[Judgment per : Sujata V. Manohar, J]. - The petitioners have a factory at Pimpri in Pune District where they manufacture, inter alia, nylon yarn and nylon twine. The petitioners have been manufacturing nylon twine since 1962.

2. Under the Central Excises and Salt Act, 1944, First Schedule, Item 18, excise duty is payable in respect of nylon yarn as specified therein. Under Rule 8 of the Excise Rules, an Exemption Notification has been issued whereby nylon yarn which is meant for use in the manufacture of fishing nets and parachute cords is exempt from the payment of so much of the excise duty leviable under Item 18 as is in excess of Rs. 4.00 per kg. This Exemption Notification is at Ex. G to the petition. Nylon twine which is manufactured by the Petitioners is used for the purpose of making fishing nets. Prior to 1975, the Petitioners were allowed to clear nylon twine manufactured by them on payment of the excise duty as specified under the Exemption Notification, Ex. G. From 1st of March, 1975, a new item viz., Item 68 was introduced in the First Schedule to the Central Excises and Salt Act. Under Item 68, all other goods, not elsewhere specified, were to be taxed at the rate mentioned against the Item. Under Item 68, certain goods are excluded from its purview but we are not concerned in the present case with the excluded goods. Item 18 has also been subsequently amended in July, 1977.

3. After Item 68 was introduced in the First Schedule, the Excise authorities contended that nylon twine manufactured by the petitioners was not covered by Item 18 since, according to them, nylon twine was different from nylon yarn. Item 18, according to them, would only cover nylon yarn and not nylon twine. They, therefore, claimed excise duty on nylon twine under Item 68. The petitioners have paid excise duty on nylon twine under Item 68, under protest. Thereafter, on or about 29th of April 1976, the petitioners applied to the Assistant Collector of Central Excise for the refund of the excise duty collected as aforesaid. By his order dated 28th of May 1976, the Assistant Collector rejected the application of the petitioners. The appeal of the petitioners was also rejected by the Appellate Collector of Customs and Central Excise, Bombay, by his order dated 28th of September, 1976. The petitioners filed a revision petition before the Central Government on or about 16th of December, 1976. The revision petition has also been subsequently rejected by the 1st Respondent under an order dated 31st of October, 1979 which has been passed after the present petition was admitted.

4. The question, therefore, which requires to be considered in this petition is whether nylon twine can be considered as nylon yarn so as to be covered by Item 18 of the First Schedule to the Central Excises and Salt Act. Item 18 as it stood prior to the amendment of 1977 was as follows :-

“18. Rayon and Synthetic Fibres and Yarn including textured Yarn, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power -

Explanation I. - “Fibres and Yarn, other than Textured Yarn”, shall be deemed to include -

(i) man-made fibres;

(ii) man-made metallic yarn;

(iii) spun (discontinuous) yarn containing not less than ninety per cent by weight of man-made fibres calculated on the total fibre content; and

(iv) man-made filament (continuous) yarn that had not been processed to introduce crimps, coils, loops or curls along the length of the filaments; but does not include bulked yarn and stretch yarn.

Explanation II. -"Textured Yarn" means yarn that has been processed to introduce crimps, coils, loops or curls along the length of the filaments and shall include bulked yarn and stretch yarn.

Explanation III. - “Base Yarn” means yarn falling under sub-item (i) of this item from which the Textured Yarn has been produced."

After the amendment of July 1977, the material part of Item 18 is as follows :-

“II. Man-made Filament Yarns

(i) Non-cellulosic-

(a) other than textured

(b) textured

Explanation : `Textured Yarn’ means yarn that has been processed to introduce crimps, coils, loops or curls along the length of the filaments and shall include bulked yarn and stretch yarn.

(ii) Cellulosic

(iii) Metallized.”

5. According to the petitioners, nylon twine is nothing but nylon yarn other than textured yarn. It falls under the category of man-made filament yarn, non-cellulosic and other than textured. Nylon yarn is manufactured from a commercial product known as Caprolactum by treatment of heat and pressure. This material is polymerized. It is then extruded in the form of noodles and chopped into small pellets which are known as polymer chips. These chips, after certain treatment, are melted and pressed through spinnerettes. The filaments so obtained are wound together on bobbins and are further stretched and twisted to produce nylon yarn of various deniers. Usually, nylon multifilament yarn is made up of a number of filaments which are held together by a twist. Nylon twine is produced by giving a ply twist or a cable twist to strands of 210 denier nylon yarn. Nylon twine is mainly used for making fishing nets.

