Holding

The imported drawings, designs and plans are not "printed books" or "manuals" within the meaning of Serial No. 10 and therefore fall under Serial No. 15, attracting duty.

Summary

Parasrampuria Synthetic Ltd imported a large number of printed drawings, designs and plans under a foreign technology‑transfer agreement for setting up a polyester plant. The importer claimed that the items fell within Serial No. 10 of Customs Notification No. 25/95 (dated 16‑03‑1995), which provides a nil rate of duty for "printed books" and "printed manuals". The Revenue argued that the items are "plans, drawings and designs" covered by Serial No. 15 of the same notification, attracting a 10 % ad‑valorem duty. The Customs, Excise and Gold (Control) Appellate Tribunal held the goods to be books and allowed the exemption, a decision later reversed by the Supreme Court. The Court held that the goods, being loose sheets of technical drawings and plans, do not meet the ordinary meaning of "printed books" or "manuals" and therefore fall under Serial No. 15, making them liable to duty. Consequently, the appeal of the Commissioner of Customs was allowed and the Tribunal’s order was set aside.

Issues considered

Whether the imported printed drawings, designs and plans qualify for the nil‑duty exemption under Serial No. 10 of Customs Notification No. 25/95.
Whether the ordinary meaning of "printed books" and "manuals" under the Notification includes technical documents in loose‑leaf form.

Legislation cited

Customs Act, 1962s. 108, s. 112, s. 28(1)
Income Tax Acts. 32, s. 43(3)

Subjects

Customs dutyExemptionPrinted booksPlans drawings designsStatutory interpretationTariff classificationTechnology transferCustoms Notification 25/95Common parlance

Judgment

COMMISSIONER OF CUSTOMS, NEW DELHI A
v.
PARASRAMPURIA SYNTHETICS LTD.

AUGUST 30, 2001

[UMESH C. BANERJEE AND SHIVARAJ V. PATIL, JJ.) B

Customs Act, 1962 :

Customs Duty-Exemption from-Plans, drawings and designs- C
Classification of-Tariff Item 49 or 49.06 and 49.11-Held: Plans, drawings
and designs are not printed manuals in loose leaf form with binder-Such
goods, therefore, fall under Tariff Item 49.06 and 49.11-Hence, not exempted
from customs duty-Customs Notification No. 25195/Cus dated 16.3.1995.

Interpretation of Statutes: D
Rules of construction-Basic cannons of-Held : Ordinary common
parlance meaning has to be attributed to words used in a statute.

Words and Phrases :
E
"Printed books", "manuals''. "plan", "drawings" and "designs"-Meaning
of-In the context of Customs Notification No. 25195/Cus dated 16.3.1995.

The respondent-assessee imported certain printed drawings, designs and
plans under an agreement for transfer of technology for the purpose of setting F
up a plant to manufacture Polyester, Polyster Filament Yarn and Polyester
Staple Fibre. The respondent contended before the Customs, Excise and Gold
(Control) Appellate Tribunal that the said goods were covered under SI. No.
IO of the Customs Notification No. 25/95/Cus dated 16.3.1995 having 'Nil"
rate of duty. But the Revenue contended that the goods fell under SI. No. 15
of the notification attracting IO percent ad valorem. The CEGA T held that G
the said goods fell under Tariff Item 49.01 and thus came within the ambit of
SI. No. I 0 of the Exemption Notification. Hence this appeal.

The following qu!!stion arose before this Court :

H
333
334 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

-A Whether the benefit of exemption under Customs Notification No. 25/
95/Cus dated 16.3.1995, as amended, was available to the goods i.e. printed
drawings, designs and plans under the Foreign Transfer of Technology
Agreement imported by the respondent ?

