Dharampal Satyapal Limited & Ors. v. The Commercial Tax Officer, Trichy Road Circle, Coimbatore & Ors.

respectively dated 18.01.2002 and quash the same as erroneous andillegal (In WP.Nos.4604/02 & 4609/02)O R D E RPRABHA SRIDEVAN, J.The petitioners are engaged in the manufacture and marketing of'Pan Masala' containing tobacco under the brand name 'Pan Parag','Pan Zarda', 'Pan Parag Gutkha' and also 'Pan Masala' which does notcontain tobacco. The first respondent passed provisional assessmentorders for the months of October, November and December, 2000,levying tax under Entry-II, Part-J of the First Schedule to theTamil Nadu General Sales Tax Act, 1959 ('TNGST Act' in short). Thepetitioners filed a revision before the Deputy Commissioner (C.T.).The revisional authority confirmed the provisional assessmentorders. Aggrieved by that, the petitioners approached the TamilNadu Taxation Special Tribunal. The Tribunal dismissed all theoriginal petitions filed by the petitioners. The petitioners alsofiled original petitions seeking the substantial relief ofdeclaration that the word "or tobacco" in Sl. No.2, Part-J of theFirst Schedule to the TNGST Act is ultra vires Sections 14 and 15 ofthe Central Sales Tax Act, 1956 ('CST Act' in short) and Article 286of the Constitution of India and is repugnant to Sl. No.1 (iv) (d)of Part-A to the Third Schedule read with Section 8 of the TNGST Actand the general scheme of levy of additional duty of excise underthe Additional Duties of Excise (Goods of Special Importance) Act,1957 ('ADE Act' in short). Aggrieved by the orders passed in thethe said petitions, these writ petitions have been preferred.2. We will briefly narrate the submissions of the writpetitioners which are dealt with elaborately in the writtensubmissions filed by them. 'Gutkha', according to them, is apreparation which, apart from tobacco, contains betel nut, katechu,lime, flavours, permitted spices and saffron and tobacco is itsessential character in relation to the dominant object of the user.The percentage of tobacco varies from 7% to 15%. They are aggrievedby the inclusion of the goods as 'Pan Masala' by whatever namecalled containing betel nuts, that is to say, nut of areca, catachubroken and perfumed and lime or menthol or sandal oils or cardamomor tobacco or any one or more of these ingredients at Sl. No.2 ofPart-J of the First Schedule read with Section 3(2) of the TNGSTAct.3. It is admitted by the petitioners that the period of disputeis only from October, 2000 to February, 2001. According to them, ifthe goods fall within the description of Sl.No.1(iv)(d) of the ThirdSchedule of the TNGST Act, they are exempt from tax by virtue ofSection 8. Once the goods are exempted by enumeration under theThird Schedule, Section 8 of the State Act operates, to exempt the https://hcservices.ecourts.gov.in/hcservices/ goods from levy under the State Act. The subsequent specificationof the goods in the First Schedule will have no effect in view ofthe above exemption. The exemption under Section 8 of the TNGST Actis not subject to any restriction or condition as far as Sl. No.1(iv)(d) of the Third Schedule is concerned. The definition underSl. No.1(iv)(d) of the Third Schedule is not restricted to chewingtobacco, but includes preparations containing chewing tobacco andthe word 'including' should be construed to enlarge the Entry tocomprehend all preparations of chewing tobacco and not restricted tojust chewing tobacco. 4. To support their case of inclusive definition, petitionersplace reliance on (2008) 15 V.S.T. 256 (SC) [Ponds India Limited vs.Commissioner of Trade Tax, Lucknow] and A.I.R. 1972 S.C. 168 [TheCommissioner of Income-Tax, Andhra Pradesh vs. Taj Mahal Hotel,Secunderabad]. It was submitted that the words 'that is to say' inSl. No.1(iv) have been used so that no other kind of manufacturedtobacco can be brought under Sl. No.1(iv), but that does not meanthat the said words have any effect on the word 'including' in Sl.No.1(iv)(d) of the Third Schedule. That is, while the words 'thatis to say' are restrictive, that cannot take away the effect of theinclusive definition in Sl. No.1(iv)(d). 5. Alternatively, it was submitted on behalf of the petitionersthat by virtue of Article 286(3) of the Constitution the State ofTamil Nadu is subjected to restrictions and conditions as specifiedby Parliamentary Legislation with regard to inter alia tax on saleor purchase of goods declared to be of special in interstate law andcommerce. Section 14(ix) of the CST Act which deals with suchgoods of special importance refers, inter alia, to items ofmanufactured tobacco. Section 15 spells out the restriction. Thedescription of goods in Section 14 was aligned by the Central Act 26of 1988 with the product description in the CET Act with effectfrom 16.3.1988. By Finance Act 2 of 1996, Chapter Heading 2404 ofthe Central Excise Tariff Act was re-cast and substituted, andchewing tobacco preparations earlier covered by sub-heading 2404.41were substituted as 2404.40. Therefore, according to thepetitioners, since their product contain tobacco it falling withinthe description 'chewing tobacco and preparations containing chewingtobacco', they would be goods of special importance, and therestriction under Section 15 of the CST Act comes into operation.Therefore, the State can neither tax such goods beyond one stage norover 4% of the sale price during the relevant period. Therefore,according to the petitioners, since Section 14(ix) of the CST Actcovers the goods under sub-heading 2404.41, now re-cast as sub-heading 2404.40, including 'Pan Masala' in Sl. No.2 of Part-J of theFirst Schedule to the State Act and taxing the goods at 40% is ultravires Sections 14 and 15 of the CST Act. https://hcservices.ecourts.gov.in/hcservices/

6. According to the petitioners, when the Finance Act, 1996substituted the entire Heading 24.04 so that the substituted sub-heading reads as 'chewing tobacco and preparations containingchewing tobacco', these words should be read as if written in Sl.No.14(ix) of the CST Act and the enquiry has to be on the wordswritten in Section 14(ix) of the CST Act as covered in sub-heading2404.40. It is impermissible to refer to any other Heading such asHeading 21.06 on the ground it is more specific. According to them,when the Parliament by referential legislation assimilated sub-heading 2404.40, it is impermissible to engage oneself in aninterpretative exercise of the entire Central Excise Tariff as towhether any other Heading excluded sub-heading 2404.40. Accordingto the petitioners, the issue is covered by (2000) 119 S.T.C. 553[Kothari Products Ltd. vs. Government of Andhra Pradesh]. Accordingto them, since Gutkha consists of more than one material orsubstance, applying the General Rules for Interpretation of theSchedule to the CET Act ('Rules for Interpretation' in short) shallbe applied, since the mixtures and composite goods are under issue,Heading 21.06 and sub-heading 2404.40 are equally specific.Alternatively, if Rule 3(a) is not attracted, then Rule 3(b) willbe attracted as the essential character of Gutkha is that of chewingtobacco. Besides, since Rule 3(c) provides that the Heading whichoccurs last in numerical order should be preferred, Chapter Heading2404 is to be preferred, since it occurs after Heading 21.06. Thepetitioners were originally paying excise duty on these goods as perthe Central Excise Tariff Act, 1985 ('CET Act' in short) underHeading 21.06 upto 9.10.2000 and thereafter, they are paying centralexcise duty and additional excise duty under Sub-Heading 24.40, inaccordance with the decision in 119 S.T.C. 553 (supra). 