Commissioner of Customs, Cochin Vs Abad Fisheries

Antony Dominic, J. - These appeals are filed by the Commissioner of Customs invoking the Appellate remedy available under Section 130 of the Customs Act, challenging the orders passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Bangalore dismissing the appeals filed by the Department and confirming the orders passed by the Commissioner of Customs (Appeals).

2. We heard learned Counsel for the appellant and the learned counsel appearing for the respondents.

3. Briefly stated, the facts of the case are that the respondents are exporters of marine products such as shrimps, prawn, cuttle fish, octopus, molluscs, etc. Treating the said items as fish, cess as provided in Section 3 of the Agricultural Produce Cess Act, 1940 was levied on the respondents. They claimed refund of the amounts and the refund applications were rejected. The orders rejecting the refund applications were challenged in appeal before the Commissioner of Customs (Appeals), who allowed the appeals and ordered refund. The Department carried the matter in appeals before the Tribunal and the Tribunal dismissed the appeals.

4. The Agricultural Produce Cess Act, 1940 was repealed by the Cess Laws (Repealing and Amending) Act, 2006 with effect from 25-9-2006. Despite such repeal, even for the purposes subsequent thereto, cess under the Act was levied on the exports effected by the respondents. In such cases also, they claimed refund and on its rejection, orders were challenged before the Commissioner (Appeals). The Commissioner (Appeals) allowed the appeals which orders were also confirmed by the Tribunal. It is in this background, these appeals are filed.

5-8. Though we heard the Counsel for the appellant and the learned counsel appearing for the respondents at length, we found that similar issues were decided by the Tribunal in favour of the respondents exporters holding that the products exported are not fish attracting the levy of cess, which have been confirmed by a Division Bench of Madras High Court in its judgment in Commissioner of Customs, Tuticorin v. Edhayam Frozen Foods [2008 (230) E.L.T. 225 (Mad.)]. In that judgment, the Division Bench has held thus :

"21. As regards, the second question of law, we are not able to accept the argument of the learned Additional Solicitor General that "fish" includes molluscs and crustaceans and as such, the crustaceans would otherwise mean and include prawns/shrimps and hence, prawns and shrimps should be regarded as "fish" for the purposes of assessment and such meaning should be given to the expression "fish" incorporated as item No. 7 to the Schedule to the Act. If that be the intention of the lawmakers, then it would have been very easy for them to describe the expression "all aquatic animals" or "all marine products", instead of "fish" in item No. 7 of the Act, 1940. But, it is not so, the item No. 7 in the schedule to the Act sets out only "fish".

22. How to interpret the provisions or the entries contained in the Schedule to the fiscal statutes has been repeatedly explained by the Apex Court in catena of decisions. The uniform opinion of the Supreme Court, in all those cases, run as follows :

"No words or expression used in any statute can be stated to be redundant or superfluous. In matters of interpretation, one should not concentrate too much on one word and pay too little attention to other words. Every provision or every word must be looked at generally and the context in which it is used and not in isolation. The elementary principle of interpreting any word while considering a statute is together the mens and sententia legis of the Legislature. Wherever the language is clear the intention of the Legislature is to be gathered from the language used. While doing so, what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support addition or substitution of words or which results in rejection of words has to be avoided."

23. As stated by the Privy Council, in the case of Crawford v. Spooner (1846) 6 Moore PC 1, "We cannot aid the Legislature''s defective phrasing of an Act, we cannot add or amend and, by construction make up deficiencies which are left there. In case of an ordinary word, there should be no attempt to substitute or paraphrase of general application. Attention should be confined to what is necessary to deciding the particular case. See : Gwalior Rayons Silk Mfg. (Wvg) Co. Ltd. v. Custodian of Vested Forests, [1990] 2 SCR 401; Union of India v. Deoki Nandan Aggarwal, AIR 1992 SC 96; Institute of Chartered Accountants of India v. Price Waterhouse, (1997) 6 SCC 312; Hrbhajan Singh v. Press Council of India, [2002] 2 SCR 369 and Grasim Industries Ltd. v. Collector of Customs Bombay, 2002 (141) E.L.T. 593 (S.C.).

24. The intention of the Legislature in a taxation statute is to be gathered from the language of the provisions particularly where the language is plain and unambiguous. In a taxing Act, it is not possible to assume any intention or governing purpose of the statute more than what is stated in the plain language. It is not the economic results sought to be obtained by making the provision which is relevant in interpreting a fiscal statute. Equally impermissible is an interpretation which does not flow from the plain, unambiguous language of the statute. Words cannot be added to or substituted so as to give a meaning to the statute which will serve the spirit and intention of the Legislature. The statute should clearly and unambiguously convey the three components of the tax law, i.e., the subject of the tax, the person who is liable to pay the tax and the rate at which the tax is to be paid. If there is any ambiguity regarding any of these ingredients in a taxation statute then there is no tax in law. Then it is for the Legislature to do the needful in the matter. See : Mathuram Agrawal v. State of M.P. : AIR 2000 SC 109 : AIR 2000 SC 109; Bank of Chettinad Ltd. v. CIT, (1940) 8 ITR 522; IRC v. Duke of Westminister 1936 AC 1; Parrington v. Attorney General (1869) 4 HL 100; Russel (Inspector of taxes) v. Scoot (1948) 2 All E.R. 1.