Allowing the appeal, the Court
B
HELD : 1.1 Admittedly, in terms of the agreement between the parties,
the documents imported cannot but be attributed to be technical know-how
in the shape of drawing, design, plan and other literature. It is a literature or
specification for a particular plant to manufacture Polyester, Polyester
C Filament Yarn and Polyester Staple Fibre. Even without adverting to the
general trade parlance of the word 'book' and its known features, a plain look
at the book itself denotes it to be an installation and planning Manual. It is a
technology transfer agreement, which stands documented in a folder.
[341-D, E)

D Scientific Engineering House Pvt. Ltd v. CIT, (1986) l SCC 11, held
inapplicable.

CITv. £/econ Engineering Co. Ltd, (1974) 96 ITR 672, referred to.

1.2. Merely by reason of the factum of certain writings on various
E sheets of papers one cannot ascribe the documentation to be a 'book'. The
word 'book' has not been defined in the Customs Act, 1962 but the word 'book'
in common acceptation is a literary composition from which one may extend
or advance his or her knowledge and learning. [341-G]

Law Lexicon and Corpus Juris Secundum Vol. 70, referred to.
F
2.1. One of the basic cannons of interpretation of statute is that the
legislature intends to ascribe the ordinary common parlance and meaning to
the words used therein. In the matter under consideration, the legislature has
used the word 'printed books' and clarified it by inclusion of covers-the intent
thus seems to be rather obvious to mean books in ordinary sense and not any
G other meaning. The articles imported cannot be termed to be 'printed
manuals' in 'loose leaf form with binder'. [341-H, 342-A-B]

2.2. Ordinary common parlance ought to be attributed for the
expressions used by the legislature and on attribution thereof one cannot
possibly come to a conclusion that the exemption notification No. 25/95/Cus
H dated 16-3-1995 ever aimed at extending the meaning to the extent as has
C.l.T. v. PARASRAMPURIA SYNTHETICS LTD. [BANERJEE, J.] 335
been effected by the Customs, Excise and Gold (Control) Appellate Tribunal. A
[342-D)

Scientific Engineering House Pvt. Ltd v. CIT, [1986) 1 SCC 11; CCE v.
Indian Petro Chemicals, (1997) 92 ELT 13 (SC) and HCL Ltd v. CCE, (2001)
130 ELT 405 (SC), held inapplicable.
B
CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 7303-
7306 of 2000.

From the Judgment and Order dated 3 I. I 0.97 and 8.5.2000 of the
Customes Excise and Gold (Control) Appellate Tribunal, New Delhi in A. C
No. C/69, 70, 73 and 74/98-C in Final Order No. 262-265 of 2000-C.

_.,. Soli J. Sorabjee, Attorney General, N.K. Bajpai, Dileep Tandon and
B.K. Prasad for the Appellant.

V. Sridharan, A. Madhav Rao, M.P. Devnath, Alok Yadav and V. D
Balachandran, Advs. for the Respondent. .

The Judgment of the Court was delivered by

BANERJEE, J. In the light of the contentions raised and submissions
made on behalf of either side, the following question arises for consideration
and decision in these appeals:- E
"Whether the benefit of exemption under Notification No.25/95 dated
16.3.1995, as amended, is available to the goods i.e. printed drawings, designs
and plans under the Foreign Transfer of Technology Agreement imported by
the respondent?"
F
On the factual score it appears that the respondent imported certain
printed drawings, designs and plans under an agreement for transfer of
technology for the purpose of setting up a plant to manufacture Polyester,
Polyester Filament Yam and Polyester Staple Fiber: whereas the assessee
contended that the goods so imported are covered under SI. No. I 0 of the
Notification No. 25195 cus dated 16.3.1995 having 'Nil' rate of duty: The G
Revenue contended that the goods fall under SI.No.15 of the notification
attracting IO per cent ad valorem. Before proceeding further with the ·
matter the variable rate of duty chargeable as appears from the table in
the Exemption Notification and in particular SI. Nos. I 0 and 15 thereof
are noted hereinbelow: H
336 SUPREME COURT REPORTS [2001) SUPP. 2 S.C.R.