7. Therefore, according to the petitioners, the judgment in 119S.T.C. 553 (supra) prohibits classification of the goods in questionunder Chapter 21 of the CET Act and therefore, one has to look onlyto Chapter 24 and the interpretative rules also point out only tosub-heading 2404.04. The word 'inclusive' would show that chewingtobacco by whatever name they are called, including khara masala,kimam, dokta, zarda, sukha and surti, would be classified undersub-heading 2404.41/2404.40 and therefore, the goods would becovered by the words 'chewing tobacco and preparations containingtobacco'. The words in the Third Schedule of the TNGST Act, byvirtue of Section 8, show that the goods in question are exempt fromtax and the inclusion thereof in the First Schedule cannot in anymanner take away the exemption granted by Section 8. For thisproposition, the learned senior counsel relied on (2006) 147 S.T.C.211 (SC) [Reliance Trading Co. vs. State of Kerala] and (2008) 114S.T.C. 559 (SC) [Fenoplast vs. State of A.P.]. If this is notaccepted, then the goods are any way 'declared goods' as per Section14 of the CST Act and there is a ceiling on tax on such declaredgoods as per Section 15. For all these reasons, the writ https://hcservices.ecourts.gov.in/hcservices/ petitioners pray that the impugned order of the Tribunal be quashedand the writ petitions be allowed.8. In response, the learned Additional Advocate Generalsubmitted that the Department and the manufacturers had all alongclassified the goods under the Heading 21.06. That was the generalunderstanding. It is the judgment in 119 S.T.C. 553 (supra) thatcatalysed this challenge. During the relevant period, Note-3 underChapter 21 of the CET Act defined 'Pan Masala' as any preparationcontaining betel nuts and any one or more or other ingredientsmentioned in the said note, which included tobacco and therefore,without any strained interpretative exercise, the product would fallunder Chapter 21. The learned Additional Advocate General alsoreferred to the "Rules of Interpretation" and submitted that whenthe goods answer the precise description in Heading 21.06, one neednot go to Chapter 24 and if the goods in question fall in Chapter21, they are not covered under Section 14(ix) of the CST Act norunder Entry 1(iv)(d) Part-A of the Third Schedule to the TNGST Act.He specifically referred to Act 14 of 2001 and the conclusion of thedispute with effect from 1.3.2001 which fortified the aboveconstruction. After 2001, Note-3 of Chapter 21 was substituted andit explained what is meant by the words 'Pan Masala' and while 'PanMasala' in Chapter 21 was described as a preparation containingbetel nuts and various other ingredients but not tobacco, in Chapter24, Note-6 was specifically inserted, which defined 'Pan Masala'containing tobacco commonly known as Gutkha as any preparation whichcontained betel nut and tobacco and any one or other ingredientsmentioned under Note-6. Therefore, the learned Additional AdvocateGeneral submitted that it is only in the year 2001, with effect from1.3.2001, that 'Pan Masala' containing tobacco came to be classifiedunder Chapter 24. Significantly, it may be noted that 'Pan Masala'containing tobacco has been assigned separate sub-Heading and notthe same sub-headings chewing tobacco and preparations containingchewing tobacco assigned a distinct sub-Heading. Thus, thelegislature has consciously not treated 'Pan Masala' containingtobacco termed as Gutkha by the petitioners, as a product of chewingtobacco. Therefore, it was submitted that if this construction isaccepted, the other grounds of challenge become redundant.9. With regard to the specific submission made by thepetitioners that 119 S.T.C. 553 (supra) decides the issue, thelearned Additional Advocate General submitted that in that case,what was dealt with was Gudaku, a tobacco product falling under sub-heading 2404.11 of the Central Excise Tariff Act as well as the ADEAct and that is not the case of the petitioners herein and that itwas a decision rendered on an issue of fact and may not bind us.The learned Additional Advocate General also submitted that thewords used in the Andhra Pradesh Government Sales Tax Act weredifferent and all inclusive as compared to the TNGST Act and so, https://hcservices.ecourts.gov.in/hcservices/ that decision will not cover the issue on hand. He also relied on(2006) 144 S.T.C. 529 (Del) [Shanti Fragrances vs. Union of India]and (2006) 145 S.T.C. 211 (Del) [M.R. Tobacco Pvt. Ltd. vs. Union ofIndia] which referred to the basis of differences existing betweenthe entries in the APGST Act and the Delhi Act. Therefore,according to the learned Additional Advocate General, on thefirst ground, viz. whether the goods fall under Chapter 21.06or 2404.41 / 40, the answer has to be the former.10. Then the learned Additional Advocate General submitted thatif this submission is not accepted, then it should be understoodunder Article 246 read with Entry 54, List-II, the State's power tolevy sales tax on goods of special importance is not taken away. Ifthe State does so, it would only deprive the State of the allocationfrom the collection of additional excise duty and therefore, thepower of the State Legislature to levy such tax is not taken away.11. As regards the construction of the word 'including' foundin sub-heading 2404.41, it was submitted that the word 'including'in the present case is followed by the words 'preparations commonlyknown as' and therefore, the said word has to be understood and readas 'and' in the conjunctive sense and therefore, the preparationsmentioned therein should be treated as exhaustive and it cannot beexpanded beyond that.12. Next, it was submitted that the general presumption is thatall goods are taxable and the legislature merely enumerates thegoods by description. Section 8 forms an exception to the generalrule that all goods are taxable and therefore, if goods that arecovered under Entry 1(iv)(d) of the Part-A, Third Schedule of theTNGST Act are introduced as a taxable entry under Entry-2, Part-J ofthe First Schedule, it would have the effect of withdrawal of theexemption. For this purpose, he relied on (1987) 66 S.T.C. 1[Commissioner, Sales Tax, U.P. vs. Agra Belting Works]. It wassubmitted that the subsequent decisions in (2006) 147 S.T.C. 211(supra) and (2008) 114 S.T.C. 559 (supra) do not refer to AgraBelting Works' case. It was also submitted that the words 'that isto say' found in Entry 114 should be understood to mean that no formof tobacco can be brought under Sl. No.1(iv) and if 'Gutkha' is'Gudaku' following the judgment in 119 S.T.C. 553 (supra), then itwill not be covered by any of the goods enumerated in Entry 1(iv),Part-A of the First Schedule. For all these reasons, the learnedAdditional Advocate General submitted that the writ petitions shouldbe dismissed.13. The questions that we have to answer are :-(a) Whether 'Pan Masala' containing tobacco commonly knownas 'Gutkha' would fall under Chapter 21 of the CET Act, 1985 andmore particularly under sub-Heading 2106.00 containedthereunder? or https://hcservices.ecourts.gov.in/hcservices/ (b) Whether 'Pan Masala' containing tobacco (Gutkha)answers the description contained in Chapter 24 moreparticularly in sub-heading 2404.41/2404.40 namely chewingtobacco and preparations including khara masala, kimam, dokta,zarda, sukha and surti, chewing tobacco and preparationscontaining chewing tobacco?If we hold that 'Pan Masala' containing tobacco commonly known as'Gutkha' falls under Chapter 21 of the CET Act, then the writpetitions fail. If we hold that 'Pan Masala' containing tobaccocommonly known as 'Gutkha' answers the description contained inChapter 24, more particularly under sub-heading 2404.41 / 1404.40,then we have to answer the following questions :(a) Whether the State Legislature is competent to levy taxon the sale or purchase of goods declared to be of goods ofspecial importance and subjected to the levy of additionalexcise duty under the ADE Act, 1957?