Supreme Court of India
M/S. STP LIMITEDversusCONTROLLER OF CENTRAL EXCISE, PATNA AND ORS.
- Citation
- 1997 INSC 780
- Decided
- 2 December 1997
- Disposal
- Appeal(s) allowed
- Bench
- S P BHARUCHA
Holding
‘Tar’ under clause (5) of Tariff Item 11 includes partially distilled tars and blends of pitch, and any doubt in interpreting a taxing provision must be resolved in favour of the assessee.
Summary
MIS. STP Ltd., a manufacturer of coal‑tar products, claimed exemption from excise duty under Notification 121/62‑CE which exempts ‘tar’ falling under Tariff Item 11(5). The Central Excise authority argued that the various pitches produced by the company were not ‘tar’ within that clause and therefore not exempt. The Tribunal accepted the exemption for some products but, relying on an earlier decision, denied it for others, classifying them under Tariff Item 68. On appeal, the Supreme Court held that the definition of ‘tar’ in clause (5) of Item 11 is expansive, covering partially distilled tars and blends of pitch with creosote oils or other tar‑distillation products, and that pitch obtained by distilling coal tar is a ‘tar distillation product’. Consequently, all the appellant’s products fall within the exemption. The Court also reiterated that any doubt in construing a taxing statute must be resolved in favour of the assessee. The appeal was allowed and the Tribunal’s order set aside.
Issues considered
- Whether ‘tar’ under clause (5) of Tariff Item 11 includes partially distilled tars and blends of pitch with creosote oils or other tar‑distillation products.
- Whether pitch obtained by distillation of coal tar falls within the definition of ‘tar’ for the purpose of the exemption notification.
- How a doubt in the construction of a provision of a taxing statute should be resolved.
Legislation cited
Subjects
excise dutyexemptiontarpitchtaxing statute interpretationCentral Excise ActCentral Excise Rulestariff classificationdoubt resolved in favour of assessee
Judgment
A MIS. STP LIMITED
v.
CONTROLLER OF CENTRAL EXCISE, PATNA AND ORS.
DECEMBER 2, 1997
B [S.P. BHARUCHA AND SUHAS C. SEN, JJ.]
Central Excise Taliff, T.I. 11 (5)--'Tar'-Whether includes partially dis-
tilled tar and blends of pitch----Held, yes-Central Excise Rules 1944, Rule
8(1).
c lnte1pretation of Statutes-Taxing Statutr:-Doubt in constrnction of
provision of a taxing statutr:-Held, must be resolved in favour of assessee.
The appellant, which produced PCM, claimed exemption from pay-
ment of excise duty under a notification which, inter alia, wholly exempted
D tar products falling under Tariff Item (T.I.) 11 (5) of the Central Excise
Tariff. The respondent contended that the appellant manufactured various
types of pitch which did not come within the ambit of T.J. 11(5).
Although the Tribunal accepted the appellant's contention in rela-
tion to some of the products, it denied relief in relation to certain others
E by relying on its earlier decision where it was held that the products were
classifiable under serial Nos. 3 to 8 of T.I. 68.
Allowing the appeal, this Court
HELD : 1.1. "Tar" in clause (5) of T.I. 11 had been given an expanded
definition. Tar distilled from coal or lignite or any other mineral would
F come within the ambit of this definition. The inclusive clause, thereafter,
extended the definition to partially distilled tars and blends of pitch with
creosote oils or with other tar distillation products. Pitch was brought
about by distillation of tar. [61-A-B]
Indian Aluminum Co. Ltd. v. Collector of Custon~s, Cochin, (1988) 38
G ELT 69 (Tribunal); Steel Authodty of India Limited v. Collector of Excise, .
Bolpw; West Bengal, (1997) 91 ELT 529 S.C., referred to.
1.2. By distillation of coal tar a type of pitch was obtained. That had
to come within the phrase 'tar distillation product'. [61-D]
H Webster Comprehensive Dictionary, International Edition, referred to.