6. In the Encyclopaedia Britannion, Vol. X, (abridged version), Yarn is described as follows :-

“YARN, continuous strand of finres grouped or twisted together and used to construct textile fabrics. Yarns are made from both natural and man-made fibre, in filament or staple form. Filament is fibre of great length, including the natural fibre silk and the man-made fibres. Most fibres that occur in nature are of fairly short length, or staple, and man-made fibres may be cut into short, uniform lengths to form staple.

Spinning is the process of drawing out and imparting twist to fibre. Filament yarns generally require less twist, produces strong yarn; low twist produces softer, more lustrous yarn; and very tight twist produces crepe yarns. Two or more single strands of yarn may be twisted together, forming ply yarn." etc.

The Indian Standards ‘Institution has issued a Standard bearing No. IS 332 of 1967 which defines the expressions “twine” and “yarn”. Twine is defined as “Applied yarn made by twisting together two or more strands of yarn.” Yarn is defined as “A” continuous strand of textile fibres or filaments with or without twist, suitable for paying, knitting, braiding, weaving or otherwise intertwining to form a textile end product..." The Indian Standards Institution has also issued Standard No. IS 4402-767 relating to netting for fishing. It defines the expression “netting yarn” as follows:-

“Yarn (a general term which embraces single yarn including monofilament, multiple folded yarn, cabled yarn) which is suitable for the manufacture of netting.

Note : The principal types of netting yarns are mono-filaments and twines. The latter are defined below :

2.2.1. Netting twine: A product of one twisting operation using two or more single netting yarns or mono-filaments.

2.2.2 Cable netting yarn : Product of further twisting operations using two or more netting twines."

Similarly, the Food and Agriculture Organisation of the United Nations has published a manual called Netting Materials for Fishing Gear by Gerhard Klust. Two diagrams from the manual are annexed as Ex. B to the affidavit, Ex. I. These diagrams show the construction of a netting yarn and common types twisted PA continuous filament netting yarns. These are twines which are used as netting material for fishing gear. The petitioners have also annexed to the revision application and to the petition orders received by them from different parts, including one from the Director of Fisheries, Madras, which go to show that nylon twine is considered as a type of nylon yarn used for making fishing nets. They have also annexed two affidavits, one from the Managing Director of Maharashtra Rajya Macchimar Sahakari Sangh Limited and the other from a partner of Maharashtra Fishing Material Company, in which it is stated that nylon twine is a category of nylon yarn. The petitioners had also made available the persons who have made these affidavits for cross-examination at the time of the hearing of the revision application, but the respondents have not cross-examined them. The respondents are, however, relying upon certain affidavits which say that a person who wants to purchase nylon twine asks for nylon twine and not for nylon yarn.

7. Before any product can be put in the residuary Item, it is necessary for the respondents to establish that the product is not covered by any of the other Items which are specified in the First Schedule. They must, therefore, establish that nylon twine is not covered by Item 18 which deals, inter alia, with nylon yarn. The various definitions which have been cited go to show that nylon twine is considered as a specific type of nylon yarn. It is twisted or cabled yarn. Further, the trade inquiries which have been received by the petitioners go to show that, in the trade, nylon twine is considered as a kind of nylon yarn. Undoubtedly, it is a special type of yarn which is prepared for a special purpose, namely, to make it suitable for being utilised in the manufacture of fishing nets or ropes. If, as a result of this special process being applied to nylon yarn, a new product emerges as contended by the respondents, then, undoubtedly, the new product would be something other than nylon yarn and it will have to be classified under the residuary Item 68. If, on the other hand, it retains its character as nylon yarn, then the mere application of a special process or giving it a different name, viz., nylon twine, cannot debar it from being considered as nylon yarn, though of a special type. It would have to be included in Item 18 which deals with yarn.

8. The Revisional authority appears to have proceeded on the footing that a mere look at twine goes to show that it is different from yarn, It has also proceeded to hold that, in commercial parlance, different words are used for twine and yarn. It has held that twine has a different name and has a different use and different characteristics, and hence it is a commodity different from yarn. The test, however, which has to be applied in order to decide whether twine is different from yarn is, whether, in common parlance and as understood by people in the trade, twine is considered as something different from yarn. A different use, by itself, is not a conclusive proof. Different types of yarn may be used in the manufacture of different commodities. Nevertheless, they continue to be yarns. Similarly, physical characteristics of different types of yarn also differ. In fact, some of the points of differentiation are enumerated in Item 18 itself. Hence the real guideline in a case like this is the manner in which twine is considered by ordinary people in the trade - whether it is considered as a certain type of yarn or whether it is considered as a totally different product.