25. Having in mind the above said well established legal principle, we will have to see whether "fish", found as the 7th item in the Schedule to the Agricultural Produce Cess Act, would include within itself prawns/shrimps also.

26. It is an admitted fact that the word "fish" has not been defined in the Act itself. In the absence of the definition, rule of interpretation is that particular words used by the Legislature in the denomination of Articles or goods should be understood according to the common or commercial understanding of the term used, for the Legislature does not suppose our merchants to be naturalists or geologists or biologists and thus resort should be made to understand the popular meaning or the meaning attached to them by finding out as to how those goods were understood by those dealing with them, that is to say, to their commercial sense. See : Mathuram Agrawal v. State of M.P., AIR 2000 SC 109.

27. The fish and prawns are delicacies in the South India. If the common parlance test is applied, it cannot be contended that fish and prawn are one and the same commodity. If a man were to ask for fish in the market and if prawn is provided or in the vice versa, he would not accept the same. However, it is an admitted fact that no evidence to that effect is available in this case.

28. It is well-settled that if there is some difficulty, as in this case, there is no evidence to show that the term concerned does not have a particular popular connotation, the Courts have to resort to dictionaries and lexicons. It is also well-settled that all aquatic creatures cannot be grouped into a category of "fish" for there are several kinds of such creatures. In "Encyclopedia Britannica" Vol. 7, 15th Edition 330, "fish" is described as "a variety of cold blooded aquatic vertebrate of several evolutionary lines". In the World (Book of Encyclopaedia Vol. VII 1977 Edition at page 138) "fish" is described as "vertebrates that live in water". In Concise Oxford Dictionary, "fish" is described as "vertebrates cold blooded animal, living in the water, having gills, throughout life".

29. Webster''s Encyclopedic Unabridged Dictionary of the English Language defines fish as-

1. any of various cold blooded, completely aquatic vertebrates, having gills, commonly fins and typically an elongated body usually covered with scales.

2. any of various other aquatic animals.

3. the flesh of fishes used as food.

In the same dictionary, the meaning of Prawn is found to be - any of various shrimp like decapod crustaceans of the general palaemon, penaeus, etc., certain of which are used as food. The Oxford English Dictionary Vol. IV, 1978 gives the meaning of fish as under :

"In popular language, any animal living exclusively in the water; primarily denoting vertebrate animals provided with fins and destitute of limbs; but extended to include various cetaceans, crustaceans, molluscs, etc. In modern scientific language (to which popular usage now tends to approximate) restricted to a class of vertebrate animals provided with gills throughout life and cold-blooded."

30. The Chambers Dictionary of Science & Technology (2nd Reprint of 1st edition) in its Appendix has furnished the Classification of the Animal kingdom. The relevant portion of that classification read as under :

Classification of the Animal Kingdom

From this, it is evident that Crustaceans are found under the sub-phylum of Mandibulata and Phylum of Arthropoda. Shrimp is smaller in size, Prawn is medium in size and Lobster is larger in size. They all belong to the sub-phylum of Crustacea.

31. Though in certain dictionaries, "fish" has been denoted primarily as vertebrates with fins and destitute of limbs, but extended to include cetaceans, crustaceans, molluscs, etc., lastly, it was found noted, "but in the modern scientific language, it was restricted to vertebrates provided with gills throughout the life and cold blooded."

32. The common parlance distinction between "fish" and "prawn/shrimp" supported by the dictionary meaning and the Biological differences stated above make it clear that though fish and prawn/shrimp are aquatic animals, they are different from each other. The commercial parlance as well as biological classification, as extracted above, show that fish (vertebrata) is conspicuously different from prawn/shrimp (crustaceans).

33. In addition to that, before the Tribunal, volumes of opinions about the biological difference between fish and shrimps were made available. A Professor from the Agricultural University has given opinion to the effect that fishes are cold blooded, aquatic, vertebrates of super class pisces under the phylum, chordata, whereas shrimps are aquatic crustaceans, belonging to the large class of crustacea under the phylum arthropoda. Shrimps are invertebrates. The body of fish is covered by dermal scales but that of a shrimp is covered by chitinous exoskeleton. In fish, blood is red-coloured and contains hemoglobin, while in shrimp, it is colourless, thin, watery fluid. The digestive system in fish is coiled and fully developed with different regions like stomach, small intestine, large intestine, etc., and associated glands like liver, pancreas, etc. In shrimp, digestive system is straight with just one digestive gland, viz., hepatopancreas. It appears that the expert opinion is akin to the dictionary meanings extracted above.