A TABLE

S. Chapter Description of Rate Conditions
No or heading goods
No. or sub-
heading No.
B (I) (2) (3) (4) (5)
10. 49 Printed books (including Nil
covers for printed books)
and printed manuals
including those in loose-
c leaf form with binder.

15 49.06 Plans, drawings and 10%ad
and designs valorem
49.11
D The factual score further depicts that by reason of the classification of
the goods in question by the revenue authorities as falling under Chapter
49.11, the goods imported were valued at DM - 32,66,900.00 equivalent to
Rs. 7,50,61,438.00 for the purpose of duty thereon. The Commissioner of
Customs however took the view that by reason of non-payment of duty as
E presented in the Table as above, the goods are liable to be confiscated and
since the same were not available for such confiscation, he imposed penalty
of Rs. I 0 lakhs on the importer under Section 112 of the Customs Act and
further penalty of Rs.5 lakhs each on three of the Directors of the Company
being the importer herein and hence the appeal before the Tribunal (CEGAT).
The Tribunal however, on a detailed judgment came to the conclusion that
F the materials imported by the appellant are books coming under Tariff item
49 .0 I and thus coming within the ambit of SI. No. I 0 of the Exemption
Notification by reason wherefor question of levy or payment of any duty for
the same would not arise as for the articles so imported rate of duty was 'Nil'
in terms of the Exemption Notification. The order of the Commissioner of
G Customs thus stood reversed in its entirety including that of the penalties
imposed and hence the appeal by Commissioner of Customs, New Delhi.

Incidentally, in view of certain conflicting decisions of the Tribunal,
the matter was referred to the larger Bench of the Tribunal and the latter
upon consideration of the relevant facts and materials on record, came to the
H conclusion as regards entitlement of the assessee under the exemption
C.J.T. v. PARASRAMPURIA SYNTHETICS LTD. [BANERJEE, J.] 337
notification as detailed above. A
Significantly, in this appeal, we have to decipher the true intent and
meaning of the words "printed books' and "manuals" as covered under Serial
No. 10 as also 'plan', 'drawing' and 'designs' as covered under Serial No.
15 of the concerned notification.
B

- Let us first analyse as to the true grammatical meaning of the words
included in SI. No. 15 to wit: "plan, drawings and design". "Plan" in common
acceptation means 'a drawing or diagram made by projections on horizontal
plane'. The Law Lexicon attributes it to be a design or a sketch and is a draft
or form of representation and its synonyms are sketch and design. Corpus
Juris Secundum (Vol.70) attributes a meaning in the similar vein as 'a draft C
or form or representation of a horizontal section of anything, as of machinery;
a map .... a scheme; project; also a method of action, procedure, or arrangement.
The word 'drawing' in common acceptation however, mean and include
'art of representing by line, delineation without colour or with single colour'
and Corpus Juris Secundum defines it as meaning a representation on a plane D
surface, by means of lines and shades.

The third expression viz., ' design' in popular parlance is used as a
synonym with plan and includes a sketch. Some times it has also been held
to be synonymous with 'figure'. The expression 'design' has ;vithin its ambit
many facets including a criminal design which connotes an evil desire, E
obviously exemption notification cannot possibly mean and imply a meaning
which can be attributed to be an evil one.

The three words 'plan, drawing and design' however, convey more or
less a common attribution and identical meaning, though however, in a larger
spectrum, three words used in the exemption notification have three individual F
attribute by reason wherefor, legislature thought it fit to specifically refer to
each of these words.

