judgement:
vil Appeal No. 1845 (N) of 1974.
From the Judgment and Decree dated 6/7.3.1974 of the Bombay High Court in First Appeal No. 586 of 1969.
133 S.K. Dholakia and H.S. Parihar for the Appellant.
A.K. Ganguli, A.M. Khanwilkar, A. Subba Rao, C.V. Subba Rao and A.S. Bhasme for the Respondents.
The appellant is a Limited Company registered under the Companies Act having its registered office situate at Ahmed nagar within the State of Maharashtra.
The appellant carries on business, inter alia, as manufacturers of Ayurvedic preparations including "Asavas", "Aristhas".
At all times material to this appeal, the appellant was manufacturing and selling an Ayurvedic product called "Ashvagandhaarist" which is a medicinal preparation containing self generated alcohol but not capable of being consumed as ordinary alcoholic beverage.
Under the provisions of the Medicinal and Toilet Prepara tions .
(Excise Duties) Act, 1955, hereinafter referred to as "the Act", which came into force on 1st April, 1957, excise duties were levied on medicinal and toilet prepara tions specified in the Schedule to the Act, hereinafter referred to as "the Schedule".
The Act, as originally stood in 1955, inter alia, contained two items in the Schedule respectively specifying "medicinal and toilet preparations containing alcohol which are prepared by distillation or to which alcohol has been added and which are capable of being consumed as ordinary "alcoholic beverage" and "medicinal and toilet preparations not otherwise specified containing alcohol", being the commodities excisable under the provi sions of the Act.
The said "Ashvagandhaarist" was treated and accepted by the Excise Authorities as being exempt from the payment of any excise duty upon the basis and the foot ing that the same was an Ayurvedic preparation containing self generated alcohol which was not capable of being con sumed as ordinary alcoholic beverage, and which fell under item 2(i) Of the Schedule in respect of which the rate of excise duty postulated in the Schedule was "Nil".
The Act was amended by the Amendment Act 19 of 1961.
The amendment, inter alia, introduced the concept of "patent and pro 134 prietary medicine" in the Schedule.
The amendment Act, however, by an Explanation, introduced in the Schedule the definition of the "patent and proprietary medicine" con tained in the Drugs Act, 1940.
Even after the introduction of the said amendment, the appellant 's aforesaid product continued to be treated as exempt from the liability to pay any excise duty on the self same ground, namely, that it was covered under item 2(i) of the Schedule which item 2(i) was renumbered as item 3(i) of the Schedule as amended by the Amendment Act of 1961.
By Section 18 of the Finance Act, 1962, the Act was further amended by substitution of an Explanation No. 1 to the Schedule of the Act.
By virtue of and under the said Explanation, a patent and proprietary medicine was defined as a medicinal preparation of the description and the type specified in the Explanation.
The Explanation which was brought in by the Finance Act was given retrospective effect from April 23, 1962.
In purported pursuance of the said Explanation and/or upon the basis thereof, a circular dated May 31, 1962 was issued by the then Director of Prohibition and Central Excise, Government of Maharashtra, Bombay which, inter alia, directed that the medicinal preparations containing self generated alcohol but not capable of being consumed as alcoholic beverage were to be treated as products falling under item 1 and not item 3 of the Schedule.
consequent thereupon, the respondents levied and recovered from the appellant diverse sums aggregating to Rs.2, 18,282.16 being the alleged amount of the excise duty payable in respect of the product "Ashvagandharist".
The amounts were paid by the appellant "under protest".
With a view to enforcing their rights in respect thereof and/or recovering the said amount illegally recovered by the respondents, on July 14, 1965, the appellant filed a suit, being Special Suit No. 23 of 1965 in the Court of Civil Judge, Senior Division, Ahmednagar.
On March 4, 1966, the respondent No. 4 filed its written statement and similarly on the 4th April, 1966 the respond ent Nos. 1 to 3 filed written statements.
In the written statements, filed on behalf of the respondents it was, inter alia, contended that the said product of the appellant was "the unrestricted ayurvedic preparations" manufactured by the plaintiff (appellant) labelled and marked by the 135 plaintiff (appellant) under their brand name and trade mark.
This, therefore, fell within the scope of patent or proprie tary medicine as given in Explanation 1 below the Schedule annexed to the Act, as inserted from April 23, 1962 by Finance Act (No. 2) 1962.
By his Judgment and Decree dated March 27, 1969, the learned Civil Judge was pleased to decree the appellant 's suit for Rs.2,22,582.07 together with future interest at 6 per cent per annum from the date of the suit till realisa tion.
Aggrieved by the Judgment and Order dated March 27, 1969, the respondents (being the defendants therein) pre ferred an appeal to the High Court of Judicature at Bombay, which was registered as First Appeal No. 586 of 1969.
The said appeal was heard by the High Court alongwith other appeals being First Appeals Nos.
136 of 1968 and 93 of 1970 as also suits being Suit Nos. 230 of 1965 and 319 of 1965.
The appeals and the suits were heard together having regard to the common questions of law involved therein.
By its judgment and decree the High Court was pleased to allow the said first appeal of the respondents, reversing the judgment and decree of the Trial Court and to dismiss the appellant 's special suit.
Hence this appeal by special leave.
Mr. S.K. Dholakia, the learned counsel for the appellant submits, inter alia, that the findings of the High Court are repugnant to the relevant provisions of the Act and/or the rules framed thereunder and/or the scheme, intendments and purposes thereof.
It is contended that the appellant 's product "Ashvagandhaarist" fell squarely within item 3(i) of the Schedule and as such wholly exempt from the payment of excise duty; that in view of the admitted position that until 1962 "Ashvagandhaarist" was exempt from the payment of excise duty as being a commodity falling under item No. 2(i) of the Schedule, simply by reason of the Explanation which was introduced in the Act by the Finance Act of 1962, as the explanation could never be considered to be or, in any event, in the scheme of the provision of the Act, was not a substantive provision of the Act and the explanation was not intended to and it did not seek to disturb the enumeration of the categories or the respective fields assigned to the various items of the schedule in existence prior thereto.
It is submitted that item 3 of the amended Schedule was a specific item and enumerated categories of Ayurvedic medici nal preparations covered thereby and that being so, all commodities answering description set out therein fell within the 136 ambit thereof and was excluded from the purview of the other items contained in the said schedule and that the express language of item 3(i), namely, of "Ayurvedic preparations containing self generated alcohol which were not capable of being consumed as ordinary alcoholic beverages" were exempt ed and that the appellant 's product "Ashvagandhaarist" was admittedly and obviously an Ayurvedic preparation containing self generated alcohol which was not capable of being con sumed as ordinary alcoholic beverage and as such it could not be made excisable on the ground that it fell within any other item of the schedule but it constituted residuary clause of the schedule in so far as the medicinal and toilet preparations containing alcohol were concerned.
Counsel further submits that the expression "not otherwise speci fied" occurring in item 3 of the schedule did not restrict the scope of the enumerated categories under item 3 but was merely a marginal note showing that the said item 3 was residuary item and comprised of three sub groups of commodi ties specified therein; and that item No. 1 was not a speci fied item.
Mr. Dholakia further submits that the interpreta tion that "ashvagandhaarist" fell within item No. 1 rendered the provisions of item No. 3 wholly nugatory inasmuch as if an Ayurvedic preparation containing self generated alcohol but incapable of being used as ordinary alcoholic beverage, is treated as failing under item 1 there would be no Ayurvedic medicine which would factually fail under item 3 of the schedule and that the Explanation newly introduced by the Finance Act, 1962 could not add to, amend or alter or vary the classification of the goods existing prior thereto as covered by the various items of the said schedule; nor could it otherwise nullify or add to, amend or alter or vary the substantive provisions of the schedule and it could not be considered to be a substantive provision of the Act nor could it be allowed to abrogate the substantive provisions of the Act.
In other words, the submission is that in view of the fact that the product of the appellant was exempt from payment of duty because the duty against item No. 3(i) in the amended Schedule of 1961 was mentioned to be 'nil ' the High Court ought to have held that the said legal and factual position could not be transformed to the detriment of the appellant by shifting the said commodity from the field covered by item 3(i) to that covered by item 1 of the Act merely on the basis of the Explanation which was intro duced by the Finance Act of 1962.
Counsel argues that this was more so because "ashvagandhaarist" was not a name within the contemplation of the explanation but was merely a de scriptive appellation of the medicine manufactured and sold by the appellant and it being a standard preparation accord ing to the Ayurvedic system could be manufactured by any one conversant with the said system, and it did 137 not have a brand name in the hands of the appellant and the High Court 's interpretation that a mere description is a name is inconsistent with the scheme of the definition of "patent and proprietary medicines" in the Explanation.
This was the reason, it is argued, why Asavas and Aristhas were expressly made non dutiable after 25.9.6,4.
by subsequent amendment by the Government.
Mr. A.K. Ganguli, learned counsel appearing for the respondents, demurring, submits that there can be no doubt that "Asavas" and "Aristhas" fall under item 1 of the sched ule to the Act as substituted by Finance Act 2 of 1962 and hence taxable at 10% ad valorem; and those being Ayurvedic preparations are specified preparations and they could never fail under item 3 or any part thereof which deals with medicinal preparations not otherwise specified containing alcohol.
Item 1, Mr. Ganguli submits, specifically describes that medicinal and toilet preparation which has alcoholic contents and which alcohol comes to be present in those medicines by use of one of the two methods described in that item.
First of such methods contemplates alcohol contents in the medicine which is prepared by distillation and the second method is addition of alcohol to the medicine.
The medicinal preparation which is prepared by distillation and which contains alcohol and other medicinal preparations to which alcohol is added fall in category I and such medicines would cover medicinal preparations belonging either to Allopathic or Ayurvedic system or I any other system of medicines.
For every system of medicines, counsel argues, item No. 1 is not general item but it is a specific item in the sense it covers only those medicines which are prepared by distillation and contain alcohol and others to which alcohol has been added.
