R. SIKARIA Vs. COLLECTOR OF CENTRAL EXCISE, HYDERABAD

JUDGEMENT

(1.) Is Wafer a biscuit? It has become necessary to give a ruling on this question because the Collector, Central Excise, Hyderabad has levied duty and also penalty on wafers as he was of the opinion that wafers are included in the category of biscuits which were considered to be excisable goods within the meaning of section 2 (d) of the Central Excise and Salt Act, 1944 (hereinafter referred to as the Act). The petitioner is the proprietor of a Concern known as Messrs International Foods. The firm is engaged in the manufacture of wafers and cones. The first respondent levied excise duty on the wafers manufactured by the petitioner under the Act.

(2.) It is the case of the petitioner that wafers do not come within the category of biscuits and, therefore, they are not liable for assessment of duty as they are not excisable goods as defined under Section 2(d) or the Act. The petitioner, therefore, prays for a declaration that wafers are not covered by this and hence are not chargeable to duty.

(3.) Mr. V. Jagannadha Rao, in support of his contention that wafers are not biscuits first reminds me of the established principle of interpretation that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. He also reminds me that a provision in a fiscal statute which is intended for the benefit of the tax payer must be construed liberally in favour of the tax payer with a view to ensuring benefit to him and not in a narrow and pedantic manner with an eye to deprive him of the benefit. With these reminders he proceeds to argue that until 1970 biscuits were not considered to be excisable goods but by the Finance Act 1970 biscuits were included as item (1)(c) in the first schedule to the Act. He further contends by reference to Encyclopaedia Britannica that the processes in the manufacture of biscuits and in the manufacture of wafers are completely different and, therefore the word 'biscuit' cannot under any circumstances be considered to include wafer. In order to appreciate the contention of the learned Advocate it is necessary to examine the relevant provisions of the Act. Section 2(d) of the Act defines excisable goods to mean goods specified in the first schedule as being subject to a duty of excise and include salt. Section 3 of the Act is a charging section and it provides that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India. Sub-Section (2) of Section 3 provides that the Central Government may, by notification in the official Gazette, fix, for the purpose of levying the said duties, tariff value of any articles enumerated either specifically or under general hearings, in the first Schedule as Chargeable with duty ad valorem and may alter any tariff values for the time being in force. In furtherance of this Section, biscuits were included as item (1)(c) in the first Schedule. The Ist respondent in his counter has stated that he has considered wafers as biscuits because wafers are known as biscuits in the market and it is common experience to find wafers packed in fancy tin boxes by well- known manufactures such as J.B. Mangharam and Co., Shalimar Biscuits and Parle Products. Another reason which prompted the first respondent to consider wafers in the category of biscuits is the meaning given to wafer in Chamber's Twentieth century dictionary as "very thin cake or biscuit baked in. Wafer-irons or tongs, formerly eaten. It is also stated in the counter that Corpus Juris Secundum describes wafer as a thin cake or biscuit. Since biscuits are included as food product in tariff item I(c) of the First Schedule to the Act, he was of the opinion that Wafers came within the category of biscuits and consequently were assessable to duty under the Act.