(b) Whether the word 'including' found in Entry 1(iv)(d)Part-A, Third Schedule of the TNGST Act and also in sub-heading2404.41 is to be considered as enlarging the meaning of 'chewingtobacco' and therefore, would have extending force so as toencompass 'Gutkha' as preparation of chewing tobacco?(c) The State Legislature being competent to levy sales taxon goods of special importance falling under ADE Act, 1957,whether inclusion of 'Pan Masala' containing tobacco as taxablegoods under Section 3(2) read with Entry 2 Part-J of FirstSchedule of TNGST Act, 1959 would prevail over Section 8 readwith Entry 1(iv)(d) Part-A of Third Schedule, assuming suchgoods fell within the description contained in Entry 1(iv)(d)Part-A of the Third Schedule?The case of the petitioners is that Gutkha is not commerciallyconsidered as 'Pan Masala' and therefore, as per 119 S.T.C. 553(supra), these goods will not fall under sub-Heading 2106.00 and onthe other hand, they would have to be classified under Chapter 24.14. To understand the questions posed before us, we have to seethe historical developments of the relevant entries in the relevantActs, which have a bearing on the levy of sales tax/excise duty on'Pan Masala' containing tobacco. The relevant Acts are the TNGSTAct, the CST Act, the CET Act and the ADE Act. Section 14 of theCST Act declares certain goods to be of special importance. AndSection 15 restricts the power of taxation on the said goods.Originally Section 14(ix) of the CST Act read thus :-"(ix) tobacco, as defined in Item No.4 of the FirstSchedule to the Central Excises and Sale Act, 1944 (1 of1944) [*]"If we go to Item No.4, 'Tobacco' reads as follows :"4. Tobacco "Tobacco" means any form of Tobacco, whether cured or https://hcservices.ecourts.gov.in/hcservices/ uncured and whether manufactured or not and includes theleaf, stalks and stems of the tobacco plant, but does notinclude any part of a tobacco plant while still attachedto the earth....II. Manufactured Tobacco...(5) Chewing tobacco, including preparations commonlyknown as "Khara Masala", "Kimam", "Dokta", "Zarda","Sukha" and "Surti"."Central Act 26 of 1988 substituted the words in Section 14(ix) withthe following words with effect from 13.5.1988 :"14(ix). Unmanufactured tobacco and tobacco refusecovered under sub-Heading No.2401.00, cigars and cherootsof tobacco covered under Heading No.24.02, cigarettes andcigarillos of tobacco covered under the sub-HeadingNos.2403.11 and 2403.21, and other manufactured tobaccocovered under sub-heading Nos.2404.41, 2404.50 and 2404.60of the Schedule to the Central Excise Tariff Act, 1985 (5of 1986)."The above amendment was made to Section 14 of the Central Act inorder to align the description of the goods with the description inthe CAT Act. This is clear from the Finance Bill, 1988.15. We will now go to the CET Act. Heading 24.04 of the CETAct, on the date of its incorporation in the Central Act, i.e. on13.5.1988 read as follows :====================================================================Heading No. Sub-Heading No.Description of goods-------------------------------------------------------------------- .....................2404.11---'Gudaku' bearing a brand name2404.12---'Gudaku' not bearing a brand name2404.13---Cut tobacco2404.19---Other---Hookah tobacco, whether or not containing tobacco substitutes in anyportion :2404.21---Bearing a brand name2404.29---Other---Biris2404.31---In the manufacture of which any process has been conducted with theaid of machines operated with orwithout the aid of power2404.39---Other---Chewing tobacco, including preparations https://hcservices.ecourts.gov.in/hcservices/ commonly known as "Khara masala","Kimam", "Dokta", "Zarda", "Sukha" and"Surti".2404.41---Bearing a brand name2404.49---Other---Snuff;2404.50---Snuff of tobacco2404.90---Other================================================================The entry relating to "chewing tobacco" as on 1.3.1993 under the CETof India 1993-94 reads as follows :================================================================Heading Sub-Heading Description of goods Rate of duty No. No.-------------------------------------------------------------------- Basic Additional-------------------------------------------------------------------- Chewing tobacco including preparations commonly known as "Khara Masala", "Kimam", "Dokta", "Zarda", "Sukha" and "Surti". 24.04 2404.41 Bearing a brand name 25% 10% 2404.49 Other 'Nil' 'Nil'=================================================================16. By the Finance Act, 1995, 'Pan Masala' was brought underthe Heading 21.06. In the year 1995, the IV Schedule was amended,and the relevant Clause (8) in Chapter XXI read as follows : "(8) in Chapter 21, – (i) for NOTE 3, the following NOTE shall besubstituted, namely :- '3. In this Chapter, 'Pan Masala' means anypreparation containing betel nuts and any one or more ofthe following ingredients, namely lime, katha (catechu)and tobacco, whether or not containing any otheringredients, such as cardamom, copra and menthol'."Clause (10) in Chapter XXIV reads as follows : "(i) for NOTE 2, for the figures and word '24.02,24.03 and 24.04', the figures and word '24.01, 24.02,24.03 and 24.04' shall be substituted."Clause (9) in Chapter XXI reads as follows : "(i) for Heading Nos.21.06 and 21.07 and the entriesrelating thereto, the following shall be inserted,namely :-21.06 2106.00 'Pan Masala'50%"By Finance (No.2) Act, 1996, there was again a change and the sameis reproduced hereunder : "(7) in Chapter 24, after NOTE 4, the following https://hcservices.ecourts.gov.in/hcservices/ NOTE shall be inserted, namely :-5. In this Chapter, 'smoking mixtures forpipes and cigarettes' of sub-heading No.2404.10 doesnot cover 'Gudaku'."....."(iii) For Heading No.24.03 and the entries relatingthereto, the following shall be substituted, namely :-==========================================================Heading Sub-HeadingDescription of goodsRate ofduty No. No.----------------------------------------------------------- (1) (2) (3) (4)========================================================== 24.04 Other manufactured tobacco and manufactured tobacco substitutes; homogenized or 'reconstituted' tobacco, extracts and essences .............................. 