But before I dilate
               on this, I will examine the dictionary meaning of the words.

E              The Oxford English Dictionary defines 'foodstuff' as
               follows: "that which is taken into the system to maintain
               life and growth and to supply waste to .tissue."

               In Webster's international Dictionary 'food' is defined as:

F              "nutritive material absorbed or taken into the body of an
               organism which serves, for purposes of growth, work or
               repair and for the maintenance of the vital processes".

               Then follows this explanation:

G              "Animals differ greatly from plants in their nutritive pro-
               cesses and require in addition to certain inorganic sub-
               stances (water, salts etc.) and organic substances of
               unknown composition (vitamins) not 'ordinarily' classed as
               foods 'though absolutely indispensable to life, and con-
               tained in greater or less quantities in the substances eaten)
H              compJex organic substances which fall into three principal
COLLECTOR OF C.E. v. PARLE EXPORTS [MUKHARJI, J.]           941

    groups, Proteins, Carbohydrates and Fats."                     A

    Next is given a special definition for legal purposes,
    namely-

    "As used in laws prohibiting adulteration etc., 'food' is
    generally held to mean any article used as food or drink by    B
    man, whether simple, mixed or compound, including
    adjuncts such as condiments, etc., and often excluding
    drugs and natural water."

    The definition given of 'foodstuff' is-

    "l. Anything used as food,
                                                                   c
    2. Any substance of food value as protein, fat etc. entering
    into the composition of a food."

    It will be seen from these definitions that "foodstuff" has    D
    'lo specirJ meaning of its own. It merely carries us back to
    the defiiul1on of "food" because "food stuff" is anything
    which is used as "food".

   So far as "food" is concerned, it can be used in a wide as
   well as a narrow sense and, in my opinion, must depend          E
   upon the context and background. Even in a popular sense,
   when one asks another "Have you had your food?", one
   means the composite preparations which normally go to
   constitute a meal-curry and rice, sweetmeats, pudding,
   cooked vegetables and so forth. One does not usually think
   separately of the different preparations which enter into       F
   their making, of the various condiments and spices and
   vitamins, any more than one would think of separating in
   his mind the purely nutritive elements of what is eaten from
   their non-nutritive adjuncts.

         So also, looked at from another point of view, the        G
   various adjuncts of what I may term food proper which
   enter into its preparation for human consumption in order
   to make it palatable and nutritive, can hardly be separated
   from the purely nutritive elements if the effect of their
   absence would be to render the particular commodity in its
   finished state unsavoury and indigestible to a whole class of   H
    942        SUPREME COURT REPORTS                 [1988] Supp. 3 S.C.R.

A              persons whose stomachs are accustomed to a more spicely
               prepared product. The proof of the pudding is, as it were,
               in the eating, and if the effect of eating what would
               otherwise be palatable and digestible and therefore nutri-
               tive is to bring on indigestion to a stomach unaccustomed
               to such unspiced fare, the answer must, I think, be that
B              however nutritive a product may be in one form it can
               scarcely be classed as nutritive if the only result of eating it
               is to produce the opposite effect; and if the essence of the
               definition is the nutritive element, then the commodity in
               question must cease to be food, within the strict meaning of
               the definition to that particular class of persons, without
               the addition of the spices which make it nutritive. Put more
c              colloguially, "one man's food is another man's poison". I
               refer to this not for the sake of splitting hairs but to show
               the undesirability of such a mode of approach. The pro-
               blem must, I think, be solved in a commonsense way."

D         Justice Bose noted that a comparison of war-time measure in
    English and Indian Statutes might not be safe. But food is one which
    nourishes and sustains human body for the purposes of growth, work
    or repair and for the maintenance of the vital process. In the Brooke
    Bond Ltd. 's case (supra), the Division Bench considered the meaning
    of the expression "coffee-chickory blend" and upheld the decision of
E   the learned Single Judge as mentioned hereinbefore.

