B. Lentin, J.
1. The 1st petitioner is a public limited Company (referred to hereafter as the 'company') incorporated under the Indian Companies Act, 1913. The 2nd petitioner is a Director of the Company. The Company carries on business of manufacturing Copper Coated Mild Steel Wires (C.C.M.S. Wires) and also manufactures welding electrodes of various types. In May 1971, Tariff Item 50 to the 1st Schedule of the Central Excises and Salt Act, 1944, was introduced whereby excise duty was levied on 'welding electrodes, all sorts' for the first time at 15 per cent ad valorem. Under the self-removal procedure the Company was required to file the classification list from year to year, which the Company did, showing its welding electrodes as excisable and the C.C.M.S. Wires as non-excisable. This classification list was filed by the Company on 1st October, 1971 and was approved by the Superintendent, Central Excise, namely, the 2nd respondent, on 8th October, 1971. Similar classification lists were filed by the Company from year to year and were approved by the Superintendent. On 23rd January, 1973, a tariff advice was issued by the Central Board of Excise and Customs, that 'Submerged Arc Welding Wires' are liable to excise duty as 'Welding Electrodes' under Tariff Item No. 50. On 2nd February, 1973, without notice to the Company, an ex-parte order was passed by the Superintendent classifying the Company's C.C.M.S. Wires as liable to excise duty under Item 50. By this order, the Superintendent stated that he had considered that -
'......the 'Mild Steel Copper Coated Wire' and 'Copper Coated mild steel wire cuts' are Welding Electrodes. For some time past I have observed the performance of these wires and cuts in some of the Bombay factories where welding operations are predominant. This operation is termed as 'Submerged Arc Welding', and copper coated mild steel wires and cuts used in this operation are nothing but welding electrodes......'
By this order, the Superintendent proceeded to classify the Company's C.C.M.S. Wires as liable to excise duty under Tariff Item 50.
2. Against this order, the Company filed an appeal on 30th April, 1973 to the Appellate Collector. The Company's appeal was rejected by the Appellate Collector on 27th July, 1975 who held that the Company's C.C.M.S. Wires were assessable to duty under Tariff Item 50 for the following reasoning :-
'On referring to the extract from page No. 316 to 319 from a technical book 'Manufacturing Processes and Materials for Engineers' by Lawrence E. Doyle, it is seen that 'Welding Electrodes' need not necessarily be coated with flux and in 'Submerged Arc Welding' Electrodes are in bare condition. Moreover, I find from the extract on page No. 891 to 821, from the Book 'Materials Handbook' by Brandy, that 'Welding Electrodes' are also available in uncoated condition. The end use of the product also plays a very important part and it cannot be separated from the product, itself.'
Repelling the Company's contention that the essential characteristic of electrodes was that the process of welding involved a direct electrical operation, viz. conduct of electricity, through a wire coated with flux for welding and that when welding is carried out by an operation other than by the use of electricity, e.g. gas welding, it ceases to be an electrode, the Appellate Collector relied on the dictionary meaning of the word 'electrode' at page 340 of 'Chambers Twentieth Century Dictionary', namely :-
'A conductor by which a current of electricity enters or leaves an electrolytic cell, gas discharge tube, or thermion valve.'
and on the basis thereof came to the conclusion that -
'It means that welding can be done by these electrodes through gas also.......'
3. The Company's revision application to the Revisional Authority was rejected by the latter's order dated 11th July, 1977/26th August, 1977. The Revisional Authority held that Tariff Item 50 includes welding electrodes, all sorts, irrespective whether coating with flux had been done or not and that welding electrodes need not necessarily be coated with flux.
4. It is to challenge these three orders passed by the Superintendent, the Appellate Collector and the Revisional Authority that the Company has filed the present petition.
5. The narrow question is whether the Company's C.C.M.S. Wires were liable to be classified as welding electrodes so as to attract excise duty under Tariff Item 50. The Company's case has throughout been that its C.C.M.S. Wires could not be electrodes at all as the latter can be used only by conducting electricity whereas the C.C.M.S. Wires are not so used.