2404.40 Chewing tobacco and 40% preparations containing chewing tobacco======================================================="The relevant extracts from the Finance Act, 2001 read as follows :"THE FOURTH SCHEDULE [See section 134 (a)]PART – IIn the First Schedule to the Central Excise TariffAct, –(1) in Chapter 21, for NOTE 3, the following NOTEshall be substituted, namely :-'3. In this Chapter, 'Pan Masala' means anypreparation containing betel-nuts and any one or more ofthe following ingredients, namely :-(i) lime; and(ii) kattha (catechu),but not tobacco, whether or not containing any otheringredients,such as cardamom, copra and menthol";(2) in Chapter 24, after NOTE 5, the following NOTEshall be inserted, namely :-'6. In this Chapter, 'Pan Masala' containingtobacco", commonly known as 'Gutkha' or by any other name,means any preparation containing betel-nuts and tobaccoand any one or more of the following ingredients,namely :- https://hcservices.ecourts.gov.in/hcservices/ (i) lime; and(ii) kattha (catechu),Whether or not containing any other ingredients such ascardamom, copra and menthol."On the above products, a special excise duty of 16% was also leviedin the V Schedule, apart from additional duties of excise in Part-IIof the VI Schedule as indicated below :"========================================================= Heading Sub-HeadingDescription of goodsRate ofduty No. No. --------------------------------------------------------- (1) (2) (3) (4) ======================================================= In the First Schedule to the Central Excise TariffAct, –(1) In Chapter 24, for sub-Heading No.2404.40 and theentries relating thereto, the following shall besubstituted, namely:-"– Chewing tobacco and preparations containing chewing tobacco; 'Pan Masala' containingtobacco : 2404.41 – Chewing tobacco and preparations16%containing chewing tobacco 2404.49 – 'Pan Masala' containing tobacco 16%========================================"17. Now, we will go to the TNGST Act. Section 4 of the Actdeals with tax in respect of declared goods :"4. Tax in respect of declared goods.–Notwithstanding anything contained in sub-section (2) to(8) of section 3 or section 3-A or section 3-B but subjectto the provisions of sub-section (1) of section 3, the taxunder this Act shall be payable by a dealer on the sale orpurchase inside the State of declared goods at the rateand only at the point specified against each in the SecondSchedule on the turnover in such goods in each year.[.....]"."Section 8. Exemption from tax.– Subject to suchrestrictions and conditions as may be prescribed, a dealerwho deals in the goods specified in the Third Scheduleshall not be liable to pay any tax under this Act inrespect of such goods". https://hcservices.ecourts.gov.in/hcservices/ Item-1 in Part-A of the Third Schedule which deals with 'tobacco'reads as follows :1. (i) Unmanufactured tobacco and tobacco refuse(produced or manufactured in India), as described incolumn(3, against the heading '24.01' in column (1), ofthe First Schedule to the Additional Duties of Excise –(Goods of Special Importance) Act, 1957 (Central Act 50 of1957) (hereinafter in this Schedule referred to as thesaid Act);(ii) Cigars and cheroots of tobacco (produced ormanufactured in India) as described in column (3), againstthe heading '24.04' in column (1), of the First Scheduleto the said Act;(iii) Cigarettes and cigarillos of tobacco(producedor manufactured in India) as described in column (3),against the heading '24.03' in column (1) of the FirstSchedule to the said Act;(iv) Other manufactured tobacco (produced ormanufactured in India) as described in column (3), againstthe heading '24.04' in column (1), of the First Scheduleto the said Act, that is to say,-(a) Smoking mixtures of tobacco for pipes andcigarettes; cut-tobacco;(b) Hookah tobacco;(c) Biris of tobacco;(d) Chewing tobacco including preparations commonlyknown as khara masala, kimam, dokta, zarda, sukha andsurti;(e) Snuff of tobacco(f) Preparations containing snuff of tobacco in myproportion."But Entry-2 in Part-J of the First Schedule to the Act which cameinto effect from 17.3.1999 pertaining to levy of 40% sales tax on'Pan Masala' reads as follows :"2. ENTRY FROM 17.3.1999'Pan Masala' by whatever name called containing betelnuts, that is to say, nut of areca, catachu broken andperfumed and lime or menthol or sandal oils or cardamom ortobacco or any one or more of these ingredients."18. Next, we will see the General Rules for the Interpretationof the Schedule to the CET Act. The Rules show that theclassification of goods in this Schedule shall be governed by thefollowing principles :"1. The titles of Sections, Chapters and Sub-Chaptersare provided for ease of reference only; for legalpurpose, classification shall be determined according tothe terms of the Headings and any relative Section orChapter Notes and, provided such Headings or Notes do nototherwise require, according to the following provisions. https://hcservices.ecourts.gov.in/hcservices/

2. (a) Any reference in a Heading to an article shallbe taken to include a reference to that article incompleteor unfinished, provided that, as presented, the incompleteor unfinished article has the essential character of thecomplete or finished article. It shall also be taken toinclude a reference to that article complete or finished(or falling to be classified as complete or finished byvirtue of this rule), presented unassembled ordisassembled.(b) Any reference in a Heading to a material orsubstance shall be taken to include a reference tomixtures or combinations of that material or substancewith other materials or substances. Any reference togoods of a given material or substance shall be taken toinclude a reference to goods consisting wholly or partlyof such material or substance. The classification ofgoods consisting of more than one material or substanceshall be according to the principles of Rule 3.3. When by application of Rule 2(b) or for any otherreason, goods are, prima facie, classifiable under two ormore Headings, classification shall be effected as follows:(a)the Heading which provides the most specificdescription shall be preferred to Headings providing amore general description. However, when two or moreHeadings each refer to part only of the materials orsubstances contained in mixed or composite goods or topart only of the items in a set put up for retail sale,those Headings are to be regarded as equally specific inrelation to those goods, even if one of them gives a morecomplete or precise description of the goods.(b)mixtures, composite goods consisting ofdifferent materials or made up of different components,and goods put up in sets for retail sale, which cannot beclassified by reference to (a), shall be classified as ifthey consisted of the material or component which givesthem their essential character, insofar as this criterionis applicable.(c) when goods cannot be classified by reference (a)or (b), they shall be classified under the Heading whichoccurs last in numerical order among those which equallymerit consideration."19. We will now look at the pleadings in this regard. In W.P.No.4001 of 2002, the product in question is described as "thepresent petition relates only to 'Pan Masala' containing tobaccoalso known as Gutkha which is sold under the brand name "Tulsi Mix".In W.P. Nos.4604 to 4609 of 2002, it is stated that the petitioners https://hcservices.ecourts.gov.in/hcservices/ market various products under the brand names 'Pan Parag' beingSadha Parag Masala, Parag Zarda and Pan Parag Gutkha and thatbesides the above products, the petitioners are also marketing 'PanMasala' which do not contain tobacco and other allied products.Therefore, we may safely understand from this that the goods inquestion are 'Pan Masala' which contain tobacco. According to thepetitioners in W.P. No.4001 of 2002, "though tobacco is mixed insmall quantity in 'Pan Masala' contents, but since it is used by thecustomers/consumers to satisfy the lust of tobacco, the productloses the identity of 'Pan Masala' and becomes a differentcommercial commodity and therefore, the only and dominant object ofthe user is to satisfy the lust intoxication of