         Mr. Sorabjee, learned counsel appearing for the respondent,
    drew our attention to several items including Item 68 and the Central
    Excise Trade Notice dated 18th June 1975 which deals with exemption.
    The said Trade Notice, inter alia, reads as follows:
F
               "A number of doubts have been raised about the general
               scope of the terms 'food products/preparations' vide Entry
               No. 1 in the Schedule to Notification No. 55/75 dated
               1.3. 75. Specific queries have also been raised as to whether
               items like oil cakes, rice bran, scented chunam, katna,
G              starch, quargum, gur, flour, ice cream and ice candy, ice,
               supari, groundnut kernels, and cashew kernels could be
               regarded as covered under the above entry as claimed by
               the manufacturers of these goods.

               2. The matter has been examined and the following clarifi-
H              cations are used for the information of the trade.
       COLLECTOR OF C.E. v. PARLE EXPORTS [MUKHARJI, J.J               943


                 The word 'food' is a general term and applies to all
           that is eaten by men for nourishment and takes in sub-
                                                                              A
           sidiaries, further;

           (i) preparations for use, either directly or after processing
           such as cooking, dissolving or oiling in water, milk etc. for
           human conoumption; and                                             B

           (ii) preparations used because of their nutritional or
           flavouring properties in the making of beverages or food
           stuffs for human consumption, are classiable as food pre-
           parations. But such preparations which because of their
           ingredients and small proportion in which they are
           normally used, are clearly added for other purposes, or not        c
           classiable as food preparations."

                                                      (underlined by us).

    Mr. Sorabjee also drew our attention to the explanatory note in           D
Heading No. 21.07 of CCCN which states, inter alia as follows:

          "21.07-FOOD PREPARATIONS NOT ELSEWHERE
          SPECIFIED OR INCLUDED.

                Provided that they are not covered by any other               E
           heading of the Nomenclature the present heading covers:

           (A) Preparations consisting wholly or partly of foodstuffs,
           used in the making of beverages or food preparations for
           human consumption. The heading includes preparations
           consisting of mixtures of chemicals (organic acids, calcium        F
           salts, lecithin etc.) with food stuffs (flour, sugar, milk, milk
           powder, etc.) for incorporation in food preparations either
           as ingredients or to improve some of their characteristics
           (appearance keeping qualities etc.)"

   Clause (2) of the said explanatory notes in heading No. 20.17 of           G
CCCN contains the following:

           "(2) Flavouring powders for making beverages, whether
           or not sweetened with a basis of bicarbonate of soda and
           glycyrrhizin or liquorice extract (sold on the Continent as
           ''Cocoa powder")."                                                 ti
    944         SUPREME COURT REPORTS               [1988] Supp. 3 S.C.R.

A          Our attention was also drawn to Item ( 12) of the same which runs
    as follows:

               "(12). Non-alcoholic compound preparations (often
               known as "concentrated extracts") used for making bever-
               ages (liqueurs, etc.) unless they are included elsewhere in
B
               the Nomenclature. These preparations are obtained by
               compounding vegetable extracts of heading 13.03 with
               lactic acid, tartaric acid, citric acid, phosphoric acid, pre-
               serving agents, foaming agents, fruit juices, etc., and some-
               times with essential oils. Alcoholic preparations of this type
               are excluded (heading 22.09)"
c
          Mr. Sorabjee further drew our attention to the Appendix 17 of
    Import Policy of 1981-82 which was relied upon by the Tribunal in the
    second decision, i.e. the Parle Exports (P) Ltd. case which is the
    subject matter of the connected appeals, i.e. C.A. Nos. 3680-82 of
    1987. It was pleaded that it was always understood and treated as a
0   part of the food product. Reliance was also placed on the reports of the
    Chief Chemist of the Central Excise Regional Laboratory, Baroda to
    which Mr. Sorabjee drew our attention. The reports dealing inter alia
    with some items stated as follows:
                           •
               "Gold Spot Base:
E
                S.R. No. 1 Base-A (Lab. No. 10)

