Smt. Sujata V. Manohar, J.
1. The original petitioners are the respondents in the appeals. They manufacture, inter alia, cotton fabrics falling under Tariff Item No. 19 of the First Schedule to the Central Excises and Salt Act, 1944. Amongst the cotton fabrics manufactured by the petitioners there is a variety known as 'A.B. Dyed Water-Proofed Umbrella Cloth', which is the subject-matter of the two appeals. The initials A.B. stand for Aniline Black. The petitioners manufacture this umbrella cloth in different grades such as - Superfine, Fine, Medium A, Medium B or Coarse. The petitioners use wax emulsion in order to make the fabric water-proof. After wax emulsion treatment the umbrella cloth of the petitioners is screener calendered at high temperature and under heavy pressure to produce silk like shine. As a result of screener calendering the pores or interstices are also filled up due to pressure; and wax-like emulsion melts at high temperature to form a uniform film which permeates right into the fabric. This material is sold by the petitioners as water-proof umbrella cloth.
2. Under notifications issued under the Central Excise Rules, 1944 the effective rates of duty for cotton fabric falling under Tariff Item No. 19 have been prescribed from time to time. Under a notification dated 1st March, 1966 cotton fabrics are divided into five categories - Superfine, Fine, Medium A, Medium B and Coarse. Each of these categories is sub-divided into (a) grey (unprocessed), (b) bleached or/and dyed or/and printed, (c) Mercerised or/and water-proofed, whether rot-proofed or not (including rubberised) and (d) Processed in any other manner including shrink-proofed and/or organdie processed. For cloth falling under sub-category (c) a lower rate of duty is prescribed than for cloth falling under sub-category (d). The difference in the rate of duty prescribed under (c) and (d) is 15 paise. We are concerned with sub-categories (c) and (d). According to the petitioner the umbrella cloth in question falls under sub-category (c) since it is water-proofed fabric. According to the Excise authorities it falls under sub-category (d).
3. Under a subsequent notification dated 1st March, 1968 some alterations are made in the provisions relating to duty on cotton fabrics. But the material provisions relating to the point of issue remain the same because the language and description of fabrics falling under sub-categories (c) and (d) remain the same. Under this notification also the difference in the rate of duty between cotton fabrics covered by sub-items (c) and (d) is of 15 paise.
4. Under a notification dated 1st March, 1969 there is a slight difference in the description of the varieties of cotton fabrics. Cotton fabrics under this notification are divided into seven sub-categories instead of four and itemised as sub-items (a) to (g). In the present petition we are concerned with only sub-items (d) and (f) of this notification. Under sub-items (d) of this notification cotton fabrics which are covered are 'Mercerised or/and water-proofed, whether rot-proofed or not (including rubberised) but not printed.' Sub-item (f) is as follows : 'Processed in any other manner including shrink-proofed and/or organdie proceeded but not printed.' The difference in the rate of duty continues to be 15 paise between cotton fabrics covered by sub-items (d) and (f). According to the petitioners the umbrella cloth in question falls under sub-item (c) of the notification dated 1st March, 1966 and 1st March, 1968 and sub-item (d) of the notification dated 1st March, 1968. Up to 1968 the petitioners were allowed to clear this cloth under the category of water-proofed cotton fabrics covered by sub-item (c) of the notifications of 1st March, 1966 and 1st March, 1968.
5. A trade notice dated 5th April, 1968 was however issued by the Collector of Central Excise, Bombay, under which a distinction was made between water repellent cotton fabrics and water-proofed cotton fabrics. The notice sets out that water repellent cotton fabrics are to be distinguished from water-proofed fabrics; and it has been decided by the Government of India that water-proofed fabrics are liable to duty at the rates prescribed for cotton fabrics processed in any other manner. The notice sets out that this decision has come into effect from 1st of April, 1968. It is contended by the Excise Authorities that in view of this trade notice the umbrella cloth manufactured by the petitioners should be considered as water repellent cloth rather than water-proofed cloth. It would, therefore, attract a higher rate of duty since it would be classified under sub-item (d) of their notifications of 1st of March, 1966 and 1st of March, 1968 and/or sub-item (f) of the notification of 1st March, 1969.
6. Appeal No. 30 of 1979 covers the demand made on the petitioners to pay the higher rate of duty in respect of umbrella cloth cleared by them from 1st of April, 1968 to 23rd of October, 1968. In Appeal No. 31 of 1979 the period covered is from 24th October, 1968 to 30th June, 1969. The notices of demand which are the subject-matter of these two appeals relate to the above periods. In respect of these demand notices proceedings were taken before the Excise Authorities. By their final orders in revision the Excise authorities have decided the issue against the petitioners. The orders in revision were given after the petitions in the present case were filed. The petitioners have challenged the above orders of the respondents.
