COLLECTOR OF CUSTOMSversusM/S. MODI RUBBER LTD.

A                          COLLECTOR OF CUSTOMS
                                          v.
                            MIS. MODI RUBBER LTD.

                                DECEMBER l, 1999

B      [S.P. BHARUCHA, R.C. LAHOTI AND N. SANTOSH HEGDE, JJ.]


          Customs Tariff Act, 1975-lmport of styrene butadiene latex-
    Notification No. 82186 (as amended on 2.4.1986) exempting payment of
C   customs duty on raw rubber, natural or synthetic, latex, natural or synthetic-
    Clause I A of the notification excluding styrene butadiene rubber and oil
    extended styrene butadiene rubber from the benefit of notification-Assessee 's
    claim for exemption-Allowed by Tribunal-On appeal-Held, principal
    clause of notification makes a distinction between 'rubber', natural or
    synthetic and 'latex' natural or synthetic-Exclusion Clause IA must be
D   construed ~ith regard to principal clause-The Tribunal justified in holding
    that the exclusion Clause IA was only of stjrene butadiene rubber and oil
    extended styrene butadiene rubber and does not cover other forms of styrene
    butadiene.

          The respondents imported styrene butadiene latex. Government by a
E notification No. 82/86 (as amended on 2.4.I986) exempted from payment of
    customs duty raw rubber, natural or synthetic, latex, natural or synthetic,
    and certain other items falling within Chapter 40 of the First Schedule to the
    Customs Tariff Act, I975. Clause IA of the said notification excluded styrene
    butadiene rubber and oil extended styrene butadiene rubber form the benefit
F   of the notification. The respondents claim for exemption was denied under
    Clause IA. However, the Customs, Excise and Gold (Control) Appellate
    Tribunal decided in favour of respondent assessee holding that the exclusion
    in clause IA was only of styrene butadiene rubber and oil extended styrene
    butadiene rubber and did not ·cover other form of styrene butadiene. Hence,
    the present appeal.
G
          Dismissing the appal, the Court

         HELD : 1.1. The Tribunal was right in holding that the exclusion in
    Clause IA was only of styrene butadiene rubber and oil extended styrene
    rubber and not cover other forms ofstyrene butadiene. II26-F-G)
H                                        124
       COLLECTOR OF CUSTOMS v. MODI RUBBER LTD. [S.P. BHARUCHA, J.]         125
       I.2. Clause IA of the notification is in the nature ofan exception to the   A ..
principal clause thereof and must be construed with regard to that principal
clause. The principal clause of the exemption notification "exempts raw rubber,
natural or synthetic rubber, latex, natural or synthetic.•.•••". The principal
clause of the said notification therefore, make a distinction between rubber,
natural or synthetic, and latex, natural or synthetic. Bearing this in mind,
one has to read clause IA of the said notification. It says that the said          B"
notification shall not apply to "Styrene butadiene rubber and oil extend styrene
butadiene rubber." It covers, therefore, the rubber but not the latex. Thus the
contention of Revenue that under item 40.02 of the Schedule contained in
Customs Tariff Act, I975, styrene butadiene rubber is shown under two sub-
heads 'latex' and 'others' and, therefore, Clause IA should, also be read as       C
covering 'latex' is rejected. (I26-C-E)

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 451of1991.

     From the Judgment and Order dated 16.7.90 of the Central Excise, Customs
and Gold (Control), Appellate Tribunal, New Delhi in A. No. C/3643/88-C
Order No. 754 of 1990-C.                                                           D·
      T.L.V. Iyer, Dilip Tandon and P. Parmeswaran for the Appellant.
     V. Laxmi Kumaran, Ravinder Narain, Sanjiv Sen, Amit Bhagat and A.P.
Arora for Mis. J.B.D. & Co., for the Respondent.
                                                                                   E
      The Judgment of the Court was delivered by

      S.P. BHARUCHA, J. The respondents imported styrene butadiene latex.
They claimed for the purposes of payment of Customs duty thereon the
benefit of an exemption notification (No. 82/86), as amended on 2nd April,
1986. So amended, this is how the said notification read:
                                                                                   F
        "in exercise of the powers, conferred by Sub-section (l), of Section
        25 of the Customs Act, 1962 (52 of 1962), the Central Government,
        being satisfied that it is necessary in the public interest so to do,
        hereby exempts raw rubber, natural or synthetic rubber, latex, natural
        or synthetic (including mixtures thereof) whether or not prevulcanised; G
        balata, guttepercha and similar natural gums, factice derived from oils,
        reclaimed rubber, waster and scrap of unhardened rubber, falling within
        Chapter 40 of the First Schedule to the Customs Tariff Act, 1975 (51
        of 1975), when imported into India, from so much of that portion of
        the duty of customs leviable thereon which is specified in the said
        First Schedule as is in excess of the amount calculated at the rate of H
     126                        SUPREME COURT REPORTS (1999] SUPP. 5 S.C.R.

             40% ad valorem.

             I A. Nothing contained in this notification shall apply to styrene
             butadiene rubber and oil extended styrene butadiene rubber."

           The exemption was denied to the respondents on the ground that under
B clause IA of the said notification styrene butadiene latex was not entitled to
    it. This was the view taken all the way upto the Customs, Excise and Gold
    (Control) Appellate Tribunal, whose order is under challenge before us. The
    Tribunal decided in favour of the assessee, agreeing with the argument of its
    counsel that the exclusion in clause IA was only of styrene butadiene rubber
C   and. oil extended styrene butadiene rubber and did not cover other forms of
    styrene butadiene.

           It will be seen that the principal clause of the said exemption notification
 . "exempts raw rubber, natural or synthetic rubber, latex, natural or synthetic
   .~ .... ". The principal clause of the said notification, therefore, makes a distinction
D between rubber, natural or synthetic, and latex, natural or synthetic. Bearing
   this in mind, one has to read clause IA of the said notification. It says that
   the said notification shall not apply to "styrene butadiene rubber and oil
   extended styrene butadiene rubber." It covers, therefore, the rubber but not
   the latex.

E          Our attention was drawn by learned counsel for the appellant to item
     40.02 of the Schedule contained in Customs Tariff Act, 1975 where styrene
     butadiene rubber is shown under two sub-heads, 'Latex' and 'Others', and
     it was submitted that the styrene butadiene rubber referred to in clause IA
     of the said notification should, therefore, also be read as covering latex. For
    the reason that we have already stated, we cannot agree. Clause IA of the
F   said notification is in the nature of an exception to the principal clause thereof
    and must be construed with regard to that principal clause. Secondly, as has
    been rightly pointed out by learned counsel for the assessee, clause IA is
    applicable not to styrene butadiene generally but to two categories of styrene
    butadiene, namely, styrene butadiene rubber and oil extended styrene butadiene
G   rubber.
         For these reasons, we are of the opinion that the Tribunal is right in the
    view that it took.

           The appeal is dismissed. No order as to costs.

H S.V.K                                                               Appeal dismissed.