We find in the Customs, Central Excise and Service Tax Tariffs many statutory definitions which are artificial, in the sense that they do not reflect the natural meaning which people attribute to them. That is to say, the concepts (definitions) in popular parlance or in market parlance do not agree with the statutory definitions incorporated in the Tariff.
Initially there were not many statutory definitions. But that resulted in controversies in identifying goods for the purpose of classification of similar goods such as rubber and resin, ash and dross, skelp and strip, paper and board and so on. Officers had to read technical books, consult chemists, engineers, specialists and experts but finally got nowhere near the solution to the problem of properly distinguishing their identity until definitions of goods were introduced in the Tariff itself. Once the statutory definition is there, it is binding on all concerned and there is no scope of controversy. If there is no statutory definition, market definition or scientific definition will come into play.
One of the reasons why the statutory definitions are to be artificial is that the products have in the course of time ceased to be natural but are artificial. They are mixtures of different products such as rubber and resin, leather and rubber (leatheroid), wood and resin, textile and resin etc. Such products cannot be easily identified or defined and not in any case by any natural standard.
The second reason is that there are certain articles, which cannot be defined scientifically with an exacti-tude. In the market people understand what is stainless steel but how much of carbon or chromium content is necessary for calling it stainless steel could not be definitely agreed upon. So it has been defined that for the purpose of excise it should have the alloys upto a certain percentage. In fact steel items have all been defined very clearly because they cannot be defined scientifically as the percentages of contents vary in different books and the trade practices also vary widely in India.
The third reason is that there are some commodities, which are extremely difficult to distinguish by scientific test either because the tests are possible by different methods and are too complicated or because the products are very marginally different. Distinguishing between rubber and resin has been a problem for a long time because the method of test could differ and was too complicated. I remember that when I sent samples to I.I.T. Kharagpur , it could not give any definitive answer. Now a specific definition of synthetic rubber has been laid down which has specified the method of test so that the alternative methods given in other technical books have been ruled out.
Fourthly there are cases where the scientific books differ regarding the constants that make a product since the product varies from country to country as it is not a stri-ctly scientific product. An example is of tallow, which is bovine fat. Almost all the textbooks carry different standards for the value of the ingredients. If it was tallow by one standard, it was not by another. The solution was found in issuing a standard in the form of a public notice, which was acceptable for the trade, though the standard was artificial.
Lastly, there are often instances of difference between a popular understanding of a concept or goods and what can be legally feasible. A classic example is that of India. India geographically means the landmass and not the attached sea. To make the Customs regulations work India has been statutorily defined as not only the geographical mass but also the territorial waters of India.
We see from the above that statutory definitions whether natural or artificial are necessary to impart certainty to the identity of goods.
The legality of artificial definition has been upheld by the Calcutta High Court which held in a case that an artificial definition of cotton fabrics was permissible as long as the statutory definition contained that special meaning. The Supreme Court said in the context of treating petroleum jelly as drug or cosmetic that “There cannot be any doubt whatsoever that artificial definition of a term under a statute is permissible in law.”
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Ponds India Ltd vs Commissioner of Trade Tax, Lucknow , 2008 (227) ELT 497 (SC)