Turning attention on to Serial No. I 0, be it noted that in Chapter 49
'printed books' and 'printed manuals' including those in loose-leaf form with G
binder, has been specifically referred to a 'Nil' duty article. It is in this
context that the learned Attorney General in support of the appeal contended
that in general trade parlance a book is known by feature like (i) a book has
an author, (ii) A book has a publisher, (iii) A book is a priced publication,
(iv) The book is available to all and sundry who pay for it, (v) The book does
not have a Memorandum of Understanding; (vi) There is no confidentiality H
338 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A about the book; (vii) A book has a subject to deal with; (viii) the pages are
serially numbered and neatly bound; and (ix) the last but not the least, it
should have ISBN Code i.e. International Standard Books Number.

As a matter of fact, it has been the contention of the appellant that
Serial No. 10 has been incorporated in the exemption notification to cover
B literary works of all kinds, text books and technical publication. Mr. Attorney
General rather strongly contended that a perusal of the volume presented in
Court, by itself depicts and lends credence to his contention that imported
goods cannot come within the ambit of 'printed books' : It is a documentation
-
with vendor's drawings and operating and maintenance manuals and a close
C look would depict that the same is an installation and planning manual issued
by Zimmer. Whilst on the subject it has further been contended that through
Revenue intelligence it was discovered that the Respondents imported drawing,
design and plans under the Foreign Transfer of Technology Agreement but ...
had not paid any customs duty on such import and by reason therefor, a show
cause notice was issued as to why an amount of Rs. 76,66,494 should not be
D demanded under Section 28 (I) of the Customs Act, 1962 and as to why
penalty should not be imposed.

The Commissioner in his order upon recording the submissions of the
respondents, herein observed that out of 97 volumes of imported materials,
E 23 volumes contained pictorial drawings and designs, while 46 volumes
contained textual materials with a few drawings and designs. The
Commissioner of Customs in his elaborate and considered order dated
31.10.1997, while referring to the various documents and statements of various
persons/directors of the assessee, in para 63 has stated thus:-

F "63. In this case, the statements of Shri Om Prakash Parasrampuria,
Director, Dr. S.C. Rustagi & Shri Alok Parasrampuria were recorded
under section I 08 of Customs Act, 1962 wherein all these inter alia
admitted that the technical documents, as per the said agreement had
-
been brought into India and no duty was paid. They also admitted
that the importation of technical documents in the form of drawings
G and designs, attracts duty under chapter heading 4906/4911 at the
relevant period of time. I further observe that M/s. Parasrampuria
Synthetic Ltd. has already deposited 30 lakhs of rupees as duty liability
' in anticipation of adjudication by the department. Since the clandestine
import of technical documents and subsequent non-payment of duty
H applicable on such goods had been admitted by Mis. Parasrampuria
C.l.T. v. PARASRAMPURIA SYNTHETICS LTD. [BANERJEE, J.] 339

Synthetic Ltd., through the statements of Shri Om Prakash A
Parasrampuria, Shri Alok Parasrampuria and Dr. SC Rustagi, I do not
want to go in details on the.issue whether the goods under reference
attracted any duty at the relevant period of time. There is also no
denying the fact that at the relevant period of time, the importation
of technical documents in the form of design and drawing were B
chargeable to duty under Tariff heading No. 4906/4911."

The Tribunal, however, while .dealing with the issue, placed strong
reliance on the decision of this court in Scientific Engineering House Pvt.
Ltd. v. Commissioner of Income Tax, Andhra Pradesh, (1986] l SCC 11 AIR
1986 SC 338. The Tribunal upon appreciation of the contents of the judgment C
of this Court in Scientific Engineering (supra) came to a conclusion that the
imported goods are printed books and they come under Chapter 49 and as
such they are entitled to complete exemption as per the general exemption
No. 121 covered by S. No. 10 of the Notification as noticed hereinbefore.