7. The only question which requires to be answered is whether umbrella cloth manufactured by the petitioners can be classified under the aforesaid notifications as water-proof cotton fabric or not None of the notifications makes any reference to water repellent cotton fabric. Under the scheme of the notifications we have to consider whether the cloth in question can be classified as water-proof fabric. If it cannot be so classified it will go under the residuary entry dealing with cloth processed in any other manner. The respondents have sought to make a distinction between cloth which is water repellent and cloth which is water-proofed. They have relied upon various technical dictionaries and trade terminology used in western countries in order to distinguish water-proofed fabric from water repellent fabric. According to the respondents water-proofed fabric must be such that neither water nor air can permeate through it. In contradistinction water repellent fabric is such that only water cannot permeate through it. Air can permeate through such fabric. In other words, water repellent fabrics are fabrics which can 'breathe' and are suitable for making wearing apparel.
8. As pointed out by the learned Trial Judge, with whose reasoning we are in respectful agreement, there is no unanimity even amongst the western technical experts as to which fabrics are to be considered as water repellent and which are to be considered as water-proofed. What is more important, we are not concerned so much with the technical interpretation of the terms 'water repellent' or 'water-proof'. Tariff entries as well as terminology used in excise notifications relating to such tariff entries, must be interpreted in the manner in which they would be understood by the trading community to which such tariff entries and tariff notifications apply. As held by the Supreme Court in the case of Dunlop India Ltd. v. Union of India, reported in 1983 E.L.T. 1566 (S.C.) : AIR 1977 S.C. 597, 'Meanings 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.... 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 then see no difficulty for statutory classification under a particular entry.' There are observations to a similar effect in the case of M/s. Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh : 1981(8)ELT325(SC) as also in the case of M/s. MSCO. Pvt. Ltd. v. Union of India and others : 1985ECR110(SC) and in the case of M/s. Rathi Khandsari Udyog, etc. v. State of U.P. : 2SCR966 . In the present case the notifications do not Make any distinction between water repellent and water-proofed cloth. Nor do they refer to any technical tests. The term 'water-proofed cloth' is well known in the trade in this country. The petitioners have relied upon a large number of affidavits made by people in the umbrella trade as well as people in the textile trade to the effect that the cloth in question manufactured by the petitioners is known in the market as water-proofed umbrella cloth. There is no material produced by the respondents which would go to show that in the textile trade cloth manufactured by the petitioners or cloth of a similar type is known as water repellent cloth. In the absence of any material to this effect produced by the respondents, the material produced by the petitioners must be accepted. Hence there is ample material to show that in the textile trade the cloth in question is known as water-proofed cloth. If this is so it must be classified as such under the Notifications in question.
9. Even if the technical tests relating to water-proofed material are to be gone into, the petitioners have produced several certificates issued from time to time by the textile Commissioner to the effect that the umbrella cloth in question manufactured by the petitioners has been found to be water-proofed. The petitioners are required to obtain approval of 'water-proof ness' from the textile Commissioner and the petitioners have obtained such approval from time to time. The petitioners have also submitted an affidavit of Dr. Brach H. Daruwall, Professor of textile Chemistry and Director of the Department of Chemical Technology at the University of Bombay. In this affidavit Dr. Daruwall has stated that in the textile trade in India water-proofed fabric is regarded as one in which the interstices are filled with a water-impermeable material, resulting in a continuous surface of low vapour air permeability. He has said that a fabric whose interstices are filled with water-impermeable material may still be regarded as water-proofed fabric if the vapour air permeability does not exceed 10 to 15 per cent. He has said that in India, the textile trade regards a fabric as being water-repellent fabric if its interstices are not closed, leaving it quite permeable to air, while still not allowing liquid water to pass through it. He goes on to state that he has tested the fabric in question manufactured by the petitioners. He has subjected this fabric to cone test and he has found that even after 18 hours no water passes through the said fabric. He has also stated that the vapour permeability of this fabric is as low as 5 to 10 per cent of the untreated fabric. Having regard to the very high degree to which the interstices have been filed up he is of the opinion that the fabric in question cannot properly be regarded as water repellent. It can only be regarded a water-proofed fabric. As against this affidavit made by an independent expert, the report of the Retired Chief Chemist, Central Revenue, Government of India, relied upon by the Excise authorities, is highly unsatisfactory. The report does not set out which tests were performed on this fabric, nor does it set out who performed them and in what manner. In these circumstances the learned Single Judge has rightly not relied upon this report and the affidavit of the said Chief Chemist, for reasons set out by him in his judgment. We are in respectful agreement. In these circumstances, even on the basis of the technical tests, the cloth manufactured by the petitioners should be classified as water-proofed cloth, rather than water repellent cloth.
10. It should be borne in mind that the trade notice in question does not refer to umbrella cloth in particular. The trade notice applies to all cotton fabrics. Water repellent cotton fabric would generally, be used in making wearing apparel. The petitioners are manufacturing cloth which is used in making umbrellas. This cloth is known in the trade as water-proofed cloth. In these circumstances in our view, it must be classified under the category of water-proofed cloth under the said notification. In these circumstances the learned Single Judge has rightly made the rule absolute in the manner set out in his judgment.
11. Both the appeals are, therefore, dismissed with costs.