tobacco. Accordingto the petitioners, since tobacco is the dominant object of theuser, the goods should be classified under sub-heading 2404.40 andnot under Heading 21.06".20. We will first take up the first proposition. At therelevant point of time, 'Pan Masala' was described as a preparationcontaining betel nuts and any one or more of other ingredients suchas lime, katha, katechu, cardamom, copra, menthol and tobacco. Thisis the definition of 'Pan Masala' as per the CET Act. This was thedefinition of 'Pan Masala' until 1995. The Heading 21.06 covered'Pan Masala' containing lime, katha, katechu, cardamom, copra,menthol and tobacco or any or more of these ingredients. Chapter 24dealt with tobacco and manufactured tobacco substitutes and therelevant sub-heading at that time was 2404.41 which deals withchewing tobacco, including preparations commonly known as kharamasala, kimam, dokta, zarda, sukha and surti.21. In the year 1995, by Act 22 of 1995, Note-3 wassubstituted. Thereafter, 'Pan Masala' came to be described as anypreparation containing betel nuts and any one or more of thefollowing ingredients, viz., lime, katha, katechu or tobacco,whether or not containing any other ingredients such as cardamom,copra and menthol. Therefore, the primary ingredient of 'PanMasala' is betel nut, which could be mixed with other ingredients incombination or in isolation and this was the position prevailing ason 1.3.1988. In the year 1995, the definition underwent a change.Betel nuts continued to be one of the essential ingredients alongwith lime, katha or tobacco in combination or in isolation. It didnot matter whether it also contained cardamom, copra and menthol,but one of the three ingredients, viz., lime, katha and tobacco hadto be found in the preparation which was known as 'Pan Masala'. ByAct 33 of 1996, the description with regard to chapter Heading 24.04and the sub-Headings thereunder were re-numbered and the descriptionof goods were re-classified. There was no change as far as Chapter21 was concerned and Heading 21.06 continued to be only 'PanMasala'. The change came with effect from 1.3.2001, where Note-3read as follows :"3. In this Chapter, 'Pan Masala' means any https://hcservices.ecourts.gov.in/hcservices/ preparation containing betel nuts and any one or more ofthe following ingredients, namely :-i) lime; andii) kattha (catechu)but not tobacco, whether or not containing any otheringredients, such as cardamom, copra and menthol."Note-6 in Chapter 24 read as follows :"6. In this Chapter, ''Pan Masala' containingtobacco', commonly known as 'Gutkha' or by any other name,means any preparation containing betel nuts and tobaccoand any one or more of the following ingredients,namely :-i) lime; andii) kattha (catechu),whether or not containing any other ingredients, such ascardamom, copra and menthol."In Chapter 24, for sub-heading 2404.40 and the entries relatingthereto, the following was substituted, namely :-"Chewing tobacco and preparations containing chewingtobacco; 'Pan Masala' containing tobacco.2404.41 –Chewing tobacco and preparations containing chewing tobacco2404.49 – 'Pan Masala' containing tobacco22. Entry No.2 of Part-J in the First Schedule to the Act issimilar to sub-heading 2404.49 as changed from 1.3.2001. Sonow, additional excise duty could be imposed on ''Pan Masala'containing tobacco' under the ADE Act. The Scheme of the ADE Act isexplained in 2000 119 S.T.C. 321 [Reliance Trading Company vs. Stateof Kerala] as follows :"The Central Government decided to pass an Act toprovide for the levy and collection of additional dutiesof excise on certain goods and for the distribution of apart of the net proceeds thereof among the States inpursuance of the principles of distribution recommended bythe Second Finance Commission in its report datedSeptember 30, 1957. This proposal to levy additionalduties of excise on certain special goods was a part andparcel of an integrated scheme under which sales taxlevied at different rates by the States on certain goodswas ultimately substituted by the levy of additionalduties Of excise on such goods and the States werecompensated by payment of a part of the net proceeds ofthe said additional levy on such goods. That this clearlywas the genesis and object of the 1957 Act also appearsfrom its Objects and Reasons. Some of the items liable toexcise duty were picked out from the Schedule to theCentral Excise Act. They were listed among the declaredgoods of Section 14 of the Central Act and also madeliable to additional excise duty under the Additional https://hcservices.ecourts.gov.in/hcservices/ Excise Act."The amendments to the Entry relating to Pan Masala containingtobacco appears to have been followed in 119 S.T.C. 553 (supra)which reversed the judgment in (1997) 107 S.T.C. 618 [KothariProducts Limited vs. Government of Andhra Pradesh]. The relevantentries in the Andhra Pradesh General Sales Tax Act read asfollows :===================================================================S.No.Description of goods Point of levyRate of tax ffective from--------------------------------------------------------------------194 'Pan Masala' including At the point of 10 paise in 8.2.1996gutka sold in sealed the rupeecontainers or pouchesor any other type ofpackages====================================================================Sl. No.7 of the Fourth Schedule to the APGST Act pertaining toexempted goods reads as follows :====================================================================Sl. No.Description of goods--------------------------------------------------------------------... ... ... 7.Tobacco... ... ...Explanation – The goods mentioned in entries 5, 6 and 7 of thisSchedule shall be goods included in the relevant heads and sub-headsof the First Schedule to the Additional Duties of Excise (Goods ofSpecial Importance) Act, 1957, but does not include goods where noadditional duties of excise are levied under that Schedule."====================================================================23. In (1997) 107 S.T.C. 618 (supra), the Full Bench of theAndhra Pradesh High Court had to consider the question whether theState Legislature could impose sales tax upon 'Pan Masala' andGutkha and at a rate exceeding 4%. After perusing all the headsand sub-heads in Chapters XXI and XXIV of the CAT Act, the AndhraPradesh Court concluded that though Gutkha falls within the meaningof 'Pan Masala', since no additional duty of excise is levied onGutkha, it cannot be held that Gutkha is exempt from tax. Againstthis, the manufacturer went before the Supreme Court. The SupremeCourt reversed this decision in 119 S.T.C. 553 (supra), by a fairlyshort judgment. This is extracted hereunder :"1. The appeal is filed against the judgment andorder of a Full Bench of the High Court at Andhra Pradesh.The appeal in this Court is restricted to the product“gutka” (Gudaku).2. The appellants manufacture and sell gutka underthe brand name “Pan Parag”. They filed a writ petition inthe High Court challenging, inter alia, the introductionof Entry 194 in the First Schedule to the A.P. General https://hcservices.ecourts.gov.in/hcservices/ Sales Tax Act. That entry sought to tax 'Pan Masala'including gutka ...”