While relying upon the judgment in Scientific Engineering (supra), the D
Tribunal placed reliance on the observations of this Court viz. 'it cannot be
disputed that these documents regarded collectively will have to be treated
as a book' and came to a conclusion as noticed above. It appears that reliance
was placed on two lines of this Court's decision and has been used in support
of the finding totally out of context. As a matter of fact, in our view paragraph
13 of the Report, runs counter to the findings of the Tribunal and it is in this E
context, paragraph 13 is noticed as below:

"13. If the aforesaid test is applied to the drawings, designs, charts,
plans, processing data and other literature comprised in the
'documentation service' as specified in Clause 3 of the agreement it
will be difficult to resist the conclusion that these documents as F
constituting a book would fall within the definition of 'plant'. It
cannot be disputed that these documents regarded collectively will
have to be treated as a 'book', for, the dictionary meaning of that
word is nothing but "a number of sheets of paper, parchment, etc.
with writing or printing on them, fastened together along one edge, G
usually between protective covers; literary or scientific work,
anthology, etc., distinguished by length and form from a magazine,
tract, etc." (vide Webster's New World Dictionary). But apart from its
physical form the question is whether these documents satisfy the
functional test indicated above. Obviously the purpose of rendering
such documentation service by supplying these documents to the H
340 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A assessee was to enable it to undertake its trading activity of
manufacturing theodolites and microscopes and there can be no doubt
that these documents had a vital function to perform in the manufacture
of these instruments; in fact it is with the aid of these complete and
up-to-date sets of documents that the assessee was able to commence
its manufacturing activity and these documents really formed the
B basis of the business of manufacturing the instruments in question.
True, by themselves these documents did not perform any mechanical
operations or processes but that cannot militate against their being a
plant since they were in a sense the basic tools of the assessee's trade
having a fairly enduring utility, though owing to technological
c advances they might or would in course of time become obsolete. We
are, therefore, clearly of the view that the capital asset acquired by
the assessee, namely, the technical know-how in the shape of drawings,
designs, charts, plans, processing data and other literat1ve falls within
the definition of 'plant' and therefore a depreciable asset. "

D (Emphasis supplied)

While there is some factual divergence as noticed above but the factum
of the drawings etc. not forming part of a book within the exemption
notification stands accepted in Scientific Engineers (supra) as would be evident
from the emphasised portion in paragraph 13 noticed above. In this view of
E the matter, the aforesaid decision of this Court in Scientific Engineers (supra)
does not lend any assistance to the assessee, rather runs counter to the
respondent's contentions. As can be seen from one of the volumes produced
before us, it contains documents in loose sheets merely put up in a folder. It
has none of the characteristics of a book known in the common trade parlance.
F At any rate, the principal interest in the goods is related to transfer of
technology to the assessee in the form of drawings, designs and plans for
setting up plant to manufacture polyester, polyester filament yarn and polyester
staple fiber. Thus viewed from any angle, the goods imported by the assessee
are not covered by SI. No. I 0 but are covered by SI. No.15 of the said
exemption notification.
G
Incidentally, the decision of the High Court of Gujarat in the case of
Commissioner of Income Tax, Gujarat v. Elecon Engineering Co. Ltd., (I 974)
96 !TR 672 has been strongly relied upon by the Tribunal and it has also
been recorded in the order impugned that the decision was subsequently
approved by this Court. While it is true that Elecon Engineering (supra) stand
H approved by this Court but paragraph 14 in the decision in Scientific
C.I.T. v. PARASRAMPURIA SYNTHETICS LTD. [BANERJEE, J.] 341

Engineering (supra) would make the situation clear enough to indicate that A
the same does not convey what the learned Tribunal wanted to convey.
Paragraph 14 as noticed above reads as below:

"14. Counsel invited our attention to the decision in CIT v. £/econ
Engineering Co. ltd. where the Gujarat High Court, has, after
exhaustively reviewing the case law on the topic, held that drawings B
and patterns which constitute know-how and are fundamental to the
assessee's manufacturing business are 'plant'. We agree and approve
the said view."