56
STPLTD. v. C.C.E.[SEN,J.) 57
2. If there was any doubt in the construction of any provisions of a A
taxing statute, that doubt to be resolved in favour of the assessee. [61-D]
- 1991.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3234 of
From the Judgment and Order dated 21.6.90 of the Customs, Excise
B
and Gold (Control), Appellate Tribunal, New Delhi in A. No. E/A. No.
424 of 86-C (Order No. 653/90-C).
S.C. Birla, Subrat Birla and Ms. Vipin Gupta for the Appellant.
c
K.N. Bhat, Additional Solicitor General, K.N. Bajpai, R.N. Verma
and V.K. Verma for the Respondents.
The Judgment of the Court was delivered by
D
SEN, J. The appellant is a Company engaged in manufacture of coal
tar products. An exemption notification was issued by the Central Govern-
ment exempting tar falling under Tariff Item 11 of Central Excise Tariff
from the whole of excise duty leviable thereon. Tariff Item No. 11 is :
Item
E
Description of Goods Rate of duty
No.
11. COAL (EXCLUDING
LIGNITE) AND COKE
ALL SORTS,
INCLUDING CALCINED F
PETROLEUM COKE :
ASPHALT, BITUMEN
AND TAR-
(1) Coal and coke not else - Ten rupees per metric
where specified tonne. G
(2) Petroleum coke, other than Twenty per cent ad valorem
calcined petroleum coke. plus two thousand rupees
per metric tonne.
(3) Calclined petroleum coke. Twenty per cent ad valorem
H
58 SUPREMECOURTREPORTS [1997)SUPP.6S.C.R.
A (4) Asphalt and bitumen Two hundred rupees per
(including cutback bitumen metric tonne.
and asphalt) natural or
produced from petroleum
or shale.
B (5) Tar distilled from coal or One hundred rupees per
lignite and other mineral metric tonne.
tars, including partially
.distilled tars and blends of
pitch with creosote oils or
with other tar distillation
c products.
The Exemption notification is as follows : [
"Tar is exempt from duty
D
TAR
121/62-CE. dt.13.6.62
In exercise of the powers conferred by Rule 8 (1) of the Central
Excise Rules, 1944, the Central Government hereby exempts Tar falling
E under Item 11 with effect from the 24th April 1962, from the whole of the
excise duty leviable thereon."
The appellant's ease before the excise authority was that its products
were fully exempt from excise duty by virtue of the above notification. The
F case of the Department on the other hand, is that the goods manufactured
by the appellant did not come within the ambit of Tariff Item 11. Therefore,
there is no question of granting any exemption from excise duty to these
products. The dispute ultimately went to the Tribunal. The Tribunal, after ·
hearing the parties and taking into consideration, the report of the Chemi-
cal Examiner, came to the conclusion that some of the goods manufactured
G by the appellant came within the ambit of clause (5) of Tariff Item 11 and,
therefore, were exempt from excise duty. The Tribunal, however, held that
no relief could be given to the assessee in respect of some of the products
in view of an earlier decision in the case of Indian Aluminium Co. Ltd. v.
Collector of Customs, Cochin, (1988) 38 ELT 69 (Tribunal). The relevant
H part of the order of the Tribunal is as under :
STP LTD. v. C.C.E. [SEN, J.) 59
"We do not see any reason to deviate from the above- referred to A
decision. Respectfully following the same we uphold the classifica-
tion of items of serial nos. 3 to 8 under Item 68, CET. Notification
No. 121/62 applies only to tar falling under Item No. 11(5), There-
fore, it does not apply to the subject pitches."
B
The goods mentioned in Serial Nos. 3 to 8 of the Chemical Examiners
Report were as under :
SL No. in the
Description of the Gist of the results
Classification
product of chemical test.
list.
c
1. xxx xxx
2. xxx xxx
3. Soft Pitch The sample is coal
tar pitch
D
4. Soft medium
-do-
Pitch
5. Hard Pitch -do-
6. Hard Medium Pitch -do-
7. Special Hard Pitch The sample is coal E
tar pitch
8. Electrode Pitch The sample has the
characteristics of
coal tar pitch.