According to counsel, such medicines belonging to any system whether indigenous or foreign are covered by item 1 and would be taxable as per that item and the disputed goods are undoubtedly medicinal preparations and they are also patent and proprietary medicines in view of the Explanation 1 and these Ayurvedic preparations are medicinal preparations being patent or proprietary medicines containing alcohol which are not capable of being consumed as alcoholic beverages and as such they squarely fall under item 1 of the Schedule, and the main Act and the Explanation is a self contained provision which eliminates the reference either to Drugs Act or to the Rules made under the Act; and one has to read only the provision of the Schedule as a whole including the Explanation, and their meaning being simple and plain, they must be given their full effect.
138 To appreciate the rival contentions we can appropriately refer to the provisions and the Schedule of the Act and the legislative changes thereof.
The Act was meant to provide for the levy and collection of duty of excise on medicinal and toilet preparations containing alcohol, opium, Indian hemp or other narcotic drug or narcotic.
The statement of objects and reasons as notified in Gazette of India of 16.9.1954, Part II, section 2, Ext., page 596 said that by virtue of entry 40 in List II in the Seventh Schedule to the Gov ernment of India Act, 1935, medicinal and toilet prepara tions containing alcohol, etc., were subjected to Provincial excise duties.
In order to secure uniformity the entry relating to excise duty on medicinal and toilet preparations containing alcohol, etc. were transferred under the Consti tution from the State list to the Union List.
The Act was intended to implement this provision in the Constitution and proposed uniform rates of excise duty and a uniform proce dure for the collection thereof.
The Act came in force on 1.4.57.
The Act in Section 2(a) defined "alcohol" to mean "ethyl alcohol of any strength and purity having the chemical composition C2H5OH"; and it defined "medicinal preparation" in Section 2(g) to include "all drugs which are a remedy or prescription prepared for internal or external use of human beings or animals and all substances intended to be used for or in the treatment, mitigation or prevention of disease in human beings or animals".
It did not define "drug".
The Drugs Act, 1940, as it was substituted by the Drugs (Amend ment) Act, 1955 (16.4.55) had defined "drug" in Section 2(b) to include "(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals other than medicines and substances exclusively used or prepared for use in accordance with the Ayurvedic or Unani systems of medicine; and (ii) such substances (other than food) intend ed to affect the structure or any function of the human body or intended to be used for the destruction of vermins or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette." (Emphasis supplied) Section 3(i) of the Act provides that "there shall be levied duties of excise, at the rates specified in the Schedule, on all dutiable goods manufactured in India.
" The original Schedule to the Act in 1955 read: 139 THE SCHEDULE (See section 3) Item Description of dutiable Rate of No. goods.
Medicinal and toilet preparations, Rupees seven containing alcohol, which are prepared and annas eig which are prepared by distilation or ht per gallon to which alcohol has been added, and of strength which are capable of being consumed as of London ordinary alcoholic beverages.
proof spirit.
Medicinal and toilet preparations not otherwise specified containing alcohol (i) Ayurvedic preparations containing Nil self generated alcohol, which are not capable of being consumed as ordinary alcoholic beverages.
(ii) Ayurvedic preparations containing Rupees three self generated alcohol, which are per gallon.
capable of being consumed as ordinary alcoholic beverages.
(iii) All others.
Rupees five per gallon of the strength of London proof spirit 3.
Medical and toilet preparations, Nil not containing alcohol, but containing opium, Indian hemp, or other narcotic drug or narcotic.
It would thus be clear that medicinal and toilet prepara tions were classified into those which were capable of being consumed as ordinary alcoholic beverages and those which were not capable of being consumed as ordinary alcoholic beverages.
Again, medicinal and toilet preparations contain ing alcohol prepared by distillation or adding alcohol is differentiated from medicinal and toilet preparations 'not otherwise specified containing alcohol '.
Further, under this 'not 140 otherwise specified ' category Ayurvedic preparations have been classified into three groups, namely, Ayurvedic prepa rations containing self generated alcohol not capable of being consumed as ordinary alcoholic beverages, those capa ble of being consumed as ordinary alcoholic beverages; and others.
These three divisions were not drugs as defined in Drugs Act then.
The first category of Ayurvedic preparations had not been subjected to duty while the other two catego ries had been.
Admittedly, under the above Schedule the product of the appellant 'ashvagandhaarist ' was not dutiable which meant that it was included in item 2(i).
It would also be clear that 'Ayurvedic preparations containing self generated alcohol which were capable of being consumed as ordinary alcoholic beverages ' were dutiable at the rate of Rupees 3 per gallon and the third category of others was also dutia ble at the rate of Rupees 5 per gallon on the strength of London proof spirit.
Alcohol and self generated alcohol were treated differently.
The Schedule was amended by the Amending Act No. 19 of 1961 and the amended Schedule stood as follows: Item No. Description of dutiable goods Rate of duty 1.
Medicinal preparations, being patent Ten per cent or proprietary medicines, contain ad valorem.
ing alcohol and which are not capable of being consumed as ordinary alcoholic beverages.
Medicinal preparations, containing Rupees three alcohol, which are and eight prepared by distillation or to which five naye alcohol has been added, paise per and which are capable of being litre of consumed as ordinary alcoholic the streng beverages.
th of Londo n proof spi rit.
Medicinal preparations not otherwise specified containing alcohol (i) Ayurvedic preparations containing Nil self 'generated alcohol which are not capable of being consumed as ordinary alcoholic beverages.
141 (ii) Ayurvedic preparations, contain Thirty eight ing self generated alcohol, which naye paise per are capable of being consumed as litre.
ordinary alcoholic beverages.
(iii) All others.
Rupee one and ten naye paise per litre of the strength of London proof spirit.
Explanation I: "Patent or proprietary medicines" has the same meaning as in clause (h) of Section 3 of the Drugs Act, 1940 (23 of 1940).
The statement of objects and reasons of the Amendment Bill, as published in Gazette of India, 8.3.1961, Pt.
II, section 2, Ext., page 106, said: "Consequent on the decision to adopt metric units from the 1st April, 1961, in the sale of alcohol and collection of duty thereon, it is proposed to provide for the levy and collec tion of excise duty on medicinal and toilet preparations in terms of metric units. . . . . . . .
Under existing item 2(ii) of the Schedule to the Act, Ayurvedic preparations containing self generated alcohol which are capable of being consumed as ordinary alcohol ic beverages are subjected to duty at the rate of Rs.3 per gallon.
However, by virtue of the provision contained in section 19(2)(xix) of the Act, read with Rule 8 of the Medicinal and Toilet Preparations (Excise Duties) Rules 1956, the rate of duty with respect to such preparations has been reduced to Rs. 1.75 per gallon with effect from the 10th September, 1960, and it is this reduced rate that is, proposed to be expressed in terms of metric units in the Bill.
" It would thus be clear that the main purpose was the levy and collection of excise duty on medicinal and toilet preparations in terms of metric unit.
while there was refer ence to them existing item 2(ii) of the Schedule of the Act, namely, Ayurvedic preparations containing 142 self generated alcohol which were capable of being consumed as ordinary alcoholic beverages the duty whereof was reduced to Rs. 1.75 per gallon from Rs.3 per gallon, there was no mention that item No. 2(i) of the Schedule, namely, Ayurved ic preparations containing self generated alcohol which were not capable of being consumed as ordinary alcoholic bever ages was subjected to tax.
The statement of object and reasons was silent about item No. 2(i).
In the amended Schedule we find that item 1 for the first time mentioned medicinal preparations being patent or proprietary medicines, containing alcohol and which are not capable of being consumed as ordinary alcoholic beverages and the earlier item No. 1 has been re numbered as item No. 2 and the earlier item No. 2(i), (ii) and (iii) remained as they were as 3(i), 3(ii) and 3(iii).
As regards levy of duty item 2(i) of the old Schedule was kept duty free in item 3(i) of the Schedule.
Thus, there has been no fresh charging of duty on what was 2(i) and is now 3(i) under which catego ry the appellant 's product 'ashvagandhaarist ' was exempted from duty before the amendment of the Schedule.
There is, therefore, no doubt that item 1 & 2(i) remained mutually exclusive or in other words, they would not be overlapping.
Item 1 in the amended Schedule deals with medicinal prepara tions being patent or proprietary medicines and not medici nal preparations 'not otherwise specified. ' The Explanation I says that patent or proprietary medi cines has the same meaning as in clause (h) of Section 3 of the Drugs Act, 1940.
The High Court has found that re num bered definition 3(h) was earlier 3(d) and read as follows: "3(d) 'Patent or proprietary medicine ' means a drug which is a remedy or prescription pre pared for internal or external use of human beings or animals, and which is not for the time being recognised by the Permanent Commis sion on Biological Standardisation of the World Health Organisation or in the latest edition of the British Pharmacopoeia or the British Pharmaceutical Codex or any other Pharmacopoeia authorised in this behalf by the Central Government after consultation with the Board." Thus, patent or proprietary medicines meant a drug which was defined in the Drugs Act and not in the Act.
The High Court rightly held that Ayurvedic medicine was not a drug at all.
The definition of drug expressly excluded them.
So the definition of patent or proprietary medicine 143 was exclusive of Ayurvedic medicinal preparations, those being excluded from the definition of drug.
The definition of patent and proprietary medicines till then did not apply to Ayurvedic preparations.
This position continued indeed till the amendment of Drugs Act by the Drugs and Cosmetics (Amendment) Act, 1964.
Several amendments were effected by that Amendment Act of 1964.
Section 33A and Chapter IV A were inserted.
Section 33A said that Chapter IV was not to apply to Ayurvedic (including Siddha) or Unani drugs.
"Save as otherwise provided in this Act, nothing contained in this Chapter shall apply to Ayurvedic (including Siddha) or Unani drugs".
Chapter IVA made.provisions relating to Ayurvedic (including Siddha) and Unani drugs.
This shows that prior to this amendment of 1964 Ayurvedic preparations were expressly not drugs under the Drugs Act.