6. From the order passed by the Superintendent it is clear that he has relied on his personal observations in factories in Bombay and to the end use of C.C.M.S. Wires or cuts. The appellate order discloses reliance on the end use of the product, reference to technical books and dictionary meaning. The revisional order discloses it reliance on the end use of the product. It is on such considerations that the Superintendent, the Appellate Collector and the revisional Authority held that the Company's product, viz. C.C.M.S. Wires, was attracted to excise duty under Tariff Item 50. However, what these authorities have palpably overlooked is that these considerations on which they have passed their impugned orders are the very considerations which the Supreme Court has repeatedly deprecated being taken into account to ascertain whether a particular commodity is attracted to excise duty or not. To illustrate in Commissioner of Sales Tax, Madhya Pradesh v. M/s. Jaswant Singh Charan Singh, : 2SCR720 , the Supreme Court observed -
'Now, there can be no dispute that while coal is technically understood as a mineral product, charcoal is manufactured by human agency from products like wood and other things. But it is now well settled that while interpreting items in statutes like the Sales Tax Acts, resort should be had not to the scientific or the technical meaning, of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense.'
In Union of India v. Gujarat Woollen Felt Mills, : 1977(1)ELT24(SC) , the question was whether non-woven felts could be treated as woollen fabrics within the meaning of Entry 21 of the Schedule to the Act. It was held by the Supreme Court that resort should be had not to the scientific or the technical meanings but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense. In Dunlop India Ltd. v. Union of India, A.I.R. 1977 S.C. 597, it was held by the Supreme Court that 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 usual course, that technical and scientific tests offer guidance only within limits and that once the articles are in circulation and come to be described and known in common parlance then there is no difficulty for statutory classification under a particular entry. At para 31 of the report it was observed as under :-
'It is well established that in interpreting the meaning of words in a taxing statute, the adaptation of a particular word by the Trade and its popular meaning should commend itself to the authority.'
At para 42 of the report appear the following observations :
'We are clearly of opinion that in the state of the evidence before the revisional authority no reasonable person could come to the conclusion that V. P. Latex would not come under rubber raw. The basis of the reason with regard to the end-use of the article is absolutely irrelevant in the context of the entry where there is no reference to the use or adaptation of the article.........'
Pausing here for a moment, it may be observed that Tariff Item 50 makes no reference to the end-use in contra-distinction to certain other items, to wit, items 51 and 54, where the end-use of the articles covered by these items is mentioned. This is another indication as to the irrelevancy of considering the end-use of the Company's product as done by the Superintendent and by the appellate authority. Reliance by the authority on dictionary meaning have been deplored by the Supreme Court in Sales Tax Commissioner, U.P. v. S. N. Brothers, : 2SCR852 , where it was observed as under :-
'In our opinion the Random House Dictionary cannot serve as a safe guide in construing the words used in the List in the Notification in question for the purpose of deciding whether or not the words used in entries nos. 10 and 37 cover food colours and syrup essences; indeed this Dictionary is apt to be a somewhat delusive guide in understanding the meanings of the words and expressions with which we are concerned in the context in which they are used. This Dictionary gives all the different shades of meanings attributable to the words referred but that is hardly helpful in solving the problem raised in the present controversy. The words 'dunes and colours' used in entry no. 10 and words 'scents and perfumes' used in entry no. 37 have to be construed in their own context and in the sense, as ordinarily understood and attributed to these words by people usually conversant with and dealing in such goods. Similarly, the words 'food colours' and 'syrup essences' which are descriptive of the class of goods the sales of which are to be taxed under the Act have to be construed in the sense in which they are popularly understood by those who deal in them and who purchase and use them.....'