F
:rhe Tribunal did not give any separate reasons of its own for coming
to its decision but merely followed the judgment of another Bench of the
Tribunal in the case of Indian Aluminium Co. Ltd. v. Collector of Customs,
Cochin, 1988 (38) E.L.T. 69 (Tribunal). In that case, it was held that coal
tar and coal tar pitch were two separate commodities. Technical literature G
showed that pitch was obtained from distillation of coal tar. No evidence
had been produced to show that from the pitch, which was the residuary
product of distillation of tar, any further distillation product could be
obtained. The coal tar comprised of many constituent and if any part of
these constituents were removed by distillation, than some constituents
would remain in it. This tar could be considered as partially distilled tar H
60 SUPREME COURT REPORTS (1997) SUPP. 6 S.C.R.
A and remaining identifiable constituents could be distilled out of it. So far
as the pitch was concerned, no further identifiable products were obtained
from the same on distillation for it to be considered as partially distilled
tar.
It was further held that the term "partially distilled tar" as used in
B Item 11(2) of the Central Excise Tariff had not been defined in any
technical book. Therefore, it had to be understood in the context of
distillation process and coal tar as stated above. There was no reason for
considering coal tar pitch as partially distilled tar. It was an item distinct
from coal tar or partially distilled tar.
c On behalf of the respondents, strong reliance was placed on this
judgment and it was contended that what the appellants had manufactured
was various types of pitch which did not come within the ambit of Tariff
Hem 11(5) and, therefore, did not qualify for exemption.
D On behalf of the appellant, our attention was drawn to a judgment
of this Court in the case of Steel Authmity of India Limited v. Collector of
Excise, Bolpur, West Bengal, [1997) 91 E.L.T. 529 (S.C.) where it was held
that the exemption notification exempted 'tar' falling under Item 11 of the
First Schedule to the Central Excises and Salt Act, 1944. The meaning of
E 'tar' had to be gathered from the Tariff description given in clause 5 of
Tariff Item No. 11. An inclusive definition had been given to 'tar' which
included "partially distilled tars and blends of pitch with creosote oils or
with other tar distillation products". Therefore, 'tar' would include every-
thing which has been included in the extended definition. Having regard
to the wording of the Notification and also the wording of the Tariff Item
F No. 11, the product of the assessee (PCM) qualified for the benefit of the
Exemption Notification.
On behalf of the respondent, a distinction was sought to be drawn
between tar and products made out of pitch. The contention is that what
G the appellants had manufactured were not tar distilled from coal. These
products also could not be regarded as blends of pitch with creosote oil.
Therefore, these products could not be given the benefit of the exemption
r otification.
We are unable to uphold this contention. The Tariff heading speaks
H of "Asphalt, Bitumen and Tar". "Tar" has been given an expanded definition
STPLTD. v. C.C.E.[SEN,J.] 61
in clause (5). Tar distilled from coal or lignite or any other mineral will A
come within the ambit of this definition. The inclusive clause, thereafter,
extends the definition to partially distilled tars and blends of pitch with
creosote oils or with other tar distillation products. It is not in dispute that
pitch is obtained by distillation of tar. It has been argued on behalf of the
respondents that the residue of distillation of tar is pitch. We fail to see
B
this fine distinction. Pitch is brought about by distillation of tar. If the
contention of the respondent is to be upheld, it will have to be held that
even though pitch is brought forth by distillation of tar, it is not "tar
distillation product".
We are unable to uphold this distinction for another reason. Accord- C
ing to "Webster Comprehensive Dictionary International Edition "coal tar"
means "the black viscid pitch distilled from bituminous coal, and yielding
a large variety of organic compounds used in the making of dye stuffs
explosives flavouring extracts, drugs, plastics etc." Therefore, in a sense,
coal tar itself is a variety of pitch. By distillation of coal tar a type of pitch
is obtained. That must come within the phrase 'tar distillation product'. D
Moreover, if there is any doubt in the construction of any provision of a
taxing statute, that doubt must be resolved in favour of the assessee.
' that the appeal must succeed.
In the premises, we are of the view
The judgment under appeal is set aside on the point in dispute. The E
appeal is allowed. There will be no order as to costs.
·s.M. Appeal allowed.
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