.3. The contention on behalf of the appellants is thatit is not open to the State of Andhra Pradesh to taxgutka. Section 8 of the State Sales Tax Act provides thata dealer who deals in the goods specified in the FourthSchedule thereto shall be exempt from tax thereunder inrespect of such goods. Entry 7 of the Fourth Schedule ofthe State Sales Tax Act refers to tobacco and theexplanation in this behalf is that the goods mentioned inEntry 7, “shall be goods included in the relevant headsand sub-heads of the First Schedule to the AdditionalDuties of Excise (Goods of Special Importance) Act,1957, but does not include goods where no additionalduties of excise are levied under that Schedule”.The said Additional Duties of Excise Act, in Entry2404, refers to “Gudaku” under the sub-Heading “Othermanufactured tobacco”. Gudaku which bears a brand name istaxable under Entry 2404.11 at the rate of 5% and Gudakunot bearing a brand name is subject to tax at nil rateunder Entry 2404.12. The Schedule to the Central ExciseAct also makes the same distinction between Gudaku bearinga brand name and Gudaku not bearing a brand name under thesub-Heading, “Other manufactured tobacco and manufacturedtobacco substitutes; homogenised or ‘reconstituted’tobacco; tobacco extracts and essences”.4. Clearly, therefore, gutka is a tobacco that iscovered by an entry in the First Schedule to the saidAdditional Duties of Excise Act and the branded gutka thatthe appellants manufacture is liable to tax thereunder.Gutka, therefore, is 'goods' covered by the Explanation tothe Fourth Schedule to the State Sales Tax Act and,therefore, covered by the exemption contained in Section 8thereof. The Schedule to the State Act could, therefore,not have been amended by including gutka as a kind of panmasala in entry 194 of its First Schedule. It must,therefore, be held that the inclusion of gutka in the saidentry 194 in the manner in which it is done is bad in lawand is struck down. The appellants will be entitled toall consequential benefits.5. The appeal is allowed and the judgment and orderunder appeal is set aside.No order as to costs."24. The Delhi High Court, in 144 S.T.C. 529 (supra) and 145S.T.C. 211 (supra), rejected the case of the manufacturers of gutkha https://hcservices.ecourts.gov.in/hcservices/ who contended that their product is gutkha and is a tax free item byvirtue of the inclusion of the said goods in the Third Schedule ofthe Delhi Sales Tax Act. The Delhi High Court chose to follow AgraBelting Works' case and distinguished 119 S.T.C. 553 (supra) on theground that it was decided on the facts of that case and theterminology used in the Andhra Pradesh Sales Tax Act was different.The Delhi High Court has also examined the writ petitions filed byguktha manufacturers on the basis of the language of each Act andalso on following Agra Belting Works' case.25. It is not the case of the petitioners herein that theirproduct is covered by Entry 2404.11 or 2404.12. Their specific caseis that their product comes under sub-heading 2404.40 and argumentswere also advanced only on that understanding. In fact, even in thewritten submissions, it is specifically stated by them that 'Gutkha'is exempt from tax since it is covered by the sub-heading 2404.40/41"Chewing Tobacco, including preparations, commonly known as 'KharaMasala', 'Kimam', 'Dokta', 'Zarda', 'Sukha' and 'Surti'" and thatthe product 'Gutkha' is covered under the sub-heading 2404.41, whichlater came to be substituted as sub-Heading 2404.40. The entry inthe schedule of exempted goods is different in the Andhra PradeshAct and in the Tamil Nadu Act. Therefore, we are bound to examinethis issue on the basis of the facts in question, the stand of thepetitioners as well as the TNGST Act and decide whether Pan Masalacontaining tobacco (Gutkha) is covered by Heading 21.06 or sub-heading 2404.40/41.26. (1988) 71 S.T.C. 285 [Mahalakshmi Oil Mills vs. State ofA.P.] also gives us an insight into how the word "include" should beunderstood. The Supreme Court, in this case, construed the words,"tobacco means any form of tobacco, whether cured or uncured andwhether manufactured or not and includes the leaf, stalks and stemsof the tobacco plant, but does not include any part of a tobaccoplant while still attached to the earth" and the effect of the word"include". It was contended that in view of the usage of the word"include", tobacco seed would also come under Item No.4. TheSupreme Court observed as follows :"11. We are inclined to accept the contention urgedon behalf of the State that the definition underconsideration which consists of two separate parts whichspecify what the expression means and also what itincludes is obviously meant to be exhaustive. As LordWatson observed in Dilworth v. Commissioner of Stamps,(1899) A.C. 99, the joint use of the words “mean andinclude” can have this effect. He said, in a passagequoted with approval in earlier decisions of this Court :(AC pp. 105-06)"Section 2 is, beyond all question, aninterpretation clause, and must have been intended bythe legislature to be taken into account in construing https://hcservices.ecourts.gov.in/hcservices/ the expression “charitable devise or bequest,” as itoccurs in Section 3. It is not said in terms that“charitable bequest” shall mean one or other of thethings which are enumerated, but that it shall“include” them. The word “include” is very generallyused in interpretation clauses in order to enlarge themeaning of words or phrases occurring in the body ofthe statute ; and when it is so used these words orphrases must be construed as comprehending, not onlysuch things as they signify according to their naturalimport, but also those things which the interpretationclause declares that they shall include. But the word“include” is susceptible of another construction, whichmay become imperative, if the context of the Act issufficient to shew that it was not merely employed forthe purpose of adding to the natural significance ofthe words or expressions defined. It may be equivalentto “mean and include”, and in that case it may affordan exhaustive explanation of the meaning which, for thepurposes of the Act, must invariably be attached tothese words or expressions". (emphasis ours)...13. Can then the words ‘tobacco’ and ‘any form oftobacco’ in the first part of the definition be given awider meaning and read as including the seeds also,particularly as it talks of tobacco in any form, cured oruncured, manufactured or unmanufactured’? We do not thinkthey can be for several reasons. In the first place,tobacco seeds hardly answer to the description of eitherthe expression ‘manufactured tobacco’ or the expression‘unmanufactured tobacco’ in their ordinary connotation;and the expression ‘cured or uncured’ cannot also beassociated with tobacco seeds. The expression used in thefirst part of the definition, though every wide, is,therefore, singularly inappropriate to take within itspurview tobacco seeds as well. Secondly, the definitionoccurs in a statute levying excise duty which is concernednot with the parts of a plant grown on the field but withthe use to which those parts are put or can be put afterseverance. The legislature could not but have been awarethat if the leaves, stalks and stems of the tobacco plantare used for manufacturing cured tobacco, biris,cigarettes and so on, the seed is also used to produce oiland cake. It takes care to mention the first three itemswhich are used in the manufacture of some forms of tobaccoconsumption which are also enumerated but refrains fromreferring to seeds which it would have done had it beenintended to include the oil and cake also for purposes of https://hcservices.ecourts.gov.in/hcservices/ the levy. The categories of unmanufactured tobaccoenumerated in the entry in the Schedule include ‘stalks’but not ‘seeds’. This also