The Drugs and Cosmetics Act in the amendment First Schedule after the amendment Act of 1964 included Ayurvedic (including Siddha) and Unani system drugs prepared under Section 3(a) which contains the definition: "Ayurvedic (including Siddha) or Unani drugs includes all medicines intended for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of disease in human beings and animals, mentioned and process and manufac ture exclusively in accordance with the formula prescribed in the authoritative book on Ayurvedic (Siddha) Unani system of medicines specified in the first schedule.
" This defini tion was also inserted by Drugs and Cosmetics (Amendment) Act, 1964 (13 of 1964) Section 2(a)(i) with effect from 15.9.1964.
The same exclusion remained in the related Central Acts.
For example, the Drugs Control Act, 1950 (Act 26 of 1950) replaced the Drugs Control Ordinance, 1949 (6 of 1949) which was promulgated on 3.10.
1949 in order to ensure that cer tain essential imported drugs and medicines were sold in the reasonable price in the Chief Commissioner 's provinces.
Similar ordinances were issued by all the provinces.
The necessity for continuing price control of these essential drugs continued.
That was an Act to provide for the control of sale, supply and distribution of drugs.
Drug meant any drug as defined in clause (b) of Section 3 of Drugs Act, 1940, in respect of which a declaration had been made under Section 3 which defined drug.
It may be noted that Pharmaco poeia authorised for the purpose of Section 3(h) of the Drugs Act, 1940, were: The Indian Pharmacopoeia, the Pharma copoeia of the United States, the National formulary of the United States, the International Pharmacopoeia and the State Pharmacopoeia 144 of the Union of Soviet Socialist Republics, vide S.O. 701 Gazette of India, 1961, Pt.
II, section 3(ii), p. 725.
There was thus no Ayurvedic Pharmacopoeia prescribed for the purpose of that Act.
Pharmacopoeia is a book containing the list of drugs with directions for use.
The fact that no Ayurvedic Pharmacopoeia had been notified at the relevant time was because Ayurvedic preparations were not drugs for the pur pose of Drugs Act and, for that matter, of , at the relevant time.
It could be for this reason that in the original Schedule the expression medicinal and toilet preparations 'not otherwise specified ' was used and Ayurvedic prepara tions of different categories were put under item 2.
In the Schedule as amended by the 1962 Act, this expression contin ued in item 3, The same definition of 'drug ' also continued in the Drugs Act.
From the Explanation I of the Schedule of the Act as substituted by Act 5 of 1964 also it is clear that patent or proprietary medicine means any medicinal preparation which is not specified in a monograph in a Pharmacopoeia, Formu lary or other publications notified in this behalf by the Central Government in the Official Gazette.
To be a patent medicine one would be required to have a patent.
A patented article means an article in respect of which a patent is in force.
"Patent" means a patent granted under the Indian Patent and , and now the Patent Act, 1970.
A patent medicine will, therefore, mean medicine in respect of which a patent is in force.
"Proprie tary" means of a proprietor, that is, holding proprietary rights.
Patent means a grant of some privilege, property, or authority, made by the Government or sovereign of a country to one or more individuals.
A proprietor is one who has the legal right or exclusive title to anything.
It is synonymous with owner.
A person entitled to a trade mark or a design under the acts for the registration or patenting of trade mark or design is called a proprietor of the trade mark or design.
Under the , "trade mark" means: "(i) in relation to Chapter X (other than section 81), a registered trade mark or a mark used in relation to goods for the purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right as proprietor to use the mark; and (ii) in relation to the other provisions of this Act, a mark used or proposed to be used in relation to goods for the 145 purpose of indicating or so as to indicate a connection in the course of trade between the goods and some person having the right, either as proprietor or as registered user, to use the mark whether with or without any indica tion of the identity of that person, and includes a certification trade mark registered as such under the provisions of Chap.
" As defined in section 2(a), registered proprietor in relation to a trade mark means a person for a time being entered in the register as proprietor of the trade mark.
A registered trade mark means a trade mark which is actually on the register.
By section 18 of the Finance (No. , the Schedule to the Act was further amended substituting the Explanation 1 by the following: "Explanation 1: "Patent or proprietary medi cines" means any medicinal preparation which bears either on itself or on its container or both a name which is not specified in a mono graph in a Pharmacopoeia, Formulary or other Publications notified in this behalf by the Central Government in the Official Gazette, or which is a brand name, that is a name or a registered trade mark under the Trade and Merchandise Mark Act, 1958 (43 of 1958), or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used m relation to that medicinal preparation for the purpose of indicating or so as to indicate a connection in the course of trade between as preparation and some person having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person.
" This amendment of the Explanation came into force in June, 1962 with retrospective effect from 23rd April, 1962.
The Director of Prohibition and Excise, for Maharashtra State, Bombay, thereafter issued the circular dated 31.5.
1962 (Ext. 44).
It said that the patent or proprietary medicines as defined in clause (d) of section 3 of the Drugs Act of 1940 (23 of 1940) and falling under items No. 1 and No. 4 of the Act as substituted by the Amendment Act, 1961 were, prior to 23rd April, 1962, subject to levy of duty at 10 per cent ad 146 valorem by virtue of the Explanation I below the Schedule to the Act which has now been deleted from 23rd April, 1962.
According to new definition of 'Patent and Proprietary Medicines ' as given in the new Explanation as amended by Finance (No. medicinal preparations containing alcohol, opium, Indian hemp or other narcotic drugs or narcotic falling under item 3(i), 3(iii) and 3(v) of the said Schedule, were with effect from 23rd April, 1962 liable to duty not under the said items but under item No. 1 or item No. 4 of the said Schedule at 10 per cent ad valorem, if such preparations are "patent or proprietary medicines" as defined in the Explanation.
Excise duty on all 'patent or proprietary medicinal preparations ' (Alopathic, Ayurvedic, Unani and Homoeopathic preparations) containing alcohol, opium, Indian hemp or other narcotic drug or narcotic, which fall within the purview of the new definition of 'patent or proprietary medicines ' given in the Explanation, should therefore, be recovered at the rate of 10 per cent ad valo rem from the holders of the licences granted under the said Act and the rules thereunder in accordance with the instruc tions contained in their Circular No. DQ 64 31/61 dated 22nd July, 1961.
A note received from the Government of India, explaining the scope of the new definition of 'patent or proprietary medicines ' was also enclosed along with the circular.
It is in evidence in the instant case that two bottles containing Asavas were produced in the Court as Exhibit 42/1 and Exhibit 42/2.
Both the bottles contained the same kind of Asavas.
The ingredients of the two were the same and the preparation of the two was also the same.
When the Asavas were sold during the period beginning from June, 1962 to February, 1964, no excise duty was levied because on the label there was no trade mark of patent and proprietary right printed.
If the Asavas were sold in the bottle having a label with no trade mark as at Exhibit 42/1, no duty was recovered from the plaintiff.
These Asavas were supplied to Employees ' State Insurance as per their tender without the trade mark on the label to see that the plaintiffcompany were not taxed the excise duty which would have been charged had they put the patent mark on the label.
But in order to fight for blemish of cheating, the plaintiff thought it necessary to have the trade mark on such bottles without any difference.
As soon as the goods were sought to be sold in the above manner the excise duty was levied and was sought to be recovered from the plaintiff 's fund.
No excise duty was recovered after February, 1964 even though Asavas were sold with their trade mark.
It is also in evidence that there were two sub groups in the group of Asavas and Aris thas known as 'restricted ' and 'unrestricted '.
Restricted means preparations which 147 could be used as alcoholic beverages.
In this case the period from 26.7.62 to 29.2.64 is alone material inasmuch as by the Finance Act of 1964 with reference to item No. 1, the Ayurvedic and Unani medicines containing self generated alcohol and which were not capable of being consumed as ordinary alcoholic beverages were exempted from the levy of excise duty.
In other words, the position prior to Finance Act of 1962 was continued and thereafter the medicinal preparations, namely, Asavas and Aristhas ceased to be taxed from 1964.
It would be noted that the Explanation itself did not specifically mention "Allopathic, Ayurvedic, Unani and Homoeopathic preparations" as was done in the Director 's Circular.
On a comparison of the earlier Explanation and the substituted Explanation one would notice that earlier "patent and proprietary medicines" meant a drug.
In the substituted Explanation it means any medicinal preparation.
However, it can not be lost sight of that the words "medici nal preparation" as continued to be defined in section 2(g) of the Act "includes all drugs which are a remedy or prescrip tion prepared for internal or external use of human beings or animals and all substances intended to be used for or in treatment, mitigation or prevention of diseases in human beings or animals.
" We have already noticed that the Drugs Act continued to exclude Ayurvedic preparations till its amendment in 1964.
It has been stated that even after amend ment of the Schedule after 1961 amendment the appellant 's product was exempted from duty, till the Director 's Circular disturbed the position.
This brings us to the question of interpretation of the Act and the Schedule with the Explanation.
in view of the submission that the Explanation could not have rendered item 3(i) of the Schedule redundant.
Was there any change of intention of the Legislature in this regard? A Schedule in an Act of Parliament is a mere question of drafting.
It is the legislative intent that is material.
An Explanation to the Schedule amounts to an Explanation in the Act itself.
As we read in Halsbury 's Laws of England, Third Edition, Vol. 36, para 551: "To simplify the presentation of statutes, it is the practice for their subject matter to be divided, where appropriate, between sections and schedules, the former setting out matters of principle, and introducing the latter, and the latter containing all matters of detail.
This is purely a matter of arrangement, and a schedule is as much a part of the statute, and as much an enactment, as is the section by which it is introduced.
" The schedule may be used in construing provisions in the 148 body of the Act.
It is as much an act of Legislature as the Act itself and it must be read together with the Act for all purposes of construction.
Expressions in the Schedule cannot control or prevail against the express enactment and in case of any inconsistency between the schedule and the enactment the enactment is to prevail and if any part of the schedule cannot be made to correspond it must yield to the Act.
Lord Sterndale, in Inland Revenue Commissioners vs Gittus, said: "It seems to me there are two principles of rules of interpretation which ought to be applied to the combination of Act and Sched ule.