34. Further, to find out as to how a product or goods or a thing has been understood by the Legislature, or in Order to find out the intention of the Legislature, there is no harm nor taboo to consider the way in which the same good has been dealt with by the Legislature in some other enactment. The Agricultural Produce Cess Act, which is the subject matter in this case, is a Central Act enacted by the Central Government for the purpose of making better financial provision for the carrying out by the Indian Council of Agricultural Research of the objects for which it was established. Another central enactment, which provided for establishment of a Statutory Authority to sort out the problems faced by the marine product industry, enacted by the Central Government is the Marine Products Export Development Authority Act, 1972 (Act 13 of 1972), in which "marine product" has been defined as follows :

"marine products" includes all varieties of fishery products known commercially as shrimp, prawn, lobster, crab, fish, shell-fish, other aquatic animals or plants or parts thereof and any other products which the Authority may, by notification in the Gazette of India, declare to be marine products for the purposes of this Act."

The said definition has been taken in aid to find out the intention of the Legislature vis-a-vis, the term "fish" by the Tribunal. The Tribunal found that the definition of the words "marine products" in that Central Act, though inclusive of shrimp, prawn, lobsters, etc., but shrimp, prawn, lobster and fish are stated separately. The fact that shrimps/prawn and fish are stated as different marine products, show that the shrimp, prawn and fish were known as different items in commercial parlance. Like that the Tribunal also took the clue from the Customs Tariff Act, 1975 wherein also fish has been classified under different heading than shrimps/prawns, which has been classified in yet another heading.

35. From the whole lot of materials available, the one and only conclusion that can be arrived at that is the expression "fish" found as item No. 7 in the Schedule to the Agricultural Produce Cess Act, 1940, does not include within itself prawns and shrimps.

36. We can also take support from the decision of the Orissa High Court in the case of State of Orissa v. CI Foods Limited (1982) 50 STC 152, wherein a Division Bench has found that biologically, "fish" and "prawn" are two different classifications, and qualitatively, "fish" and "prawn" are two different commodities and on the evidence placed, even in the common parlance, they were understood as two different items. There was no scope for one item to pass for the other. The said decision of the Orissa High Court was followed by another Division Bench of the same High Court in the case of the same Assessee reported in 68 STC 284.

37. The Kerala High Court while answering the question as to whether "cuttlefish" is a variety of "fish", or not, after referring to various technical meanings, in the case of Sunbay Food Corporation v. State of Kerala (1986) 63 STC 270, has observed as under :

"Thus, the poignant feature of "cuttle-fish" is that it is a non-vertebrate. Prawns and lobsters are also non-vertebrates. Even the Act does not include prawns and lobsters in the category of fish, as they have been made taxable items. There is no dispute about it.

The conclusion to be drawn from the above discussion is that "cuttlefish" cannot be treated as a fish variety. It is hence not an exempted item".

38. The finding of the above case is also yet another support to the conclusion we arrived at. The ultimate conclusion arrived at by the Division Bench was "cuttlefish" is a non-vertebrate and hence not a "fish". In this case, prawns/shrimps are also non-vertebrates and hence, they are different from fish, which is a vertebrate.

39. The Andhra Pradesh High Court in the case of T.B.R. Exports (Madras) v. State of Andhra Pradesh 116 STC 257, after referring to the decisions of the Orissa High Court in the cases of C.I. Foods cited supra, has held as follows :

"Having given our anxious considerations to the rival contentions, we have reached the conclusion that it is not possible to agree with the contentions canvassed by the learned Counsel for the Petitioner-Assessee, for obvious reasons while applying a common parlance test it cannot be seriously contended that fish and prawns are one and the same commodity. If a lay man were to ask for fish in the market and if prawn is provided he would promptly refuse it and vice versa. Fish and prawns are separate commodities as understood in commercial world."

40. Hence, the second substantial question of law is answered in favour of the Assessee by holding that the expression "fish" contained in Schedule 7 to the Agricultural Produce Cess Act, 1940 would not include within itself prawns and shrimps."

8. Having gone through the judgment in detail and also appreciating the materials relied by the Madras High Court, we find no reason to deviate from the principles laid down therein. Consequently, we have to uphold the findings of the Tribunal to the effect that the goods in question are not fish to attract the levy of cess as provided in the Agricultural Produce Cess Act, 1940.

9. Admittedly, the Cess Act was repealed by the Legislature with effect from 25-9-2006. If that be so, cess under the Act could not have been levied on any export that was effected subsequent thereto. The levy of tax for the period thereafter is, therefore, clearly ultra vires and consequently, the Commissioner (Appeals) was fully justified in allowing the claim of the exporters. The Tribunal also cannot be faulted for confirming such orders. We, therefore, do not find any reason to interfere with the orders of the Tribunal which are impugned in these appeals.

10. Appeals are therefore dismissed.