indicates that seeds are notintended to be included. In other words, the omission ofthe word ‘seeds’ from the second part of the definitioncasts its shadow on the first part as well. Indeed itrather looks as if the second part of the definition isintended to restrict rather than expand the scope of thefirst part. Thirdly, it is to be noticed that the firstpart of definition is somewhat restrictively worded."29. In A.I.R. 1977 S.C. 90 [S.G.R. Tiles Manufacturers vs.State of Gujarat], the Supreme Court, by construing Entry 22 inSchedule Part-I of the Minimum Wages Act, held that "It seems thatthe word 'includes' has been used here in the sense of 'means'.This is the only construction that the word can bear in the context.In that sense, it is not a word of extension, but limitation. TheSupreme Court also held as follows :"The use of the word 'includes' in the restrictivesense is not unknown. The observation of Lord Watson inDilworth v. Commissioner of Stamps (1899) A.C.105-106,which is usually referred to on the use of 'include' as aword of extension, is followed by these lines : "But theword 'include' is susceptible of another construction,which may become imperative, if the context of the Act issufficient to show that it was not merely employed for thepurpose of adding to the natural significance of the wordsor expressions defined. It may be equivalent to 'mean andinclude', and in that case it may afford an exhaustiveexplanation of the meaning which, for the purposes of theAct, must invariably be attached to these words orexpressions"."The expression "that is to say" is descriptive, enumerative,exhaustive and subscribes to a great extent the scope of the entry –vide (2005) 3 S.C.C. 30 [Castrol India Ltd. vs. Commissioner ofCentral Excise]. This is another clue to the meaning of the word'include', viz., the other, restrictive, limited construction canalone be employed. 30. One other method of understanding the meaning of the wordsis to follow the meaning attributed by a common man andconsistently. In (1996) 102 S.T.C. 566 [City Distributors vs. Stateof Pondicherry], which related to Parag Zarda, which is chewabletobacco, our High Court has referred to (1990) 76 S.T.C. 319[Parimala Agencies vs. State of Orissa] which related to assessmentunder the Orissa Sales Tax Act. And we find the entries at variouspoints of time read as follows : https://hcservices.ecourts.gov.in/hcservices/ "Tobacco and all its products other than chewingtobacco, gudakhu, 'Pan Masala', gundi, zarda and snuff." Therefore, it is clear that all along, chewing tobacco and 'PanMasala' have been treated differently and not synonymously and thatis why Entry 2404 refers to chewing tobacco including preparationscommonly known as "Khara Masala", "Kimam", "Dokta", "Zarda", "Sukha"and "Surti". Gudaku is, therefore, dealt with under a separateHeading, so also Snuff. In (1994) 92 S.T.C. 239 [Royal HatcheriesP. Ltd. vs. State of A.P.], the Supreme Court explained the words"that is to say" as restrictive and because of the use of thosewords in the rule in question in that case, the livestockcontemplated by that clause became confined to the domestic animalsreferred to in the said clause as livestock is not, ordinarilyspeaking, confined to domestic animals. 31. Several decisions were cited which related to Gudaku andwhich show that Gudaku is manufactured out of tobacco and is coveredby the expression "tobacco". These are not really necessary forthis case. In A.I.R. 1981 S.C. 1649 [Hindustan AluminiumCorporation vs. State of U.P.], the Supreme Court held against theassessee and said that aluminium rolled products and cannot bedescribed as "metal" for the purposes of the notifications issuedunder the U.P. Sales Tax Act and that when aluminium ingots andbillets are converted into aluminium rolled products and extrusionproducts, they go through a process of manufacture which brings intoexistence of a new marketable commodity and that the expression"included" in the notification in question does not enlarge themeaning of "metal" and must be understood in a conjunctive sense, asa substitute for "and". 32. In King vs. Planters Nut and Chocolate Co. Ltd. [1951 CLR(Ex) 122], the decision was whether salted peanuts and cashew nutscould be considered to be fruit or vegetable within the meaning ofthe Excise Tax Act and Justice Cameron of the Canadian ExchequerCourt emphasised the importance of commercial understanding of theproducts in the following words :"My findings must be that as products and as generalcommodities in the market, neither salted peanuts norcashews, or nuts of any sort, are generally denominated orknown in Canada as either fruits or vegetables. I think itmay be assumed, therefore, that if Parliament had intendedto include `nuts' among the exempted foodstuffs, the word`nuts' would have appeared in the schedule. That being so,it must follow that salted peanuts and cashew nuts, whichas I have said above are considered generally in Canada tobe within the category of `nuts,' do not fall within the https://hcservices.ecourts.gov.in/hcservices/ exemptions provided for fruit and vegetables in ScheduleIII."The learned Judge also posed one test, which was, "Would a householder, when asked to bring home fruit or vegetables for the eveningmeal, bring home salted peanuts, cashew nuts or any salt? Theanswer is obviously no". We will adopt the same test to fit thecase on hand. If a common man is asked to buy 'Pan Masala', he mayask us "With or without tobacco?". But he will understand what isthe product that he has been asked to buy. On the other hand, if heis asked to buy chewing tobacco, he may buy kimam or zarda, which ismainly chewing tobacco, but he will not buy 'Pan Masala'. That iswhy 'Pan Masala' containing tobacco has all along been specificallydescribed under a different Heading, because that is how it iscommonly understood.33. In (1980) 46 S.T.C. 256 [Delhi Cloth & General Mills Co.Ltd. vs. State of Rajasthan], the Supreme Court held that indetermining the meaning or connotation of words and expressionsdescribing an article or commodity, the turnover of which is taxedin a sales tax enactment, if there is one principle fairly wellsettled, it is that the words or expressions must be construed inthe sense in which they are understood in the trade, by the dealerand the consumer; it is they who are concerned with it, and it isthe sense in which they understand it that constitutes the definiteindex of the legislative intention when the statute was enacted. 34. In 2008 (9) SCALE 277 [Ponds India Ltd. vs. Commissioner,Trade Tax, Lucknow], the question was whether petroleum jelly is adrug or cosmetic. The Supreme Court dealt at length that the effectof inclusive definition vis-a-vis restrictive definition andreferred to various decisions of the Supreme Court on this question.We find that when an interpretation clause uses the word "includes",it is prima facie expansive, but when it uses the words "means" and"includes", it is exhaustive. The Supreme Court referred toMahalakshmi Oil Mills case (supra) and also to the observations inthe Principles of Statutory Interpretation by Justice G.P. Singh,where it is observed that the word "include" may in certain contextsbe a word of limitation. In this case, the entry in the ThirdSchedule could have as well been tobacco and all products containingtobacco, instead of which it uses the words "chewing tobaccoincluding preparations commonly known as khara masala, kimam, dokta,zarda and surti. Therefore, the word "includes" here can only berestrictive and used as a word of limitation. 