If the Act says that the Schedule is to be used for a certain purpose and the heading of the part of the Schedule in question shows that it is prima facie at any rate devoted to that purpose, then you must read the Act and the Schedule as though the Schedule were operating for the purpose, and if you can satisfy the language of the section without extending it beyond that purpose you ought to do it.
But if in spite of that you find in the language of the Schedule words and terms that go clearly outside that purpose, then you must give effect to them and you must not consider them as limited by the heading of that part of the Schedule or by the purpose mentioned in the Act for which the Schedule is prima facie to be used.
You cannot refuse to give effect to clear words simply because prima facie they seem to be limited by the heading of the Schedule and the definition of the purpose of the Schedule contained in the Act.
" The above observation was not disapproved in appeal However, the basic principle is that in case of a conflict between the body of the Act and the Schedule, the former prevails.
In the instant case we do not find any such conflict.
An Explanation, as was found in Bihta Marketing Union vs Bank of Bihar, ; , may only explain and may not expand or add to the scope of the original section.
In State of Bombay vs United Motors, ; ,it was found that an Explana tion could introduce, a finction or settle a matter of controversy.
Explanation may not be made to operate as "exception" or "proviso".
The construction of an Explana tion, as was held in Collector of Customs vs G. Dass & Co., AIR 1966 SC 1577, must depend upon its terms and no theory of its purpose can be entertained 149 unless it is to be inferred from the language used.
It was said in Burmah Shell Oil Ltd. vs Commercial Tax Officer, AIR 1961 SC 3 15: , that the explanation was meant to explain the Article and must be interpreted accord ing to its own tenor and it was an error to explain the Explanation with the aid of the Article to which it was annexed.
We have to remember what was held in Dattatraya Govind Mahajan vs State of Maharashtra, ; (928): ; , that mere description of a certain provision, such as "Explanation" is not decisive of its true meaning.
It is true that the orthodox function of an expla nation is to explain the meaning and effect of the main provision to which it is an explanation and to clear up any doubt or ambiguity in it, but ultimately it is the intention of the legislature which is paramount and mere use of a label cannot control or deflect such intention.
State of Bombay vs United Motors, (supra) laid down that the inter pretation must obviously depend upon the words used therein, but this must be borne in mind that when the provision is capable of two interpretations, that should be adopted which fits the description.
An explanation is different in nature from a proviso for a proviso excepts, excludes or restricts while an explanation explains or clarifies.
Such explanation or clarification may be in respect of matters whose meaning is implicit and not explicit in the main section itself.
In Hiralal Ratanlal vs State of U.P., ; (225), it was ruled that if on a true reading of an Explanation it appears that it has widened the scope of the main section, effect be given to legislative intent notwithstanding the fact that the Legislature named that provision as an Expla nation.
In all these matters courts have to find out the true intention of the Legislature.
In D.G. Mahajan vs State of Maharashtra, (supra) xx this Court said that legislature has different ways of expressing itself and in the last analysis the words used alone are repository of legislative intent and that if necessary an Explanation must be con strued according to its plain language and 'not on any a priori consideration '.
Applying the above principles we do not find any differ ence between the Schedule and the Explanation I; the latter has not amended the Schedule by either deleting item 3(i) or by adding or including Ayurvedic preparations in item 1.
No change of legislative intent is indicated.
In the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 Section C Medicinal and Toilet preparations, Allopathic preparations, Homoeopathic preparations and Ayurvedic preparations are dealt with separately.
So far as Ayurvedic preparations are concerned, 150 Rule 64 dealing with types of preparations said: "Asavas and Aristhas are the principal types of Ayurvedic preparations in which alcoholic content is self generated and not added as such.
" Rule 65 on Pharmacopoeia for Ayurvedic prepara tions said: "Until a standard Ayurvedic pharmacopoeia has been evolved by the Central Government, the pharmacopoeias that are in vogue in the various States shall be recognised as standard Ayurvedic pharmacopoeias." Rule 66 classified the preparations containing self generated alcohol for purposes of levy of duty.
It said: "No duty shall be levied on Ayurvedic preparations containing self generated alcohol in which the alcohol content does not exceed 2 per cent.
Where the percentage of proof spirit is in excess of 2 per cent, duty will be leviable under item 2(ii) or 2(i) of the Schedule to Act the according as the preparations are capa ble of being consumed as ordinary alcoholic beverage or not." Thus Ayurvedic preparations containing self generated alcohol which are not capable of being used as alcoholic beverages fall under original 2(i) and now 3(i).
The above Rules, which have not been shown to have been amended clearly say that where the percentage of proof spirit is in excess of 2% the preparation would be dutiable under item 2 which became item No. 3 in the amended Sched ule.
This Rule is consistent with the Schedule but is wholly inconsistent with the Director 's circular.
Mr. Ganguli relies on ; Baidyanath Ayurved Bhawan Pvt. Ltd. vs The Excise Commis sioner of U.P., The question there was whether medicinal preparation containing tincture, spirit etc.
was dutiable.
The tincture and spirit in their turn contained alcohol.
It was contended that alcohol was not directly added but was component of the tincture or spirit.
It was, however conced ed that the preparations were medicinal preparations and that tincture was a component of that preparation and alco hol was a component of tincture.
Therefore, this Court held that it was difficult to see how it could be urged that the preparation did not contain alcohol.
All that the plain language of the provision required was that the preparation should contain alcohol.
The question whether Ayurvedic preparation was a drug to be included in the definition of medicinal preparation was not involved.
Whether self gener ated alcohol was to be treated differently was also not there.
In Mohanlal Maganlal Bhavsar vs Union of India.
it was held that before a medicinal preparation can fall under Item 151 1 of the Schedule three conditions are required to be satis fied: (A) the preparation must be a patent or proprietary medicine; (2) it must contain alcohol; and (3) it must not be capable of being consumed as an ordinary alcoholic bever age.
The fact that ointments and liniments were medicinal preparations containing alcohol in semi liquid form did not make any difference.
However it was not in dispute that the articles were medicinal preparations for the purposes of the Act and that they were patent and proprietary medicines.
In the instant case the question is whether Ayurvedic prepara tions, in view of the definition of medicinal preparations in the Act, could be regarded as drugs and could be dutiable under Item 3 and not Item 1.
In Commissioner of Sales Tax vs The Modi Sugar Mills Ltd.; , it was held that a taxing statute must be interpreted in the light of what is clearly expressed therein and nothing can be implied nor can provisions be imported into them so as to supply an assumed deficiency.
In Baidyanath Ayurved Bhawan (supra) this Court quoted the observation of Rowlatt, J. in Cape Brandy Syndi cate vs Commissioners of Inland Revenue, that "in a taxing Act one has to look at what is clearly said.
There is no room for any intendment.
There is no equity about a tax.
There is no presumption as to tax.
Nothing is to be read in, nothing is to be implied.
One can only look fairly at the language used.
" The question in the instant case, however, is whether the appellant 's product being an Ayurvedic preparation could be a drug for being included in the definition of medicinal preparation for the purpose of the Act.
This question was not raised in the above cases.
As Mr. Dholakia points out, the Circular would render item 3(i) of the Schedule wholly redundant.
It has been the consistent policy of legislature to exempt item 3(i) hither to 2(i), from duty.
The legislature has not in any way changed it.
The Explanation has not in any way altered the classification in the Schedule.
The substituted Explanation no doubt stressed on patents and trade marks.
But it has not expressly envisaged in item I, patented trade marked Ayurvedic preparations contrary to the classification in the Schedule.
Ex praecedentibus et consequentibus optima fit interpretatio.
The best interpretation is made from the context.
Injustum est nisi tota lege inspecta, de una aliqua ejus particula proposita judicare Vel respondere.
It is unjust to decide or respond as to any particular part of a law without examining the whole of the law.
Interpretare et concordare leges legibus, est optimus interpretendi modus.
To interpret and in such a way as to harmonize laws with laws, is the best mode of interpretation.
In the instant case the Director 's Circular is not in harmony with item 3(i) or with the classifi 152 cation of Ayurvedic preparations in separate item 3.
It would not be in conformity with definition of medicinal preparation ' in section 2(g) of the Act.
Jura eodern modo dislit uentur quo constitutuntur.
Laws are abrogated by the same means (authority) by which they are made.
The Director 's Circular is not shown to have been a piece of delegated legislation.
The Explanation on its tenor does not amend the Schedule.
No part of a Statute is to be taken as superfluous or redundant.
Every word in a Statute is to be given a meaning.
A construction which would leave without effect any part of the language of a statute will normally be rejected.
Every clause of a statute is to be construed with reference to the context and other clauses of the Act so as to make, as far as possible, a consistent enactment of the whole Statute.
The High Court accepted the submission that it provided a selfcontained definition of 'patent and proprietary medi cines ' for the purpose of the main Act and severed the connection between the provisions of the Drugs Act as was contemplated in earlier Explanation I, and consequently one need not look to the Drugs Act at all for its interpretation and the Schedule was thence to be interpreted as it existed along with that self containing definition in Explanation I.
In doing so, the position that "Patent and Proprietary medicines" means "any medicinal preparation" which very "Medicinal preparation" includes all drugs which are a remedy or prescription etc.
as defined in section 2(g) of the Act.
So a reference to the Drugs Act was still necessary.
No doubt this is an inclusive definition.
To enlarge its deno tation a specific provision to include Ayurvedic prepara tions containing selfgenerated alcohol which are not capable of being consumed as ordinary alcoholic beverages was neces sary.
That having not been done by the Explanation itself, it was not permissible to include it by the Circular.
The Explanation I could not have been in conflict with the provisions of the Act and the Circular could not have been in conflict with the Explanation, the Schedule, the Rules and the Act.
In the result, we set aside the judgment and decree of the High Court and restore those of the Civil Judge decree ing the suit.
We leave the parties to bear their own costs.
Y. Lal Appeal allowed.

summary/full:
The appellant is a company having its registered office at Ahmednagar in Maharashtra.
It carries on business as manufacturers of Ayurvedic preparations including "Asvas" and "Aristhas".