               The sample is in the form of orange coloured liquid con-
               taining flavouring agents free from Alcohol. (Please see
               note attached).
F
               S.R. No. 2 Base-B (Lab. No. 11)

               The sample is in the form of white powder. It is sodium
               Benzoate-a-chemical known to be used as a preservative.
G              S.R. No. 3 Base-C (Lab. No. 12)

               The sample is in the form of white powder. It is vitamin 'C'
               (ascorbic acid) an organic chemical.

                Limca Base:
H
      COLLECTOR OF C.E. v. PARLE EXPORTS IMUKHARJI, J.]           945

          S.R. No. 4 Base-A (Lab. No. 13)
                                                                         A
          The sample is in the form of white liquid containing
          flavouring agents. It is free from Alcohol. (Please see note
          attached.)

          S.R. No. 5 Base-B (Lab. No. 14)                                B

          The sample is in the form of white powder. It is sodium
          Benvonate-a-chemical known to be used as a preser-
          vative."

      The note appended to these reports stated inter alia the           C
following:

                            "NOTE"

          "The term "food" as defined in the Prevention of Food
          Adulteration Act, 1954 meant any article used as food or       D
          drink for human consumption other than drugs and water
          and includes:

          {a) Any article which ordinarily enters into, or is used in
          the composition or preparation of human foods; and
                                                                         E
          (b) any t1avouring matter or condiments.

          Food products which are excluded from item (C) would fall'
          under Item 68 of Central Excise, Tariff read with the
          Notification 62/78 dated 1.3.78 excluded as amended. The
          term "Food preparations" on the other hand would cover;    F

          (a) Preparation for use either directly or after processing
          (such as cooking, dissolving or boiling in water, milk etc.)
          for human consumption.

          (b) Preparation cimsisting wholly or partly of food stuffs G
          used in making of Beverages or food preparation for
          human consumption.

                This would also include concentrated extract for mak-
          ing non-alcoholic beverages.
                                                                         H
                         (Ref. B. T .N. heading 21.07)
    946         SUPREME COURT REPORTS               [1988] Supp. 3 S.C.R.


A                    In this connection attention is also invited to Banga-
               lore Collectorate trade notice No. 103/75 dated 18.6.75.

                     In vi.ew of that has been stated above samples at
               SI. No. 1, 4, 8, 9, 13 and 15 may be deemed to falf in the
               category of food preparations. However, before finalising
B              the assessment, it may be worthwhile ascertaining whether
               the above products are also known as food preparations in
               common parlance and trade. The views of the Director.
               Drugs & Food Laboratory, Baroda may also sought, if
               necessary."

          Mr. Sorabjee submitted that the Tribunal has relied on the
c   Bangalore Collectorate Trade Notice as referred hereinbefore, order
    of the Appellate Collector in the case of Bush Boake Allan (India)
    Limited, and Heading No. 21.07 of CCCN, Import Policy of the
    Government of India for 1981-82 as well as the observations in En-
    cyclopaedia Britannica, Volume 13 at pages 420-421. It was submitted
D   that the said orders of the Tribunal had considered and taken into
    consideration all the relevant factors. The Tribunal has acted on the
    varied materials, and therefore, such decision of the Tribunal should
    not be alt.ered or deviated from. Reliance was placed on the observa-
    tions of this Court in Collector of Customs, Bombay v, Swastic Woollen
    (P) Ltd. and Ors., [1988] 37 ELT 474 at paragraph 9. The expression        -.
E   "food products" is not defined in the Act. The product exemption
    includes 'food and food preparations' and provides an inclusive defini-
    tion of 'food products' and 'food preparations'. But the correct and the
    appropriate meaning of the expressions covered in the said notification
    has to be found out.
                                                                               '
F         The question is whether non-alcoholic beverage base is either
    'food product' or 'food preparation' in terms of the notification in
    question. Mr. Sorabjee tried to suggest that fruit and vegetable juice
    might become fruit or vegetable products to come under Item l(iii) of
    the Schedule to the exemption notification.      ·