35. Therefore, "Pan Masala containing tobacco" and "chewingtobacco" are not the same. They may now be included under the sameHeading, but that does not mean that they are one commodity. "Thefact that certain articles are mentioned under the same heading in astatute or the Constitution does not mean that they all constitute https://hcservices.ecourts.gov.in/hcservices/ one commodity" – vide A.I.R. 1964 S.C. 1729 [A. Hajee Abdul Shukoor& Co. vs. State of Madras] and (1998) 1 S.C.C. 437 [Tvl. K.A.K.Anwar & Co. vs. State of Tamil Nadu]. It is clear from the presentamendment with effect from 2001 that "chewing tobacco" does notinclude, and never included "Pan Masala containing tobacco" and butfor the inclusion of "Pan Masala containing tobacco" in Chapter 24and sub-heading 2404.49 with effect from 2001, it would have beengoods covered by Heading 21.06.36. Applying the General Rules for Interpretation, we find thatthe words 'Pan Masala containing tobacco' provides the most specificdescription for the goods in question and even if the fact thattobacco is one of the ingredients in the goods in question, sincethe description of 'Pan Masala' in Heading 21.06 describes thegoods most specifically, that has to be preferred. It is,therefore, not necessary to go to Rule 3(b). Even if we do, by itsvery description, the goods in question is 'Pan Masala' containingtobacco. 37. Even in the Words and Phrases of Central Excise, Customsand Service Tax, 2006, the relevant page of which has been enclosedin the typed set, under chewing tobacco, it says many kinds ofchewing tobacco are manufactured, for example Surti, Zarda, Kimam,Dokta and Sukha. 'Pan Masala' is obviously not a kind of chewingtobacco. There is also an entry which says Gudaku, 'Pan Masala',Gundi, Zarda and Snuff, all containing tobacco, but each has its ownidentity and separate use. Referring to Parimala Agencies case(supra), the definition states that though tobacco is a constituentof Zarda, after manufacture, it is a different class of goods. 38. In the Third Schedule to the TNGST Act, the words used inthe CET Act under sub-heading 2404.40 are incorporated. Therefore,what is included in the Third Schedule is chewing tobacco, which isjust chewing tobacco per se and not 'Pan Masala' which containstobacco, and the exemption would include preparations commonly knownas khara masala, kimam, dokta, zarda, sukha and surti, which meansjust those "things which the interpretation clause declares thatthey shall include". In fact, in (2004) 7 S.C.C. 68 [Godawat 'PanMasala' Products I.P. Ltd. vs. Union of India], one of thesubmissions on made on behalf of the appellants before the SupremeCourt was attacking the validity of the notifications issued by theFood (Health) Authorities under Section 7(iv) of the Prevention ofFood Adulteration Act, 1954 is that it was strange that States didnot ban chewing tobacco or other products which contain almost centper cent tobacco, but they banned the sale of Gutkha which containsonly about 6% tobacco and 'Pan Masala' which contains no tobaccowhatsoever. Therefore, if we use Rule 3(a), the essentialingredient in 'Pan Masala' containing tobacco is nottobacco. Tobacco is another ingredient of Pan Masala and https://hcservices.ecourts.gov.in/hcservices/ therefore, it was rightly taxed under Entry 2106 until thecontroversy started. 39. If the words "chewing tobacco and preparations containingchewing tobacco" meant or included "Pan Masala containing tobacco"and had always meant or included "Pan Masala containing tobacco",then in Chapter 24, the note would have read 'chewing tobacco andpreparations containing chewing tobacco' means, inter alia, 'PanMasala' containing tobacco commonly known as 'Gutkha'. But this isnot the case here. It was separately and specifically included.Therefore, their goods now come under Chapter Heading 2404 because"Pan Masala containing tobacco" is introduced therein for the firsttime. Prior to 2001, the words used in Chapter 21 are 'Pan Masala'containing lime, kattha, catechu, cardamom, copra, menthol andtobacco or any one or any of these ingredients. And Chapter 24 usedthe words 'chewing tobacco including preparations commonly known askhara masala, kimam, zarda, surti. 40. After the Finance Act 2001, under the sub-heading 2404.40,which read previously as chewing tobacco and preparations containingchewing tobacco, the words, "chewing tobacco and preparationscontaining chewing tobacco; 'Pan Masala' containing tobacco" weresubstituted and under sub-heading 2404.49, the words 'Pan Masala'containing tobacco" were substituted. In the Fifth Schedule whichrelates to the Second Schedule to the CET Act and in the SixthSchedule which relates to the First Schedule to the A.D.E. Act, inthe Seventh Schedule which relates to the First Schedule to the CETAct under Heading 21.06, sub-heading 2106.00, the description of thegoods is 'Pan Masala'. In the Fourth Schedule of the Finance Act,we find that Note-3 of Chapter 21 of the First Schedule to the CETAct was amended by modifying the definition of 'Pan Masala' by usingthe words "but not tobacco". Therefore, the reference to 'PanMasala' in Chapter 21 is Pan Masala that did not contain tobacco.And in the same Schedule, we find that an alteration is made inChapter 24 which defines what 'Pan Masala' containing tobaccocommonly known as 'Gutkha' means. The petitioners admit that afterthe Finance Act 2001, the matter is beyond the pale of controversysince 'Pan Masala' containing tobacco has been included under sub-heading 2404.49. Therefore, their product admittedly is "Pan Masalacontaining tobacco". If their goods are "Chewing tobacco andpreparations containing tobacco", then inclusion of 'Pan Masala'containing tobacco" should have made no difference to their stand.But admittedly it does, and it has, and the petitioners state thatthe dispute came to an end after "Pan Masala containing tobacco" wasincluded under sub-heading 2404.49. So, without any controversy,the product of the petitioners is "Pan Masala Containing Tobacco". 41. For all the above reasons, the first question is answeredagainst the writ petitioners. https://hcservices.ecourts.gov.in/hcservices/

42. In view of our answer to the first question, it is notnecessary to deal with the other questions. We find that theTribunal has arrived at the correct conclusion and we see no reasonto interfere with the same. The writ petitions fail and areaccordingly dismissed. But, there shall be no order as to costs.Consequently, all the connected miscellaneous petitions are closed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.ab1.The Commercial Tax Officer,Trichy Road Circle, Coimbatore.2.The Secretary to Government of TamilnaduDepartment of Commercial Taxes andReligious Endowments, Fort. St. George,Chennai-9.3.The Secretary,Union of India,Department of Finance,Government of India,New Delhi.4.The Registrar, Tamil Nadu Taxation Special Tribunal,Second Floor,Singaravelar Maaligai,Chennai-1.5. The Commercial Tax Officer,Woraiyur Assistant Circle,Tiruchirapalli.6.The Principal Commissionerand Commissioner of Commercial Taxes Department of Commercial Taxes,Government of T.N.Ezhilagam,Chennai - 5. https://hcservices.ecourts.gov.in/hcservices/

7.The Deputy Commissioner (CT)Trichy District, Trichy.2 ccs To Mr.N.Inbarajan, Advocate, SR.138661 cc To Mr.S.Sethuraman, Advocate, SR.141472 CCs to the Spl. Government Pleader, SR NOs.14006 & 14004WPs.4001 & 4604 to 4609/2002GV (CO)kk,km,sra,rvl 21/4