At the material time the appellant was manufacturing and selling an Ayurvedic product, "Ashvagand harist" which is a medicinal preparation containing self generated alcohol but not capable of being consumed as ordinary alcoholic beverages.
came into force on 1.4.1957.
The schedule to the said Act contained two items specifying "medicinal and toilet preparations containing alcohol" which are prepared by distillation or to which alcohol has been added and which are capable of being consumed as ordinary "alcoholic bever age" and "medicinal and toilet preparations not otherwise specified containing alcohol" as the commodities excisable under the provisions of the Act.
The said "Ashvagandharist" was treated and accepted by the Excise Authorities as being exempt from the payment of excise duty upon the basis and footing that the same was an Ayurvedic preparation contain ing self generated alcohol which was not capable of being consumed as ordinary alcoholic beverage and which fell under item 2(i) of the schedule in respect of which, the rate of excise duty prescribed in the schedule was "Nil".
130 The Act was amended by Amendment Act 19 of 1961 whereby concept of "patent and proprietary" medicine was introduced in the schedule.
The Amendment Act, by an Explanation intro duced in the schedule the definition of "patent and proprie tary" medicine contained in the Drugs Act 1940.
Despite the said amendment in the schedule the appellants ' product continued to be treated as exempt from the liability to pay excise duty on the ground that it was covered under item 2(i) of the schedule which item was re numbered as item 3(i) of the schedule.
Thereafter by section 18 of the Finance Act 1962, the Act was further amended by substitution of Expla nation I to the schedule of the Act.
By the said explana tion, a "patent and proprietary" medicine was defined as a medicinal preparation of the description and the type speci fied in the Explanation.
The said Explanation was given retrospective effect from April 23, 1962.
In pursuance of the said Explanation I brought by the Finance Act, Director of Prohibition and Central Excise, Govt.
of Maharashtra, Bombay issued a circular dated May 31, 1962, which inter alia directed that the medicinal preparations containing self generated alcohol but not capable of being consumed as alcoholic beverage were to be treated as products falling under Item No. I and not Item 3 of the schedule.
As a result of that circular, the Respondents levied excise duty on the appellants ' product amounting to Rs.2, 18,282.16p.
and realized the same from the appellant.
The appellant paid the amount "under protest".
With a view to recover the aforesaid amount, which according to the appellant, was illegally recovered by the Respondents, the appellant filed a suit, being special suit No. 23 of 1965 in the Court of Civil Judge Sr. Division, Ahmednagar.
The Civil Judge by his order dated 27.3.69 decreed the appellantplaintiff 's suit with interest at 6% per annum from the date of the suit till realisation.
The Respondents appealed to the High Court against the Order of the Civil Judge and the High Court allowed the appeal, reversed the Judgment and decree passed by the Civil Judge and dismissed the appellant 's suit.
Hence this appeal by the plaintiff appellant by special leave.
Allowing the appeal, this Court, HELD: From Explanation I of the Schedule of the Act as substituted by Act 5 of 1964 it is clear that patent or proprietary medicine 131 means any medicinal preparation which is not specified in a monograph in a Pharmacopoeia, Formulary or other publica tions notified in this behalf by the Central Government in the Official Gazette.
[144C] To be a patent medicine one would be required to have a patent.
A patented article means an article in respect of which a patent is in force, [144D] A patent medicine will, therefore, mean medicine in respect of which a patent is in force.
[144E] Patent means a grant of some privilege property, or authority, made by the Government or sovereign of a country to one or more individuals.
A proprietor is one who has the legal right or exclusive title to anything.
It is synonymous with owner.
A person entitled to a trade mark or a design under the Acts for the registration or patenting of trade mark or design is called a proprietor of the trade mark or design.
[144E F] A Schedule in an Act of Parliament is a mere question of drafting.
It is the legislative intent that is material.
An Explanation to the Schedule amounts to an Explanation in the Act itself.
[147F] The Schedule may be used in construing provisions in the body of the Act.
It is as much an Act of the Legislature as the Act itself and it must be read together with the Act for all purposes of construction.
Expressions in the Schedule cannot control or prevail against express enactment and in case of any inconsistency between the schedule and the enactment, the enactment is to prevail and if any part of the schedule cannot be made to correspond it must yield to the Act.
[147H; 148A B] An explanation is different in nature form a proviso, for a proviso excepts, excludes or restricts while an expla nation explains or clarifies.
Such explanation or clarifica tion may be in respect of matters whose meaning is implicit and not explicit in the main section itself.
[149F] Bihta Marketing Union vs Bank of Bihar, ; ; ; State of Bombay vs United Motors, ; ; Collector of Customs vs G. Dass & Co., AIR 1966 SC 1577; Burmah Shell Oil Ltd. vs Commercial Tax Officer, AIR 1961 SC 315: ; Dattatraya Govind Mahajan vs State of Maharashtra, ; (928): ; and Hiralal 132 Ratanlal vs State of U. P., ; Ex praecedentibus et consequentibus optima fit interpre tatio.
The best interpretation is made from the context.
Injustum est nisi tota lege inspecta, de una aliqua ejus particula proposita judicare Vel respondere.
It is unjust to decide or respond as to any particular part of a law without examining the whole of the law.
Interpretare et concordare leges ligibus, est optimus interpretendi modus.
To interpret and in such a way as to harmonize laws with laws, is the best mode of interpretation.
[151G H] Jura eodem modo distituentur quo constitutuntur.
Laws are abrogated by the same means (authority) by which they are made.
[152A] Every word in a Statute is to be given a meaning.
A construction which would leave without effect any part of the language of a statute will normally be rejected.
Every clause of a statute is to be construed with reference to the context and other clauses of the Act so as to make, as far as possible, a consistent enactment of the whole statute.
[152B] A specific provision to include Ayurvedic preparations containing self generated alcohol which are not capable of being consumed as ordinary alcoholic beverages was neces sary.
That having not been done by the Explanation itself, it was not permissible to include it by the Circular.
The Explanation I could not have been in conflict with the provisions of the Act and the Circular could not have been in conflict with the Explanation, the Schedule, the Rules and the Act.
[152E F] The Court set aside the order of the High Court and restored that of the Civil Judge decreeing the suit.
[152G] Inland Revenue Commissioners vs Gittus, [1920] I KB 563; Baidyanath Ayurved Bhawan Pvt. Ltd. vs The Excise Commis sioner, U.P.; , ; Mohanlal Maganlal Bhavsar vs Union of India, ; Commissioner of Sales Tax vs The Modi Sugar Mills Ltd., ; and Cape Brandy Syndicate vs Commissioners of Inland Revenue, , referred to.


judgement:
Civil Appeals Nos.
1573/88, 3954/87 and 3370 of 1988.
From the Judgment and Order dated 1.2.1988, 10.6.1987 and 28:4.1988 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. C/1373/85 C Order No. 87.,88 C, 1704/83 D Order No. 463/87 D and Appeal No. C 605 1986(C) in Order No. 429/88 C respectively.
A.K. Ganguli, P. Parmeshwaran, T.V.S.N. Chari and Mrs. Sushma Suri for the Appellant.
section Ganesh, K.J. John and San jay Grover for the Respondent.
The Judgment of the Court was delivered by RANGANATHAN, J.
These three appeals under Section 130 E(b) of the raise the same issue.
They are therefore disposed of by a common order.
The respondent M/s.
K. Mohan & Co. imported, from Japan, "metallised poIyester films" under an import licence dated 14.6.1978.
The goods were admittedly in the shape of film rolls several metres long.
They were cleared on payment of customs duty leviable under the (CA) as well as the additional duty of customs (or countervailing duty) leviable under section 3 of the Customs Tariff Act, 1976 (CTA).
Subsequently, the respondent firm made three applica tions for the refund of the amount of the additional duty of customs paid by it.
The claim for refund was based on the terms of a notification of exemption issued under section 25(1) of the CA.
Under notification No. 228/76 dated 2.8.1976, an exemption from the customs duty payable under section 3 of the CTA was granted in respect of "articles made of plastics, all sorts, but excluding those specified in the table an nexed hereto and falling within Chapter 39 of the First Schedule to the (51 of 1975)".
The annexed table 234 excepted the following items from the purview of the exemp tion: "Tubes, rods, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexible including tubings and polyvinyl chloride sheets".
Notification No. 443 dated 29.11.76 omitted the words of notification No. 228 which have been underlined above but left the main notification otherwise untouched.
The assesses ' claim for refund was accepted by the Tribunal.
The Tribunal held that the goods imported by the respondent were articles made of plastics.
But they were 'films ' and not one of the categories of articles enumerated in the table.
In reaching its conclusion, the Tribunal followed the decisions, of the Madras High Court in Precise Impex P. Ltd. vs Collector, , of the Calcut ta High Court in Continental Marketing P. Ltd. vs Union, and of the Bombay High Court in A.V. Jain vs Union, WP 2136 of 1986, decided on 30.1. 1987.
The Tribu nal also referred to its own earlier decisions in Export India Corpn.
P. Ltd. vs Collector and Collector vs Fancy Dyeing and Printing works, Bombay.
The Collector of Customs is aggrieved by the orders of the Tribunal and hence these appeals.
There are three appeals as there were three appli cations for refund by the assessee in respect of different periods.
There is no dispute before us that the goods in question are articles made of plastics.
This being so, the assessee is entitled to the exemption conferred by the notification unless the goods answer the description of one or other of the specific items set out in the table.
The onus of showing this is clearly on the Revenue.
The department contends that the goods are "sheets" or "foils" or "other rectangular or profile shapes" and hence liable to duty.
On the other hand the assesses ' case is that they are "films", a specie of plastic articles different from any mentioned in the table.
It is alternatively contended that, even if they are treated only as thin sheets of plastic material, they can be more accurately described only as "sheetings" and not "sheets".
It is pointed out that the goods are in the form of large rolls containing films several metres long.
Such huge lengths can only be called "sheetings" for the expression "sheets", it is said, connotes only smaller lengths or bits cut out from "sheetings" which mean sheets of immense lengths.