G         Learned Additional Solicitor General, Mr. Kuldip Singh, on the
    other hand submitted that non-alcoholic beverage base though having
    some food value, is not food product or food preparation, at any rate,
    in the context of the Act and notification as such. He drew our atten-
    tion to the first heading in the First Schedule to the Act dealing with
    "Food and Beverages" and pointed out that items 1 to IC deal with
H   Food and Food Products while item lD deals with beverages sepa-
       COLLECTOR OF C.E. v. PARLE EXPORTS IMUKHARJ!, J.] • 947

rately. He submitted before us that this indicates that the expression
                                                                            A
"food products and food preparations" are used in contrast to "bever-
ages" so far as the present Act and notifications thereunder are cott-
cerned. There is force in the submissions of the learned Additional
Solieitor General.

      Our attention was drawn to a decision of the Government of            B
India in Re: Asian Chemical Works, [1982] 10 ELT 609A where the
Government of India opined that 'Food flavours' and 'food prepara-
tions, might improve taste or appearance .of food products and/or food
preparations, but by themselves could not be legitimately consumed
directly or after processing such as cooking, dissolving, or boiling in
water for human consumption independently. Mr. Singh submitted
that in ordinary common and commercial parlance also the goods in
                                                                            c
question are not known as food products and/or food preparations as
such, therefore,. these are not to be treated as exempt under the notifi-
cation. Mr. Singh submitted that when a person says "I have consumed
food" he does not mean or says that he has consumed non-alcoholic
beverage bases. Therefore, those goods cannot be understood as              D
covered by the notification of exemption. It was submitted that how
Government understood a matter at the time of the notification, is a
relevant factor and that is a factor which one should bear in mind in
view of the principles enunciated by this Court in K.P. Verghese v.
Income Tax Officer, Ernakulam & Anr., [1982] 1 SCR 629. It is a
well-settled principle of interpretation that courts in construing a        E
statute or notification will give much weight to the interpretation put
up on it at tbe time of enactment or issue, and since by those who have
to construe, execute and apply the said enactments.

      How then should the courts proceed? The expressions in the
Schedule and in the notification for exemption should be understood         f'
by the language employed therein bearing in mind the context in whith
the expressfons occur. The words used in the provision, imposing taxes
or granting exemption should be understood in the same way in which
these are understood in ordinary parlance in the area in which the law
is in force or by the people who ordinarily deal with them. It is,
however, necessary to bear in mind certain principles. The notification     G
in this case was issued under Rule 8 of the Central Excise Rules and
should be read along with the Act. The notification must be read as a
whole in the context of the other relevant provisions. When a notifica-
tion is issued in accordance with power conferred by the statute, it has
statutory force and validity and, therefore, the exemption under the
notification is, as if it were contained in the Act itself. See in this     H
    948         SUPREME COURT REPORTS                [1988] Supp. 3 S.C.R.