These are but a few illustrations (the list is endless) to show the continued depreciation by the Supreme Court in authorities resorting to personal observations (pertaining to subjects of which they are obviously not and are not even expected to be experts), technical books, dictionary meanings and the end-use of articles sought to be made liable to excise duty.
7. What also is not entirely irrelevant is the proximity of time between the tariff advice issued by the Central Board on 23rd January, 1973 and the date of the passing of the ex-parte order by the Superintendent on 2nd February, 1973 without even giving a hearing to the Company. It may be recalled that the tariff advice issued by the Central Board was that 'Submerged Arc Welding Wires' are liable to excise duty as 'Welding Electrodes' under Tariff Item 50. Within 10 days thereafter, the Superintendent passed his impugned order dated 2nd February, 1973. Although it has not been stated by him that he levied excise duty as a result of the tariff advice issued by the Central Board barely ten days earlier, the close proximity between these dates and the fact that the Superintendent passed his order even without notice to the Company, makes one wonder whether it was actually tariff advice which was responsible in the Superintendent suddenly passing his impugned order. If so (and it is not entirely unlikely that it is so), it is yet another breach of a warning repeatedly given by the Supreme Court as, for instance, in Orient Paper Mills Ltd. v. Union of India - : 1973ECR1(SC) , where it was observed -
'If the power exercised by the Collector was a quasi-judicial power - as we hold it to be - that power cannot be controlled by the directions issued by the Board. No authority however high placed can control the decision of a judicial or a quasi-judicial authority. That is the essence of our judicial system. There is no provision in the Act empowering the Board to issue directions to the assessing authorities or the appellate authorities in the matter of deciding disputes between the persons who are called upon to pay duty and the department. It is true that that assessing authorities as well as the appellate authorities are judges in their own cause; yet when they are called upon to decide disputes arising under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is controlled by the directions given by others.....'
8. All these principles repeatedly laid down by the highest Court in the country have pointedly been ignored by the authorities in this case in holding willy-nilly that the Company's product is assessable to excise duty under Tariff Item 50.
9. Coming to the burden of proof, the case of the Company throughout has been that its C.C.M.S. Wires are not popularly understood in the trade as electrodes. If it was the Department's case to the contrary, which it was, surely it was reasonable enough to expect the Department to discharge the burden of proof by establishing the positive rather than expect the Company to establish the negative. It is now too late in the day to reiterate what has been stated times out of number by several High Courts and the Supreme Court that in a fiscal or a taxing statute the burden is heavily upon the Department seeking to recover the revenue or tax. No such attempt has even remotely been made by the Department in this case. For not less than 2 years the Company's self-assessments were accepted by the Department. If thereafter, the Department suddenly chose not to accept them, surely the burden was heavily on the Department to show that C.C.M.S. Wires are popularly understood in the trade to be welding electrodes and therefore, chargeable to duty under Tariff Item 50. In Amar Dye Chem. Ltd. v. The Union of India, 1980 CEN-CUS 242, it was observed by the Division Bench of this Court at para 22 of the report as under :-
'Even assuming in favour of the Revenue that the petitioners have failed to adduce any sale instances in the market the said four varieties of products as they existed before the mid-night of 28th February, 1961, the question still arises whether the Revenue was entitled to levy excise on the said stuff. As already noticed, the respondents have also not produced any affidavit of any dealer or consumer to show that the said products in lump or crystal form were not capable of being used in any dyeing process before the same were blended and/or pulverised and standardised.....
The learned counsel for the petitioners urged that the burden of establishing that the products were liable to pay excise duty is on the revenue and if the Court were to come to the conclusion that there is no evidence on the point, the respondent failed to discharge the burden of proving that the products were excisable goods........'
Drawing support from the observations of the Supreme Court in Deputy Commissioner of Agricultural Income-tax and Sales-tax, Quilon v. Travancore Rubber & Tea Co., Sales Tax Cases 1967 20 520 -
'....In all cases of taxation the burden of proving necessary ingredient laid down by law to justify taxation is upon the taxing authority.....'
the Division Bench opined that -
'In our opinion, the argument is sound and, therefore, the burden is on the respondents to establish that the said four varieties were liable to pay excise duty as the same were manufactured after mid-night of 28th February, 1961....'
