Spentex Industries Ltd vs. CCE (Supreme Court)
The Supreme Court was concerned with whether or not the manufacturer/exporter is entitled to rebate of the excise duty paid both on the inputs and on the manufactured product, when excise duty is paid on a manufactured product and also on the inputs which have gone into manufacturing the product and such manufactured product is exported? HELD in that context by the Court:
(i) It is to be borne in mind that it is the Central Government which has framed the Rules as well as issued the notifications. If the Central Government itself is of the opinion that the rebate is to be allowed on both the forms of excise duties the government is bound thereby and the rule in-question has to interpreted in accord with this understanding of the rule maker itself. Law in this respect is well settled and, therefore, it is not necessary to burden this judgment by quoting from various decisions. Our purpose would be served by referring to one such decision in the case of R & B Falcon (A) Pty Ltd. v. Commissioner of Income Tax (2008) 12 SCC 466 wherein interpretation given by the Central Board of Direct Taxes (CBDT) to a particular provision was held binding on the tax authorities.
(ii) We are also of the opinion that another principle of interpretation of statutes, namely, principle of contemporanea expositio also becomes applicable which is manifest from the act of the Government in issuing two notifications giving effect to Rule 18. This principle was explained by the Court in Desh Bandhu Gupta and Co. and others v. Delhi Stock Exchange Association Ltd.2 in the following manner: It is a well-settled principle of construction that courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it. I do not suggest for a moment that such interpretation has by any means a controlling effect upon the Courts; such interpretation may, if occasion arises have to be disregarded for cogent and persuasive reasons and in a clear case of error, a Court would without hesitation refuse to follow such construction.
(iii) Interpretation of word ‘OR’ occurring in Rule 18: We are conscious of the principle that the word ‘or’ is normally disjunctive and ‘and’ is normally conjunctive (See Union of India v. Kamlabhai Harjiwandas Parekh and others3). However, there may be circumstances where these words are to be read as vice-versa to give effect to manifest intention of the Legislature as disclosed from the context. Of course, these two words normally ‘or’ and ‘and’ are to be given their literal meaning in unless some other part of same Statute or the clear intention of it requires that to be done. However, wherever use of such a word, viz., ‘and’/’or’ produces unintelligible or absurd results, the Court has power to read the word ‘or’ as ‘and’ and vice-versa to give effect to the intention of the Legislature which is otherwise quite clear. This was so done in the case of State of Bombay v. R.M.D. Chamarbaugwala (1957) 1 SCR 874
"The doctrine of contemporanea expositio is well established in our law. The words of a statute must be construed as they would have been the day after the statute was passed. Since a statute must be considered in the light of all circumstances existing at the time of its enactment it follows logically that words must be given the meanings they had at the time of enactment, and the courts have so held. The words of an Act will generally be understood in the sense which they bore when it was passed.
"This does not mean, of course, that all terms in all statutes must always be confined to their original meanings. Broad statutory categories are often held to include things unknown when the statute was enacted.... [F]or example, it was held that the Engraving Copyright Act of 1735, which prohibited ... in any other manner copying prints and engravings, applied to photographic reproduction — a process invented more than one hundred years after the Act was passed. This kind of interpretive approach is most likely to be taken, however, with legislative language that is broad or open-textured."
The Supreme Court was concerned with whether or not the manufacturer/exporter is entitled to rebate of the excise duty paid both on the inputs and on the manufactured product, when excise duty is paid on a manufactured product and also on the inputs which have gone into manufacturing the product and such manufactured product is exported? HELD in that context by the Court:
(i) It is to be borne in mind that it is the Central Government which has framed the Rules as well as issued the notifications. If the Central Government itself is of the opinion that the rebate is to be allowed on both the forms of excise duties the government is bound thereby and the rule in-question has to interpreted in accord with this understanding of the rule maker itself. Law in this respect is well settled and, therefore, it is not necessary to burden this judgment by quoting from various decisions. Our purpose would be served by referring to one such decision in the case of R & B Falcon (A) Pty Ltd. v. Commissioner of Income Tax (2008) 12 SCC 466 wherein interpretation given by the Central Board of Direct Taxes (CBDT) to a particular provision was held binding on the tax authorities.
(ii) We are also of the opinion that another principle of interpretation of statutes, namely, principle of contemporanea expositio also becomes applicable which is manifest from the act of the Government in issuing two notifications giving effect to Rule 18. This principle was explained by the Court in Desh Bandhu Gupta and Co. and others v. Delhi Stock Exchange Association Ltd.2 in the following manner: It is a well-settled principle of construction that courts in construing a statute will give much weight to the interpretation put upon it, at the time of its enactment and since, by those whose duty it has been to construe, execute and apply it. I do not suggest for a moment that such interpretation has by any means a controlling effect upon the Courts; such interpretation may, if occasion arises have to be disregarded for cogent and persuasive reasons and in a clear case of error, a Court would without hesitation refuse to follow such construction.
(iii) Interpretation of word ‘OR’ occurring in Rule 18: We are conscious of the principle that the word ‘or’ is normally disjunctive and ‘and’ is normally conjunctive (See Union of India v. Kamlabhai Harjiwandas Parekh and others3). However, there may be circumstances where these words are to be read as vice-versa to give effect to manifest intention of the Legislature as disclosed from the context. Of course, these two words normally ‘or’ and ‘and’ are to be given their literal meaning in unless some other part of same Statute or the clear intention of it requires that to be done. However, wherever use of such a word, viz., ‘and’/’or’ produces unintelligible or absurd results, the Court has power to read the word ‘or’ as ‘and’ and vice-versa to give effect to the intention of the Legislature which is otherwise quite clear. This was so done in the case of State of Bombay v. R.M.D. Chamarbaugwala (1957) 1 SCR 874
"The doctrine of contemporanea expositio is well established in our law. The words of a statute must be construed as they would have been the day after the statute was passed. Since a statute must be considered in the light of all circumstances existing at the time of its enactment it follows logically that words must be given the meanings they had at the time of enactment, and the courts have so held. The words of an Act will generally be understood in the sense which they bore when it was passed.
"This does not mean, of course, that all terms in all statutes must always be confined to their original meanings. Broad statutory categories are often held to include things unknown when the statute was enacted.... [F]or example, it was held that the Engraving Copyright Act of 1735, which prohibited ... in any other manner copying prints and engravings, applied to photographic reproduction — a process invented more than one hundred years after the Act was passed. This kind of interpretive approach is most likely to be taken, however, with legislative language that is broad or open-textured."
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