A   connection the observations of this Court in Orient Weaving Mills (P)
    Ltd. v. The Union of India, [1962] Supp. 3 SCR 481. See also Kai/ash
    Nath v. State of U.P., AIR 1957 SCR 790. The principle is well-settled
    that when two views of a notification are possible, it should be con-
    strued in favour of the subject as notification is part of a fiscal enact-
    ment. But in this connection, it is well to remember the observations
B   ofthe)udicial Committee in Coraline M. Armytage & Ors. v. Federick
    Wilkinson, (1878] 3 A.C. 355 at 370 that it is only, however, in the
    event of there being a real difficulty in ascertaining the meaning of a
    particular enactment that the question of strictness or of liberality of
    construction arises. The Judicial Committee reiterated in the said deci-
    sion at page 369 of the report that in a taxing Act provisions establish-
    ing an exception to the general rule of taxation are to be construed
C   strictly against those who invoke its benefit. While interpreting an
    exemption clause, liberal interpretation should be imparted to the
    language thereof, provided no violence is done to the language
    employed. It must, however, be borne in mind that absurd results of
    construction should be avoided.
D
          In Hindustan Aluminium Corporation Ltd. v. State of Uttar
    Pradesh & Anr., [ 1982] 1 SCR 129 this Court emphasised that the
    notification should not only be confined to its grammatical or ordinary
    parlance but it should also be construed in the light of the context. This
    Court reiterated that the expression should be construed in a manner
E   in which similar expressions have been employed by those who framed
    relevant notification. The Court emphasised the need to derive the
    intent from a contextual scheme. In this case, therefore, it is necessary
    to endeavour to find out the true intent of the expressions "food
    products and food preparations" having regard to the object and the
    purpose for which the exemption is granted bearing in mind the con-
F   text and also taking note of the literal or common parlance meaning by
    those who deal with those goods, of course bearing in mind, that in
    case of doubt only it should be resolved in favour of the assessee or the
    dealer avoiding, however, an abs1ud meaning. Bearing the aforesaid
    principles in mind, in our opinion, the revenue is right that .the non-
    alcoholic beverage bases in India cannot be treated or understood as
G   new 'nutritive material absorbed or taken into the body of an organism
    which serves for the purpose of growth, work or repair and for the
    maintenance of the vital process' and an average Indian will not treat
    non-alcoholic beverage bases as food products or food preparations in
    that light.
       I
H          We have also noted how these goods were treated by the
         COLLECTOR OF C.E. v. PARLE EXPORTS [MUKHARJI, J.]              949

Government as mentioned hereinbefore. There is no direct evidence
as such as to how in commercial parlance unlike in ordinary parlance,
                                                                               A
non-alcoholic beverage bases are treated or whether they are treated
as food products or food preparations. The purpose of exemption is to
encourage food production and also give boost to the production of
goods in common use and need. After all the purpose of exemption is
to help pt"oduction of food and food preparations at cheaper price and         B
also help production of items which are in common use and need, like
electric light and power.

       The question of interpretation involves determining the meaning
of a text contained in one or more documents. Judges are often
criticised for being tied too closely to the statutory words and for
failing to give effect to the intention of the Parliament or the Jaw-          C
maker. Such language, it has been said, in Cross's "Statutory Interpre-
tation" (Second Edn.) at page 21, appears to suggest that there are
two units of enquiry in statutory interpretation-the statutory text and
the intention of the Parliament-and the Judge must seek to har-
monise the two. This, however, is not correct. According to the tradi-         D
ti on of our law, primacy is to be given _to the text in which the intention
of the law-giver has been expressed. Cross refers to Blackstone's
observations that the fairest and most rational method to interpret the
will of the law-maker is by exploring his intentions at the time when
the law was made, by.signs the most natural and probable. And these
signs are either the words, the context, the subject matter, the effects       E
and consequences, or the spirit and reason of the law. We have no
doubt, in our opinion, that having regard to the language used it would
not be in consonance with the spirit and the reason of law to give
exemption for non-alcoholic beverage bases under the notification in
question. Bearing the aforesaid purpose, in our opinion, it cannot be
contended that expensive items like Gold-Spot base, Limca-base or              p
Thumps up-base were intended to be given exemption at the cost of
public exchequer.

      For the aforesaid reasons, the appeals have to be allowed and the
decision of the Tribunal reversed. We, however, need not go into the
question of penalty as well as the question of limitation which have G
been left open by the Tribunal in its order. It will be open for the
parties to urge these points afresh before the Tribunal. We express no
opinion on these aspects. The appeals to the extent indicated above
are allowed. There will, however, be no order as to costs.

R.S.S.                                                   Appeals allowed. H