With these observations, I am in respectful agreement.
10. The Company has, in the petition, filed an affidavit of one Mohammed Iqbal, Administrative Officer of M/s. Industrial Distributors, Bombay, engaged in the distribution of welding electrodes since the past several years. He has stated that whenever a customer asks for welding electrodes he is not supplied with copper coated mild steel wires, that welding electrodes are invariable coated with flux and that welding electrodes known in commercial parlance are only those electrodes which are used by electricity; whenever a customer buys copper coated mild steel wires or wire cuts, he asks in terms for wire cuts and wires and never for welding electrodes. On behalf of the respondents, exception was taken to this affidavit on two grounds. Firstly that the deponent has used the word 'invariably' without stating that welding electrodes are always coated with flux. This is a mere play on words. 'Invariably' is what is not 'variable' or 'changeable' and hence constant. The second objection was that such an affidavit should have been produced by the Company before the authorities, which the Company did not do. The second objection is also devoid of merit. If, according to the Department, C.C.M.S. Wires are commonly understood in the trade or in commercial parlance as welding electrodes, the burden of so proving was on the Department and it was not on the Company to establish the negative. To discharge that burden, the Department lamentably failed to do, despite the fact that in the memos of appeal both before the appellate and revisional authorities, this ground has been taken by the Company in the forefront. The result is that even assuming that Mohammed Iqbal's affidavit be ignored by me as suggested by the respondents' learned counsel, what cannot be ignored is that the burden of proof has on the Department and it is that burden which the Department should have discharged but failed to.
11. Mr. Mehta, the learned counsel appearing on behalf of the respondents, attempted to support the impugned orders on several grounds. Mr. Mehta urged that the petition involved determination of disputed questions of facts where it was not possible that two views could be taken. He further urged that it could not be said that the impugned orders are perverse or that there was any error of law or jurisdiction apparent on the face of the record. Mr. Mehta relied on the decision of the Gujarat High Court in Bhor Industries Ltd. v. Union of India - 1980 E.L.T. 752, where after referring to the Supreme Court's decision in V. V. Iyer v. Jasjit Singh, Collector of Customs and another, (1973) I S C C148, the Gujarat High Court observed that the High Court should not interfere with the decision of the Central Excise Authorities in the matter of classification unless that decision is perverse or mala fide or is based upon a wrong test and further that the High Court is not a Court of appeal against the orders of adjudication made by the Central Excise Authorities. I respectfully agree with these observations. However, these observations can avail the respondents nothing. In the matter before me the question of mala fides on the part of the authorities does not arise and, in fact, no such suggestion was made by the petitioner before me, and rightly so. However, what learned counsel apparently forgets is that in arriving at its findings the concerned authorities proceeded on extraneous consideration frowned upon and expressly prohibited by the Supreme Court as stated earlier in this judgment. It need hardly be emphasised that where an authority consistently and persistently violates or does not choose to follow principles laid down by the highest Court in this country, it would certainly be a matter for interference in exercise of writ jurisdiction.