9. The above test has been applied in a number of cases. Thus, in Dunlop India Ltd. v. Union of India, AIR 1977 S.C. p. 597, the Supreme Court has stated that meaning given to articles in a fiscal statute must be as people in trade and commerce, conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we see no difficulty for statutory classification under a particular entry. The Supreme Court goes on to observe :

“When an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphange of the residuary clause.”

In the present case, therefore, if nylon twine is considered by people in the trade as a type of nylon yarn, there is no reason why it should be denied its rightful place under Item 18 and put in the residuary clause. The definitions of the expressions “yarn” and “twine” given in the Standards issued by the Indian Standards Institution referred to above are relevant for this purpose, because these are the specifications which relate to the terms as understood in the trade. Similarly the United Nations manual also deals with the information relating, to the netting materials used in the fishing industry. All this goes to show that twine is considered as a kind of yarn at least in the trade and industry in which it is utilised. The trade inquiries received by the petitioners also go to show that nylon twine is considered in the trade as a kind of nylon yarn. Even if we ignore the affidavits filed by both the sides, this material, in our view, would be sufficient to show that nylon twine is considered as a kind of nylon yarn.

10. The term “yarn” has been considered in a number of cases by different Courts, mainly in connection with Sales Tax. Thus, in Madura Mills Co. Ltd. v. Government of Madras and another, 25 S.T.C. 407, the Madras High Court was required to consider whether cotton tyre cord warp sheet could be considered as cotton yarn under the provisions of the Sales Tax Acts. The Court came to the conclusion that string, cord and rope are merely different species of the same genus, namely, yarn, and held that cord is cotton yarn in the accepted commercial sense. In Commissioner of Sales Tax, U.P. v. Sarin Textile Mills, 35 S.T.C. 634, the Supreme Court was required to consider whether woollen carpet Kati was yarn under the U.P. Sales Tax Act. The Supreme Court, after referring to the dictionary meaning of the term ‘yarn’ that a fibre, in order to answer the description of yarn in the ordinary commercial sense, must have two characteristics. Firstly, it should be a spun strand. Secondly, such strand should be primarily meant for use in weaving, knitting or rope-making. In this case also, the Supreme Court applied the test of ordinary commercial sense. There is also an unreported decision of the Calcutta High Court in Civil Rule No. 3934(W) of 1970, General Distributors (International) v. Commercial Tax Officer, Radhabazar Charge, dated 1st March, 1973, where Chittatosh Mukherjee, J. has considered twine thread purchased by the petitioner therein as yarn within the meaning of the Bengal Finance (Sales Tax) Act. In the present case also, if we consider the characteristics of yarn as laid down in the above case by the Supreme Court, twine satisfies both the tests. It is a spun strand and it is primarily meant for use in weaving fishing nets and in rope-making.

11. A number of cases were cited before us in order to show when a new product emerges after the application of a process. Thus, our attention was drawn to Commissioner of Sales Tax v. Dunken Coffee Manufacturing Co. 3S S.T.C. p. 493, which considered the meaning of the word ‘manufacture’ and held that French Coffee was a new commercial product and the process required to produce it amounted to ‘manufacture’ within the meaning of clause (17) of Section 2 of the Bombay Sales Tax Act, 1959. A reference may also be made to Deputy Commissioner of Sales Tax v. Pai and Co., 45 S.T.C. p. 58, and State of Tamil Nadu v. Pyare Lal Malhotra, 37 S.T.C. p. 319. The classic test for deciding whether there is ‘manufacture’ of a new product or not is laid down in McNicol and another v. Pinch, 1906(2) Indian Law Reports K.B, 352. In that case, Darling J. observed that, in a sense, you can only make one thing out of another. The essence of making or manufacturing is that it shall be a different thing from that out of which it is made. In other words, we come back to the same test, namely, whether the product that emerges is something different from the thing out of which it is made. If yarn, after twisting, remains yarn-although it is known as twine-, then no new product emerges.

12. Our attention has been drawn by Mr. Paranjape who appears for the respondents to Item 18D of the First Schedule to the Central Excises and Salt Act, 1944, as amended in 1977, which deals with JUTE YARN, ALL SORTS. In Explanation I, it is stated that Jute yarn shall include jute twist, thread, rope and twine. Similarly, before the amendment of 1977, Item 18D dealt with JUTE TWIST, YARN, THREAD, ROPE AND TWINE, ALL SORTS. etc. From this Item, it is not possible to conclude that, for the purposes of the Central Excises and Salt Act, twine is treated as something different from yarn. On the contrary, this Item goes to show that, under the Act, twine is included in yarn. It has been argued that, but for the Explanation, twine would have been excluded from yarn. This argument has not appealed to us. The Explanation goes to show that twine is included in yarn. It is not possible to conclude that, without such Explanation, twine should not be considered as yarn.