Also, being in the form of rolls, they cannot be said to be articles of "rectangular shape" merely because, when cut into segments, they may fall into rectangular pieces.
235 After giving the matter our careful consideration, we are of opinion that the view taken by the three High Courts and the Tribunal that "films" made of plastic fall in a category of their own and do not fall within the categories of articles excepted by the table is correct.
We have come to this conclusion because there are various statutory indications and other material which support such a conclu sion: (1) Duty under the CTA in respect of artificial resins, plastic materials of various types and articles thereof is leviable under section 3 read with Chapter 39, containing heading nos.
39.01/06 and 39.01/07 in section VII of the First Schedule to the CTA.
This aspect found a reference in the original notification No. 228 but was omitted, apparently as being redundant, by the amendment of 29.11.1976.
In Note 3 at the commencement of the said Chapter 39, clause (c) talks of "seamless tubes, rods, sticks and profile shape while clause (d) refers to "plates, sheets, films, foils and strips".
This indicates that plates, sheets, films, foils, etc.
are categories of plastic articles distinct from one another.
(2) Notification No. 228 contains a reference to the tariff schedule under the Central Excises & Salt Act, 1944 (CESA).
The CESA, read with item 15A of its First Schedule, provides for the levy of an ad valorem duty of excise on all "artificial or synthetic resins and plastic materials and cellulose esters and ethers and articles thereof" described in greater detail in sub items (1) to (4) thereunder.
Of these, sub item (2) reads: (2) Articles made of plastics all sorts, including tubes, rods, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not, and whether rigid or flexi ble, including lay flat tubings and polyvinyl chloride sheets, not otherwise specified"; and Explanation I appended to item 15A clari fies: "For the purpose of sub section (2), "plas tics" means the various artificial or synthet ic resins or plastic materials or cellulose esters and ethers included in sub item (1)" Comparing item 15A of the CESA tariff with the notification under consideration, it will be seen that the intention was to exempt, from countervailing duty, "articles made of plastics, all sorts" (the expression "plastic" having the very wide meaning given to it in Explanation 236 I of the CESA tariff) and falling within the main part of sub item (2) of item 15A and to deny exemption to goods which fall under the second (inclusive) part of the said sub item.
In this context it is of some interest to refer to item 15A as substituted by the Finance Act, 1982.
This item describes in greater detail than before various "artificial and synthetic resins and plastic materials" liable to duty.
of these item (2) reads: "Article of materials described in sub item (1) including the following, namely: Boards, sheeting, sheets and films, whether lacquered or metallised or laminated or not: lay flat tubings not containing any textile material.
This item, it will be seen, does not stick to the classifi cation made earlier in sub item (2).
However, it does make a distinction between "sheeting, sheets and films".
(3) There are a number of exemption notifications issued under rule 8(1) of the Central Excise Rules in respect of items falling under Item No. 15A of the CESA Tariff which make a pointed reference to 'films ' and draw a similar distinction as above.
Notification No. 68 of 1971 dated 29.5.
1971 exempts articles made of plastics, all sorts, falling under sub item (2) of Item No. 15A except (i) rigid plastic boards, sheeting, sheets and films, whether laminat ed or not; and (ii) flexible polyvinyl chloride sheeting, sheets, films and lay flat tubings not containing any tex tile material.
Notification No.69 of 1971, dated 29.5.1971, read with notification No. 7417 and 107/73, exempts articles made of polyurethane foam except, inter alia, sheets and sheetings.
Notification No. 70 of 1971, of the same date, restricts the duty on rigid polyvinyl chloride boards, sheeting, sheets and films.
Notification No. 71 of 1971, also of the same date, grants limited exemption, subject to certain conditions to rigid plastic boards, sheeting, sheets and films, whether laminated or not, other than those manu factured from polyvinyl chloride.
Notification No.72 of 1971 of the same date limits the excise duty in respect of flexi ble polyvinyl chloride sheeting, sheets, films and lay flat tubings, not containing any textile material and falling under sub item (2) of Item No. 15A to 25 per cent (amended later to 30%) ad valorem, subject to certain conditions.
Notification No. 39 of 1973 dated 1.3.
1973, exempts rigid and flexible polyvinyl chloride films of thickness below 0.25 mm as well as polyvinyl chloride lay flat tubings in certain circumstances.
By notifi 237 cation No. 151 of 1975 dated 31.5.1975 exemption was granted in respect of cellulose tri acetate, when intended for use in the manufacture of cine films, X ray films or photograph ic films.
Item 15B talks of "film or sheet" of cellulose and a notification of 1981 specifically added item 15BB to the Tariff under CESA dealing with polyster films as a separate item, though this entry was subsequently omitted by the Finance Act of 1982.
All these indicate that 'film ' is a well known, distinct and independent category of plastic article known to commerce.
(4) There is a like distinction maintained even by the notifications issued under section 25 of the in regard to items falling within chapter 39 of the First Schedule to CETA.
Notification No. 227 dated 2.8.1976 limits the rate of duty on various items, two of which are "film scrap" and "cellulose nitrate sheets and cellulose nitrate films".
We then have notification No. 223 of the same date, which falls for interpretation now and which omits a refer ence to "films" while enumerating various other categories of plastic articles.
Notification No. 229, also of 2nd August, 1976, restricted the customs duty on metallised or plain plastic films imported for certain specified purposes to 60%.
Notification Nos. 230 dated 2nd August, 1976 and 36 of 1.3.
1978, also granted limited exemption to other types of polyster films.
(We must, however, point out that these last two notifications are somewhat ambiguous for our present purposes as they also specifically provide for an exemption to the said articles from the additional duty which, on the argument of the assessee before us, would be really unnecessary.
The Revenue 's stand is that the articles in question may be films in a generic sense but that, in this particular case, they are either 'foils ' or 'sheets '.
For this purpose our attention is drawn to the discussions contained in the Bombay case where the issue was decided on the basis of evidence produced by both parties.
This shows that according to the glossary of terms used in the plastic industry issued by the Indian Standards Institution (IS 2828 1954, as well as in 1979), a film is "a sheeting having nominal thickness not greater than 0.25 mm".
A report of the Chief Chemist of the Customs Department as well as extracts from certain text books were produced to show that 'foil ' is the term "applied to materials which are made in continuous rolls and are less than 1/1000th of an inch thick (0.254 mm).
In the present case, the film rolls were of thickness varying between 0.025 mm to 0.501 mm.
It is, therefore, submitted that to the extent the material was less than .0254 mm in thickness it would constitute 'foils ' and to the extent 238 it exceeded 0.25 mm in thickness it will be a 'sheet '.
It is urged that since 'sheets ' and 'foils ' are specifically mentioned in the entry in question, the imported goods, at least to the extent indicated above, cannot qualify for exemption.
The answer given by the Bombay High Court to the conten tion that the goods were 'foils ' was that while it may be that, technically and scientifically speaking, the articles in question may be capable of being characterised as 'foils ', one is concerned in a customs or excise matter not so much with the technical or scientific definitions of these terms but rather with commercial usage.
One has to see how the trade understands the expression "films" and one should also bear in mind in this connection that the expres sions set out in the table are applicable not merely to the articles with which we are at present concerned but also to various other types of articles of plastics with varied commercial use.
The question is whether the trade under stands the article presently in question as a 'film ' or whether there is a distinction in trade usage also between 'foils ' and 'films '.
It has been pointed out by the Bombay High Court, on the basis of the evidence before it, that in the understanding of those who are in this particular trade, metallised polyester films are referred to as 'films '.
Reference has been made to the classification made by the only manufacturer of polyester films in India for purposes of CEA.
Reference has also been made to the brochures brought out by the Japanese manufacturers of the goods in question which show that metallised polyester 'films ' could consist of films of the thickness of even 12 to 25 microns.
It has been pointed out that, under the Import Export Policy of India for 1984 85, reference has been made to metallised polyester 'films ' having thickness of even less than 6 microns which are used in the electronic industry.
In the light of the above material and the absence of any additional material led in the present case, we agree with the view of the Bombay High Court that, though for certain purposes there is a distinction between 'films ', 'foils ' and 'sheets ', so far as the article presently in question is concerned it is recognised in trade only as 'film '.
It is difficult to imagine any person going to the market and asking for these films by describing them either as 'foils ' or as 'sheets '.
We are therefore of opinion that the goods under consideration cannot be described either as 'foils ' or as 'sheets '.
There is also another reason why the articles in the present case, to the extent they have thickness of more than 0.25 mm cannot be described as 'sheets '.
Shri Ganesh for the assessee contended and we 239 think rightly that a film roll of indefinite length and not in the form of individual cut pieces can be more appropri ately described as 'sheetings ' rather than 'sheets '.
The Indian Standard Institution also defines 'sheets ' as a piece of plastic 'sheeting ' produced as an individual piece rather than in a continuous length or cut as an individual piece from a continuous length.
We have also earlier pointed out that there are various items in various notifications making distinct reference to sheets and sheetings.
Actually, we also think that there is a factual confusion on this aspect.
While One of the Collectors has referred to the goods as being of thickness varying between 0.025 mm and 0.501 mm, it is seen from another of the orders that the goods are 3000 metres in length, 0.501 mm in width and 0.025 mm in thick ness.
If the latter is the correct version and all the goods are only 0.025 mm in thickness, the question now posed will not at all arise.
However, as indicated above, there is force in the contention of Shri Ganesh that if the articles be held not to be 'films ', because they exceed 0.25 mm in thickness, they would be 'sheetings ' rather than 'sheets ' and would therefore not fall within the meaning of the expression "sheets" in the table.
We would also like to add that the expression 'other rectangular or profile shapes ' in the table is also not appropriate to bring in the items in question.
For one thing, the articles have a distinct name in the market as 'films ' and therefore they are outside the table as already pointed out.
For the same reasons as we have mentioned in the context of 'foils ' and 'sheets '; it will not be possible to accept the contention that articles which have a clear commercial identity as 'films ' should be brought within the wide and vague expression "other rectangular or profile shapes", because, if the film is cut into small pieces, each piece will be rectangular in shape, The items imported do not come in a rectangular shape; they are imported as rolls of polyester films.