12. Mr. Mehta next urged that where the legislature uses technical language or words then the technical meaning must be taken unless there is an obvious intention to the contrary. Now, what is the technical language used in Tariff Item 50. As I see it, there is nothing technical in the phraseology 'Welding Electrodes'. It is common knowledge and judicial notice can certainly be taken that the very concept of electrodes connotes the user of electricity which the user of C.C.M.S. Wires or cuts does not. Mr. Mehta invited my attention to Item 50 which says 'Welding Electrodes, all sorts.' Emphasising the last two words, Mr. Mehta urged that no distinction was made between gas welding wires and welding electrodes (with or without flux). He urged that therefore C.C.M.S. Wires and wire cuts would be electrodes covered by Tariff Item 50. Surely, the words 'all sorts' emphasised by Mr. Mehta must be read in conjunction with preceding words. It is difficult to see how gas welding wires can be equated with welding electrodes which by their very nomenclature connote the use of electricity. Mr. Mehta's interpretation is also rendered nugatory by reason of the fact that if it had been intended to include gas welding within electrical welding, namely by electrodes, the entry would have read, for instance, 'welding materials' instead of the description specifically being confined to electrodes (be they of all sorts) envisaging welding with the use of electricity. Mr. Mehta next urged that in order to determine the excisability of the goods the user of the product in question not detain me any longer than it must, because it is directly in conflict with the decisions of the Supreme Court referred to earlier in this judgment. Mr. Mehta further urged that it was not disputed that C.C.M.S. Wires or wire cuts could not be used for welding purpose. To a limited extent, Mr. Mehta is correct but what he obviously overlooks is that they cannot be used as electrodes involving the use of electricity.
13. Mr. Mehta urged the burden of proof even if it was on the Department was duly discharged by the Department, inasmuch as the findings were based on standard test-books and that the fact that the books were merely standard text-books and not technical books, has impliedly been admitted by the Company in its affidavit-in-rejoinder. Mr. Mehta relied on the decision of the Supreme Court in Union of India and another v. Delhi Cloth and General Mills Co. Ltd., : 1973ECR56(SC) and on the decision of the Delhi High Court in Porrits & Spencer (Asia) Ltd. v. Union of India and another, 1980 E.L.T. 679, where it was respectively held that the opinions of the Indian Standards Institute as expressed in the 'glossary of textile terms' must be preferred to the opinions of authors and technical exports. It is difficult to see how those decisions can be of assistance to the respondents before me in view of the fact that neither the Superintendent nor the Appellate Collector nor the Revisional Authority has relied on any opinion of the Indian Standards Institute. I do not see the implied admission alluded to by Mr. Mehta. It is futile to say that the books relied on by the Department are mere standard text-books. They are not any the less what they actually are, namely, highly technical books containing a wealth of technical information meant for technical people. It is reliance on such material by authorities that has consistently been frowned upon and condemned by the Supreme Court.
14. Mr. Mehta adverted to the Dictionary meaning of 'weld', meaning 'to 'units' or 'fuse' as piece of metal by hammering, compressing after reducing to soft or pasty by heat and sometimes with addition of fusible material like or unlike the pieces to be united.' Relying on this dictionary meaning, Mr. Mehta urged that flux coating is not the criterion to determine whether C.C.M.S. Wires are welding electrodes or not. By relying on dictionary meanings, Mr. Mehta fails into the same error which the authorities fell into and which in turn, he invites me to do. I must decline to succumb to the temptation that Mr. Mehta lays before me.
15. In conclusion, I may state that one ground of challenge, namely that the show cause notice could not be issued under Rule 10-A of the Central Excises and Salt Act, was not urged by the Company in view of the findings arrived at by me.
16. Before parting with this judgment, it would be ungracious of me if I did not acknowledge my appreciation of the manner in which both Mr. Hidayatullah and Mr. Mehta conducted the arguments in this matter. They were, as they should be - pithy and precise.
17. In the result, the petition is allowed in terms of prayer (a). The Department shall refund to the Company within four months from today the amount of Rs. 14,25,736.28 admittedly received by the Department and paid by the Company under protest. According to the Company, a further sum of Rs. 10,000 has also been paid to the Department under protest. Mr. Mehta is not in a position to admit or dispute that statement. The Department shall make necessary enquiries and if any amount in excess of the amount already ordered to be refunded to the Company has been paid to the Department by the Company under protest, the Department shall refund the same to the Company within four months from today. Rule is made absolute accordingly. The respondents shall pay to the Company the costs of the petition. Bank guarantees to stand discharged.