13. The practice which was followed by the respondents before 1st of March, 1975 when the residuary Item 68 was introduced for the first time in the First Schedule, also throws some light on the controversy. Admittedly, prior to 1975, nylon twine was cleared by the petitioners under the Exemption Notification issued under Item 18. This practice is, however, not conclusive on the question. The petitioners have filed an affidavit dated 3rd April, 1980 and have annexed to it copies of Classification List which go to show that, prior to 1975, the petitioners have classified twine under Item 18. The Classification List has been accepted by the respondents. In their Gate Passes also, the petitioners have described twine as nylon yarn/twine. The respondents have subsequently filed an affidavit on 8th April, 1980 in which they have claimed that they had taxed nylon yarn and not nylon twine under the Exemption Notification, Ex. G. The respondents contend that they taxed the yarn which was used in the manufacture of twine. Since the excise duty has been levied per kg. in respect of the present item and since the weight of the original nylon yarn used and of the eventual twine remains the same, it is possible to contend that excise duty could have been levied either on the strands of the yarn used in twine or on the twine itself. This practice, therefore, does not conclude the matter.

14. There is, however, sufficient material on record which goes to show that nylon twine manufactured by the petitioners has been treated as a kind of nylon yarn by the people in the trade. It is commonly considered as yarn. Hence it can be classified under Item 18. The respondents have failed to establish that nylon twine must be taxed under Item 68, as it is not convered by Item 18 of the First Schedule. The respondents are the taxing authorities, and they must show that the item in question is taxable in the manner claimed by them. In this connection, a reference may be made to the decision in Deputy Commissioner of Agricultural Income-Tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co., 20 S.T.C. p 520, and the observations of the Bombay High Court in Sanghvi Non-Ferrous Metal Industries v. Union of India and others - 1979 E.L.T. (J 543), at p. 546, to the effect that the burden is on the taxing authorities to show that the item in question is taxable in the manner claimed by them. In any event, there is enough material on record which goes to show that nylon twine has been commercially considered as a special kind of nylon yarn. Hence, in the words of the Supreme Court, it must find a place in the parent Item 18 of the First Schedule. It cannot be consigned to the orphanage of the residuary Item 68.

15. The petition is, therefore, allowed. The rule is made absolute. The respondents are directed to refund to the petitioners the excess amount collected from the petitioners as Central Excise Duty on the basis that nylon twine falls under Item 68 of the First Schedule to the Central Excises and Salt Act.

16. In view of the circumstances of the case, there will be no order as to costs.

[Per Masodkar, J]. -

17. I prefer not to record dissent to the judgment of my learned sister fudge; for the facts she feels that “nylon twine” in commercial connotation goes will under the terms of Entry 18-II, namely, “Man-Made Filament Yarns”, which is the main descriptive Entry of the Excise Tariff in issue. In the matter of a tax, when two possible views are available with regard to tax liability, I think, the one that favours the subject should yield to that one in favour of the revenues. No doubt, left to myself, as far as the commercial commodity of “yarn” is concerned, I would have rendered the judgment in favour of the revenue, holding that “yarn” signifies the basic filament and is distinct from the “twine”, which is a processed and manufactured article out of the yarn and not the yarn itself. I could have drawn good support for this view from the judgment of the Supreme Court in The Commissioner of Sales Tax, U.P. v. M/s Sarin Textile Mills, AIR 1975 S.C. 1262, with regard to the connotation of the word “yarn” to mean only “any spun thread specially of kinds prepared for weaving, knitting or rope-making”. Clearly “twine” is the product being a thick twisted article made out of “yarn.” Ex. 1 produced for the petitioners and Ex. 2 for the revenue leave no manner of doubt that “yarn” and “twine” are different articles, though in the make of the latter the former is used. Also the judgment of the Kerala High Court in Deputy Commissioner v. Khader Kunhi Sons, (1976) S.T.C. 227, clearly supports the distinction between cotton “yarn” and “twine”. Even in Tariff Entry 18-D, dealing with “Jute Yarn”, Explanation I supports that "yarn" may be distinct from twist, threat, rope and twine. However, these are not matters conclusive of the controversy at issue before us and the same is determinable by applying the normal principles, one of which is putting a beneficient construction on a taxing statute in favour of the subject.