They are not articles of rectangular shape.
Nor would it be possible to treat them as of other 'profile ' shapes.
We are unable to attribute any precise meaning to the expression 'profile ' shape but it cannot be taken to be comprehensive enough to take in any shape what ever, as is contended for.
If we give the expression 'rec tangular or other profile shapes ' in the table such wide and unrestricted interpretation as is suggested, then practical ly any article of plastic can be brought within the meaning of one or other of the expressions used in the table and thus the entire exemption can be altogether deprived of any content.
For the above reasons, we are of opinion that the articles are 240 'films ' and, as this expression does not find specific mention in the table, the assessee is entitled to exemption under the main part of the notification.
The conclusion arrived at by the Tribunal is therefore upheld and these appeals are dismissed with no orders as to costs.
Y. Lal Appeals dis missed.

dataset_name: IN-Abs

summary/full:
The Respondent firm imported from Japan, "metallised polyester films" which were in the shape of film rolls several metres long.
The goods were cleared on payment of customs duty as well as additional duty/countervailing duty leviable under section 3 of the Customs Tariff Act.
Thereaf ter the Respondent firm moved three applications claiming refund of the additional duty of customs paid by it.
The claim was made under the terms of a notification of exemp tion issued under section 25(1) of the Customs Act.
Under notification No 228/76 dated 2.8.1976, an exemption from the Customs Tariff Act was granted in respect of "articles made of plastics, all sort but excluding those specified in the Table annexed and failing under Chapter 39 of the First Schedule to the Customs Tariff Act.
The Tribunal accepted the claim of refund made by the ' Respondent.
In so doing it relied on the decisions of the Madras High Court in Precise Impex P. Ltd. vs Collector, , of the Calcutta High Court in Continental Marketing P. Ltd. vs Union, and of the Bombay High Court in A.V. Jain vs Union, WP 2136 of 1986 decided on 30.1.1987.
The Tribunal also referred to its earlier decision in Export India Corporation P. Ltd. vs Collector; and Collector vs Fancy Dying and Printing Works Bombay.
The Tribunal held that the goods imported by the Re spondent were articles made of plastics but they were "films" and thus not one of the Categories of articles mentioned in the Table.
Aggrieved by the decision of the Tribunal, the Collector of Customs has filed these appeals under section 130 E(B) of the . 232 Before this Court the Department contended that the goods are "sheets" or "foils" or other "rectangular or profile shape" and hence liable to duty.
The assesses ' assertion is that the goods are "films" though specie of plastics articles yet they are different from any mentioned in the table.
According to it even if they are treated only as thin sheets of plastic material, they can be described only as "sheetings" and not sheets.
On consideration of the rival contentions advanced by the parties and after making reference to the other relevant notifications granting exemption issued under rule 8(1) of the Central Excise Rules in respect of items falling under Item No. 15A of the Central Excise Tariff Act, this Court dismissing the appeals, HELD: Films made of plastic fall in a category of their own and do not fail within the categories of articles ex cepted by the Table.
Film is a well known, distinct and independent category of plastic article known to commerce.
[235A] The Court agreed with the view of the Bombay High Court that, though for certain purposes there is a distinction between "films", "foils" and "sheets", so far as the article presently in question is concerned it is recognised in trade only as "film".
[238F] The goods under consideration cannot be described either as "foils or sheets".
A film roll of indefinite length and not in the form of individual cut piece can be more appro priately described as "sheetings" rather than ' 'sheets".
[238G ;239A] The expression "other rectangular or profile shapes" in the table is also not appropriate to bring in the items in question.
For one thing, the articles have a distinct name in the market as "films" and therefore they are outside the table.
It will not be possible to accept the contention that articles which have a clear commercial identity as "films" should be brought within the wide and vague expression "other rectangular or profile shapes", because if the film is cut into small pieces each piece will be rectangular in shape.
The items imported do not come in a rectangular shape they are imported as rolls of polyester films.
They are not articles of rectangular shape.
Nor would it be possible to treat them as of other "profile" shape.
The Court was unable to attribute any precise meaning to the expression "profile" shape but it cannot be taken to be comprehensive enough to take in any shape whatever.
If the expression "rectangular" or other "profile" shape in the table is given 233 such wide and unrestricted interpretation then practically any article of plastic can be brought within the meaning of one or other of the expressions used in the Table and thus the entire exemption can be altogether deprived of any content.
The Court took the view that the articles are "films" and, as, this expression does not find specific mention in the table, the assessee is entitled to exemption under the main part of the notification.
[239E H; 240A]


judgement:
ivil Appeal No. 2653 of 1980.
From the Judgment and Order dated 24.7.1980 of the Delhi High Court in L.P.A. No. 113 of 1980.
V.M. Tarkunde, A.B. Lal and V.N. Ganpule for the Appellant.
T.S.K. Iyer and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by AHMADI, J.
The appellant Ajit Singh was appointed as Grade II Stenographer on February 2, 1953 and was promoted to the post of Senior Personal Assistant w.e.f.
April 1, 1970.
On January 4, 1974 he was further promoted to the post of Private Secretary to the Deputy Election Commissioner in which capacity he worked till July 26, 1977 when the Deputy Election Commissioner under whom he was working relinquished charge of office.
The first respondent is the Chief Election Commissioner.
One Tilak Raj was the Private Secretary to the first re spondent.
On the said Tilak Raj being promoted as Under Secretary, the post of Private Secretary to the Chief Elec tion Commissioner fell vacant and it was not filled in forthwith.
However, by an order dated October 23, 1979 respondent No. 2 M.L. Sarad was appointed to the same post w.e.f. September 1, 1979.
On learning about the appointment of respondent No. 2 to the said post the appellant com plained that the said appointment was contrary to the Elec tion Commission (Recruitment of Staff) Rules, 1974 (herein after called 'the 1974 Rules ').
The appellant 's representa tion was rejected on the ground that he was not eligible for appointment to the post in question.
The appellant then filed a Civil Writ Petition No. 1583 of 1979 in the High Court of Delhi challenging the notifica tion dated October 23, 1979 appointing M.L. Sarad to offici ate as Private Secretary to the Chief Election Commissioner w.e.f. September 1, 1979 as well as the Memorandum dated October 26, 1979 informing him that he was 252 eligible for appointment to the said post.
During the pend ency of this writ petition it was disclosed to the Court that the Commission proposed to make suitable changes in the 1974 Rules insofar as appointment to the post of Private Secretary to the Chief Election Commissioner was concerned.
The leave of the Court was sought to amend the 1974 Rules.
It was also disclosed that the Commission proposed to with draw the order of October 23, 1979 appointing M.L. Sarad as Private Secretary to the Chief Election Commissioner.
The Court granted leave to the Commission to amend the 1974 Rules.
By the notification dated December 3, 1979 earlier notification of October 23, 1979 appointing M.L. Sarad as officiating Private Secretary to the Chief Election Commis sioner was withdrawn.
The 1974 Rules were amended by notifi cation dated December 10, 1979 by the President in exercise of the power conferred by the proviso to Article 309 of, the Constitution of India.
By the said amendment entry at serial No. 9 relating to the post of the Private Secretary to Chief Election Commissioner and the entries relating thereto came to be omitted.
The respondent No. 1 brought these two changes to the Court 's notice by an application dated Decem ber 21, 1979.
Thereupon, the appellant sought leave to amend the memo of his writ petition.
The Commission also informed the appellant by its communication dated January 17, 1980 that it had withdrawn its earlier memorandum of October 26, 1979 whereby it was stated that the appellant was not eligi ble for appointment to the said post.
The Court took notice of these facts but thought that the writ petition survived, since the appellant was not considered for appointment to the post in question w.e.f. September 1, 1979.
Besides the appellant also challenged the Election Commission (Recruit ment of Staff) Amendment Rules, 1979 (hereinafter called 'the 1979 Rules ') by which entry at serial No. 9 came to be omitted.
The contention of the appellant was that the entire exercise culminating in the amendment of 1974 Rues was mala fide and was undertaken with the sole purpose of depriving him of appointment to the said post.
It may here be men tioned that after the 1979 Rules came into force respondent No. 2 was re appointed to the same post by notification dated February 27, 1980 w.e.f. the previous day.
It was contended that the 1979 Rules had the effect of conferring an absolute discretion on the Chief Election Commissioner to appoint any person of his choice to the post in question.
To put it differently the appellant contended that the amend ment conferred arbitrary and unfettered power on the Chief Election Commissioner to appoint any person he deemed fit as his Private Secretary regardless of his qualification.
It was further contended before us by the learned counsel for the appellant that if the appellant had been appointed to the post in question on September 1, 253 1979 the subsequent amendment of the Rules would not have operated retrospectively to his detriment and he would have continued as Private Secretary even after the amendment.
A learned Single Judge of the High Court came to the conclusion that the 1979 Rules were not mala fide nor were they arbitrary as alleged by the appellant.
The High Court also came to the conclusion that since the memorandum of October 26, 1979 was withdrawn the appellant was entitled to be considered for appointment to the post of Private Secre tary w.e.f. September 1, 1979.
The High Court, therefore, directed Class II Departmental Promotion Committee to con sider the case of the appellant for appointment to the post of Private Secretary to the Chief Election Commissioner w.e.f. September 1, 1979.
It ordered that if the appellant is selected for appointment by promotion to the said post his appointment will be deemed to have been made on ad hoc basis from September 1, 1979 to December 14, 1979 after which the 1979 Rules came into force.
Monetary benefits due to the appellant on such appointment were ordered to be calculated and paid.
The appellant feeling aggrieved by this order preferred an appeal, L.P.A. No. 113 of 1980, before a Division Bench of the same High Court.
This Letters Patent Appeal was summarily dismissed on July 24, 1980.
Feeling aggrieved by the said order the petitioner approached this Court and secured special leave under Article 136 of the Constitution.
