1. Appeal under Section 35B of the Central Excises and Salt Act, 1944 praying that in the circumstances stated therein, the Tribunal will be please to set aside the order of the Collector of Central Excise (Appeals), Madras, dated 22-10-1983 in C. No. V/34A/11/83, with consequential refund of duty.
2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of Shri C. Natarajan, Advocate for the appellant and upon hearing the arguments of Shri J.M.K. Sekhar, Senior Departmental Representative the the respondent, the Tribunal makes the following Order : 3. This is an appeal against the order of the Collector of Central Excise (Appeals), Madras, referred to supra, confirming the order of the Assistant Collector of Central Excise, Madras II Division, dated 23-5-1983 in C. No. IV/16/293/82 demanding duty under Rule 196 of the Central Excise Rules, 1944, hereinafter referred to as Rules, from the appellants.
4. The appellants manufacture tractors for which they procure motor vehicle parts and accessories as per procedure prescribed under Chapter X of the Rules. The appellants have obtained L6 licence. In respect of items received by the appellants under Chapter X Procedure which are found detective at the receiving stage, they are rejected and included in the rejection reports and returned to the concerned original manufacturers under Rule 196B (1) read with Rule 173P(3) and the quantity so returned is also deducted ii, the register prescribed under Rule 194 viz. R.G. 16/stock register. In respect of the items which were not rejected at the receiving stage, they are inspected subsequently at the assembly line before fitment on tractor and goods that were found damaged or defective at the stage of line inspection before they are put into assembly line, they were sent to the original manufacturers as per rules and in terms of Notification No. 176/81, dated 7-11-1981. In this appeal we are only concerned with such items that were rejected in the assembly line before fitment on tractor after issue to the manufacturer and after inclusion in the R.G. 16 register and returned to the manufacturers on grounds of defectiveness for the period from 24-5-1982 to 13-8-1982. Since in the instant case, the goods have not been found defective or damaged on receipt but at a later stage, the authorities took the view that it was in contravention of Rule 196B read with Rule 173P(3) and initiated proceedings by issue of a show cause notice against the appellants which ultimately culminated in the impunged order now appealed against.
5. The learned Counsel appearing for the appellants submitted inter alia that- (1) the construction of Rule 196B read with Rule 173P(3) by the authorities and the interpretation put on the words "on receipt" are not in accordance with law and accepted principles of interpretation; (2) checking of each and every component at the time of receipt itself is an impossibility, particularly having regard to the magnitude and quantum of receipts and a provision of law or rule which is intended to the benefit of an assessee cannot be construed in such a rigorous and strict way so as to render it totally unworkable and inoperative; (3) when a defect of a part or a component is noticed before it is actually put into use in the tractor production, such rejection at the "line stage" should be construed to be rejection on receipt at the "receipt stage".
The learned Counsel for the appellants also relied on the rulings in AIR 1980 S.C. 485-Commissioner of Income Tax v. National Taj Traders and (2) AIR 1975 S.C. 17-Bolani Ores Ltd. v. State of Orissa and another, in support of his submissions, which I shall advert to at the relevant stage.
6. The learned SDR contended that the reasoning of the authorities below is correct and proper and inasmuch as Rule 196B(1) read with Rule 173P(3) clearly envisages returning of defective or damaged goods to the original manufacturer subject to defective or damaged nature of the articles in question being found on receipt, it would not be open to to the appellants to seek liberal construction of the provisions so as to enable them to claim benefit even in respect of articles rejected in the assembly line inspection.
7. I have carefully considered the submissions of the parties herein.
It will be seen that Rule 196B read with Rule 173P enables a holder of L6 licence as' that of the appellants to return goods to the original manufacturer after informing the Central Excise officers and does not restrict the return only to those goods found defective immediately on receipt but also covers goods which are found defective in the assembly line. As rightly contended by the learned Counsel for the appellants when appellants received substantial quantity of goods it would be physically impossible to examine each and every one of the items in order to find out as to whether it is defective or damaged or unsuitable. To superimpose such an onerous task on a manufacturer as that of appellants would force him to do the impossible and the relevant rules and the words "on receipt" therein, in my opinion, cannot be put into a straight jacket as it were with such a degree of precision and exactitude so as to cover rejection eao instantal on receipt of goods. If such an interpretation or construction of the relevant rules were to be adopted it would lead to a very anomalous situation rendering the very rule itself unworkable inoperative, nugatory and otiose, for the simple reason that there should indisputably be an interregnum of at least some split second time between the receipt of the goods and noticing the defect or damage thereon on receipt. The learned Collector (Appeals) has construed the words "on receipt" occurring in Rules 196B and 173P(3) very strictly and assigned the dictionary meaning which explains the proposition 'on' as "exactly at", "contemporaneously with" etc. I am afraid I cannot subscribe to such a narrow and strict rule of interpretation adopted by the authorities below. It is axiomatic proposition of law that interpretation of statutory enactment is not a mechanical task but is an attempt to discover the intent of the legislature from the language used by it. Language being an imperfect instrument for expression of human thoughts, it would be idle to expect every statutory provision to be drafted with "divine prescience and perfect clarity". The dictionary meaning of words cannot always be the guiding factor, much less a conclusive one, for after all one cannot make a fortress out of a dictionary. It is a well-recognised rule of construction that absurdity and mischief may be avoided, and where a plain literal interpretation produces manifestly an absurd and unjust result which could never have been intended by the legislature, Courts have found it expedient and legal even to modify the language and have gone even to the extent of adding some violence to it so as to achieve the obvious intention of the legislature and produce a rational construction. The learned Counsel for the appellants drew my attention to the trade notices issued by the authorities and in particular to Trade Notice Nos.
190/82, dated 23-9-1982 and 84/84, dated 2-6-1984 and the last one makes it abundantly clear that the goods which are taken into account in R.G. 16 after filing the D-3 declaration, if later on were found to be defective or damaged, before they are actually subject to any process, those goods may be permitted to be returned to the original manufacturer within two months from the date of receipt subject to a further extension by the authorities. The learned SDR contended that the aforesaid trade notices will not be applicable as they were not in existence at the relevant time. In my opinion, even though the applicability of the trade notices in respect of the period covered under the present case cannot strictu sensu come within the ambit of the doctrine of con-temporanea expositio I would prefer to adopt what may be called administrative construction of the rules by the authorities and extend the benefit to the appellants. The rulings relied upon by the appellants and referred to supra would also highlight the legal position that strict construction of processual part or machinery part of the statute is not warranted, taxing statute notwithstanding. The Supreme Court has clearly held that it is a well-settled principle of law that fiscal statute should be construed strictly is applicable only to taxing provisions, such as charging provision or a provision imposing penalty and not to those parts of the statute which contain machinery provisions. Indeed the appellate authority has also observed that it would be a different matter if the appellants were to return such goods on the ground that they have become surplus to their needs. Therefore, on a consideration of all the relevant rules, I am of the view that a liberal interpretation of the rules as envisaged by the later trade notices, referred to supra would be just and proper. In this view of the matter, I set aside the impugned order appealed against and allow the appeal.