18. Further, this is a case of applicative tariff item, the controversy being circumscribed to find out as to whether a particular item describing the goods, or the general item called “the residuary item”, should hold the field for the purpose of fiscal liability. In other words, this is not a case where total exemption from excise liability is sought. Now, as far as Tariff Item No. 18-II(i)(a) is concerned, it is under the Entry which uses a plural as “filament yarns” as distinguished from singulars available in other Entries under Tariff Item No. 18 itself, see Entries 18-III, 18-B, 18-C, 18-D, 18-E and 18-F, which use singular denomination as “yarn”. Therefore, it is possible to attach significance to plural and infer that all yarns of the kind are within the contemplation of the Entry; and “twine”, being “a netting yarn” or is a specie of the product used mainly for that and such ancillary purposes, is well covered by such language. The use of the plural as “yarns” can be suggestive to the commercial world that all kinds of “yarns” of the type mentioned in the Tariff Item are intended to be excised. This is more so because, as far as the “man-made filament yarns” are concerned, having origin from non-cellulosic substances, the Entry is classified in textured and other than textured, respectively being clauses (b) and (a) of Entry No. 18-II(i). That signifies that all yarns are divided into two classifications, one being textured and the other being non-textured. “Twine”, though a different item of goods, can be understood as having been classed under the broad category of “other than textured non-cellulosic man-made filament yarn”. I think, this possibility is not entirely ruled out, though it appears to be anomalous because of the nature of the yarn and the twine. The benefit of this, in my view, should go to the assessee.

19. The provisions of the Central Excises and Salt Act, 1944 clearly and by express intendment enjoin that the Schedule has to contain, with definite specifications, the item, of excisable goods. In Section 2(d) of the Central Excises and Salt Act, 1944, the term “excisable goods” is defined to mean such goods which are specified in the First Schedule and Section 3(1), which is the charging section, states that duties of excise are levied on excisable goods. The First Schedule has got three columns and of importance is the middle or the second column with the heading “Description of goods”. The term “goods” by itself is not defined. Therefore, it is of utmost importance and it appears to be the clear intention underlying such a fiscal statute that there would be sufficient description with regard to the item of goods which are subjected to excise duty. When sufficient prescriptive or descriptive details of the goods are not available and the item falls in one or the other Entry, one would tend to raise, in keeping with the fairness, the liability by applying the principle of benefit to the subject. Fiscal statutes, for this reason should always be specific and leave no manner of doubt in the minds of those who are required to obey the same particularly as to the item that is being subjected to fiscal levy. To introduce general Entries, like the one at Entry No. 68, may have expedient legislative purpose behind it, but, for the purpose of tariff in the context of Section 2(d) and Section 3, that can hardly be an appreciative exercise of legislative activity for obviously it does not give the definite description of the goods, nor does it disclose the identity of the goods, everything being left to the applicative adjudications by the Authorities concerned as the Entry embraces universally “all other goods”, which is too wide and too general without any descriptive details and being always open to doubt and debate. The importance of specifications by description of the goods cannot but be emphasised when we are virtually in the midst of a commercial explosion all dominated by technological advances. Our age itself is a factory age; products are being turned out every second in new forms and new shapes. The complexity and competitive market may necessitate such general enactments, but in the matters of tax, expediency can hardly be preferred to certainty. The purpose of Central Excises and Salt Act, 1944 is to earn revenue and for that to classify the substances or the manufactured articles according to the general and commercial usage and known denominations of such articles. General Entries in such a field, though called “residuary entries”, can hardly subserve that purpose. It is no answer that acting upon the power the Central Government has come out with a big list of exemption Notifications with regard to several types of goods. Surely, that is a subsidiary legislative activity. The effort of the revenue being to press the general entry into service, I think, if reasonable relief can be given under the main Entry, then the assessee is entitled to relief. The general Entry further uses the words “all other goods”. The word “other” cannot but be clarified. That word is suggestive of the connotation, being “nor the same as one or more or some already mentioned or implied, separate in identity, distinct in kind”. To give full meaning to that qualitative term, therefore, even an implication under a particular connotation of the word will have to be ruled out. As stated above, there is a possibility of commercial understanding that “twine” is treated as a kind of yarn by the main Entry and if that be so, Entry No. 68 would not be available to the revenue. To be “other goods”, it will have to be shown that it is not, either by express or implied mention, covered by any other item.

20. By such an approach in the present case the levy under Tariff Entry No. 18 II(i)(a), as is proposed by the judgment of my learned sister Judge, is not likely to frustrate the object of the revenue. Hence, I concur.

Per Court :

The Rule is made absolute. No order as to costs.