Mr. Tarkunde, the learned counsel for the appellant, reiterated the same contentions which were convassed before the learned Single Judge of the High Court and added that if the appellant was appointed w.e.f. September 1, 1979, the subsequent amendment of the Rules would not have stood in his way and he would have continued as Private Secretary to the Chief Election Commissioner even after the amendment of the said Rules.
He, therefore, contended that the High Court was not right in limiting the relief in regard to the appel lant 's appointment upto December 14, 1979 i.e. till the 1979 Rules came into force.
It may at this stage be pointed out that pursuant to the order of the High Court directing the Class II Departmental Promotion Committee to consider the case of the appellant for appointment to the post of Private Secretary w.e.f. September 1, 1979, the said Committee met on May 9, 1980 and considered the case of all eligible persons for appointment to the post in question w.e.f. September 1, 1979.
The Departmental Promotion Committee did not find anyone suitable for appointment tO the said post.
Intimation in that behalf was given to the appellant by the memorandum of May 14, 1980.
This decision of the 254 Departmental Promotion Committee sets at rest the argument that the appellant would have continued as Private Secretary had he been appointed to the said post w.e.f. September 1, 1979.
Mr. Tarkunde, the learned counsel for the appellant, rightly did not seriously contend before us that the 1979 Rules were mala fide and were made solely with a view to deny appointment to the appellant as Private Secretary to the Chief Election Commissioner.
It must be realised that in reply to the proposal to amend the extent rules the Ministry of Law, Justice and Company Affairs, in consultation with the Department of Personnel and Administrative Reforms, wrote to the Commission on December 5, 1974 as under. "The post of Private Secretary to the Chief Election Commissioner is borne on the personal staff of the Chief Election Commissioner and appointment thereto is outside the purview of the U.P.S.C. vide entry 5 of Schedule to the Union Public Service Commission (Exemption from consultation) Regulations 1958.
The appointment of a person thereto may be made by the Chief Election Commissioner at his discre tion without the consultation of the Union Public Service Commission.
The appointment to the post of Private Secretary to the Chief Election Commissioner is also co terminus with the appointment of Chief Election Commission er.
In view of this position, the Department of Personnel and Administrative Reforms have advised that the Recruitment Rules for the post of Private Secretary to the Chief Elec tion Commissioner need not be made.
The Rules for the post as proposed by the Commission have therefore not been notified." After the amendment of the 1974 Rules the Commission issued an office order dated February 18, 1980 stating that ap pointment to the post of Private Secretary shall be made 'in the absolute discretion of the Chief Election Commissioner ' from amongst persons of suitable class or category serving in the Commission or from outside, as he may deem fit.
The words 'in the absolute discretion of the Chief Election Commissioner ' were construed by counsel to mean that arbi trary and unfettered power was conferred to the Chief Elec tion Commissioner in the matter of choice of his Private Secretary.
The office order further stated that the appoint ment of the incumbent to the said post 'shall be co terminus with the incumbency in the post of the Chief Election Com missioner '.
This order shows that after the amendment of the 255 1974 Rules the matter in regard to the choice of personnel for the post of Private Secretary to the Chief Election Commissioner was left to the sole discretion of the Chief Election Commissioner.
It will appear from the above developments that the proposal for the amendment of the relevant recruitment Rules was moved way back in July 1970.
The advice given by the Law Ministry by their communication of December 5, 1974 was ultimately accepted by the Commission.
By the letter of March 19, 1975, the Law Ministry, however, informed the Commission that the Commission 's proposal would be consid ered at the time if change in the incumbency in the post of the Chief Election Commissioner.
That was why the process of amendment of the 1974 Rules was delayed until December 1979.
The incumbent to the post of Chief Election Commissioner at all material times had, therefore, nothing to do with the proposal to amend the recruitment rules.
It was, therefore, impossible to contend that respondent No. 1 's action was mala fide and was actuated with the sole desire to deny promotion to the appellant to the post of Private Secretary to the Chief Election Commissioner.
Coming to the next limb of attack it must be realised that in a democratic republic like ours the office of the Chief Election Commissioner is of vital importance.
Article 324 confers the power of superintendence, direction and control of elections in the Chief Election Commissioner.
Free and fair elections are the basic postulates of any democratic order.
A duty is cast on the Chief Election Commissioner to ensure free and fair elections.
This makes the post of the Chief Election Commissioner a sensitive one.
The Chief Election Commissioner has to deal with several matters which are brought before him by political parties as well as the Government.
His office is called upon to handle correspondence which require a high degree of secrecy and confidentiality.
He would naturally require the services of his Private Secretary for handling such highly secret and confidential files and correspondence.
It is, therefore, imperative that the person working as Private Secretary to the Chief Election Commissioner must be one in whom implicit faith and confidence can be placed.
He must be a man of impeccable character and integrity, besides being competent in secretarial work.
Integrity, honesty and competence are the basic hallmarks for the post.
In addition, he must be a person in whom the Chief Election Commissioner has absolute trust and faith.
It is for this reason that the tenure of the post is made co terminus with the tenure of the Chief Election Commissioner.
That is for the obvious reason that a man chosen by the predecessor may not be enjoying the 256 same degree of confidence of his successor.
He may like to have his own man of confidence to attend of his secretarial work.
It is, therefore, not without reason that the choice of personnel to the post of Private Secretary is left to the Chief Election Commissioner himself.
This is nothing new.
Similar provision is made for certain other functionaries as can be seen from the Home Department 's Notification dated 1st September, 1958 as amended from time to time.
We are, therefore, of the opinion that having regard to the special needs of the post it was imperative to leave the matter of choice of personnel in the absolute discretion of the Chief Election Commissioner.
We, therefore, do not think that the office order of February 18, 1980 can be struck down.
The High Court was, therefore, right in limiting the relief upto December 14, 1979 i.e. till the 1974 Rules became effective.
Since consultation with the U.P.S.C. was not necessary after the amendment introduced by the 1979 Rules, the Chief Elec tion Commissioner was entitled to choose the man of his confidence as Private Secretary.
The choice of respondent No. 2 to the post cannot, therefore, be questioned.
In view of the above, we do not see any merit in the contentions urged before us by the learned counsel for the appellant.
We, therefore, dismiss this appeal but in the facts and circumstances of the case leave the parties to bear their own costs.
Y. Lal Appeal dismissed.

summary/full:
The appellant was working as Private Secretary to the Deputy Election Commissioner until July .26, 1977 when the Deputy Election Officer under he whom was working relin quished his charge.
One Tilak Raj who was working as Private Secretary to Chief Election Commissioner was promoted as Under Secretary.
In order to fill the vacancy caused by his promotion, Re spondent No. 2 M.L. Sarad, was appointed to the said post w.e.f. September 1,1979.
The appellant made a representation complaining that the said appointment was contrary to the Election Commission {Recruitment of Staff) Rules, which was rejected on the ground that he was not eligible for appoint ment to the said post.
Thereupon, the appellant filed a Writ Petition challenging the notification dated 23.10.79 ap pointing the said M.L. Sarad as Private Secretary.
During the pendency of the Writ Petition the Commission under due intimation to the Court amended the 1974 Rules as a result of which entry at serial No. 9 relating to the Post of P.S. to Chief Election Commissioner was omitted.
The appellant was informed by the Commission that it had withdrawn the Memo of October 26, 1979 wherein it was stated that the appellant was not eligible for appointment to the post in question.
The Court took due notice of the amendment but held that the Writ Petition survived since the appellant was not considered for appointment to the post w.e.f. 1.9.79.
The appellant contended before the High Court that (i) the entire exercise culminating in the amendment of the Rules was mala fide; (ii) that the amendment conferred arbitrary and unfettered power on the Chief Election Commis sioner to appoint any person as his Private Secretary; (iii) that in case the appellant had been appointed to the post on 1.9.79, subsequent amendment of the Rules would not have operated 250 retrospectively to his detriment and he would have contin ued.
The High Court came to the conclusion that the 1979 Rules were not mala fide nor were they arbitrary and that since the memo of 26.10.79 was withdrawn, the appellant was entitled to be considered for appointment to the post in question w.e.f. 1.9.79.
Accordingly the High Court directed the class II Departmental Promotion Committee to consider the case of the appellant to the post in question w.e.f. 1.9.79.
It further ordered that if the appellant is selected for appointment to the said post, his appointment will be deemed to have been made on ad hoc basis from 1.9.79 to December 14, 1979 after which 1979 Rules came into opera tion.
Monetary benefits were also directed to be paid to the appellant.
The appellant being dissatisfied with the aforesaid order preferred Letters Patent Appeal which was summarily rejected on 24.7.80.
The appellant has, therefore, appealed to this Court after obtaining Special Leave.
Dismissing the appeal, this Court, HELD: Article 324 confers the power of superintendence, direction and control of elections in the Chief Election Commissioner.
Free and fair elections are the basic postu lates of any democratic system.
A duty is cast on the Chief Election Commissioner to ensure free and fair elections.
This makes the post of Chief Election Commissioner a sensi tive one.
The Chief Election Commissioner has to deal with several matters which are brought before him by political parties as well as the Government.
His office is called upon to handle correspondence which require a high degree of secrecy and confidentiality.
He would naturally require the services of his Private Secretary for handling such secret and confidential files and correspondence.
Integrity, hones ty and competence are the basic hallmarks for the said post.
In addition, he must be a person in whom the Chief Election Commissioner has absolute trust and faith.
It is for this reason that the tenure of the post is made co terminus with the tenure of the Chief Election Commissioner.
That is for the obvious reason that a man chosen by the predecessor may not be enjoying the same degree of confidence of his succes sor.
He may like to have his own man of confidence to attend to his secretarial work.
It is, therefore, not without reason that the choice of personnel to the post of Private Secretary is left to the Chief Election Commissioner him self.
[255E G] Since consultation with the U.P.S.C. was not necessary after the 251 amendment introduction by the 1979 Rules, the Chief Election Commissioner was entitled to choose the man of his confi dence as Private Secretary.
The choice of Respondent No. 2 to the post cannot, therefore, be questioned.
[256C]