The question thus arises as to whether articles imported satisfy the
requirement of Serial No. I 0 of the notification. Incidentally, this Court in C
Scientific Engineering (supra) categorically posed a question as to whether
apart from the physical form, the documents satisfy the functional test! Basic
issue thus would be the nature of articles imported: now what these documents
are: Admittedly in terms of the agreement between the parties, these documents
cannot but be attributed to be technical know-how in the shape of drawing, D
design, plan and other literature: It is a literature or specification for a particular
plant to manufacture Polyester, Polyester Filament Yam and Polyester Staple
Fiber: Even without adverting to the general trade parlance of the word
'book' and its known features, a plain look at the book itself denotes it to be
a Installation and Planning Manual. The documents though loosely kept in a
binder is known as Zimmer Documentation as regards the Fisher-Rosemount E
Systems. It is a technology transfer agreement which stands documented in
a folder. The heading itself record "Installing CHIP Products and Application
Software". The heading itself thus indicative of not being a work of art by
an author - it is a record of scientific progress achieved and this particular
achievement is being transferred by way of Transfer of Technology Agreement F
between the two parties and thus cannot but be termed to be a "technical
know-how in the shape of a drawings, designs, charts, plans and other
literature" - these items have been ascribed to be a part of the plant for the
purposes of Depreciation Allowance in terms of Section 32 and 43 (3) of the
Income Tax Act. Merely by reason of the factum of certain writings on
various sheets of papers one cannot ascribe the documentation tq be a 'book': G
The word 'book' has not been defined in the Act but the 'book' in common
acceptation is a literary composition from which one may extend or advance
his or her knowledge and learning:

In any event, one of the basic canons of interpretation of statute is that
the legislature intends to ascribe the ordinary common parlance and meaning H
342 SUPREME COURT REPORTS [2001] SUPP. 2 S.C.R.

A to the words used therein. In the matter under consideration, the legislature
has used the word 'printed books' and clarified it by inclusion of covers - the
intent thus seems to be rather obvious to mean books in ordinary sense and
not any other meaning. The legislature has also included 'printed manuals'
and explained it by express words "including those in the loose leaf form
B with binder". Can the articles imported be termed to be 'printed manuals' in
'loose leaf form with binder', unfortunately, the answer cannot be in the
affirmative. It contains specifications in terms of a technology transfer
agreement, it is not a collection of various articles in trade journals but a
definite importation of technology transfer which obviously was not intended
to mean by the user of the word 'manual'. The word 'manual' means and
C implies 'a small book for handy use and includes a reference book, a hand-
book as aJ50 a text book (vide Concise Oxford Dictionary) and on attribution
of the same meaning, the words used by the legislature cannot identify to be
a product of technology transfer between two countries. Ordinary common
parlance ought to be attributed for the expressions used by the legislature and
on attribution thereof one cannot possibly come to a conclusion that the
D exemption notification ever aimed at extending the meaning to the extent as
has been effected by the Tribunal. The decision of this Court in Scientific
Engineering (supra) has been totally misread and misapplied in the contextual
facts - Scientific Engineering (supra) on the contrary lends all possible credence
to the contentions as propagated by the appellants and not the Respondents.
E The decisions of this Court in the case of Collector of Central Excise, Baroda
v. Indian Petro Chemicals, (1997) 92 E.L.T. 13 S.C. and H.C.L. Limited v.
Collector of Customs, New Delhi, (2001) 130 E.L.T.405 S.C. do not in any
way lend any support to the contentions of the respondent herein by reason
of the special fact situation as above and in any event we are not concerned
with two notifications, one of which confers benefit on to the assessee. Thus
F reliance thereon is totally misplaced in the facts of the matter under
consideration.

In the view as expressed above, we are not inclined to lend concurrence
to the judgment of the Tribunal and as such these appeals succeed. The order
G of the Tribunal stands negated and that of the Commissioner, Customs restored.
We thus answer the question noticed above in the negative. There will be no
order however, as to costs.

V.S.S. Appeal allowed.