Full Judgment Text
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PETITIONER:
M/S. MSCO. PVT. LTD.
Vs.
RESPONDENT:
UNION OF INDIA & ORS.
DATE OF JUDGMENT31/10/1984
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
VENKATARAMIAH, E.S. (J)
MISRA, R.B. (J)
CITATION:
1985 AIR 76 1985 SCR (1)1146
1985 SCC (1) 51 1984 SCALE (2)676
CITATOR INFO :
RF 1989 SC2278 (9)
ACT:
The Customs Act, 1962-Words "industrial units"
occurring in the Notification issued under the Act-Meaning
of.
Interpretation of statutes-Word occurring in a
particular statute or statutory instrument-Statute silent
about definition of the Word-Whether it must be interpreted
according to the subject-matter of the statute and not
according to the definition of the same word given in some
other statute.
HEADNOTE:
The appellant imported some stainless steel plates at
concessional rate of import duty under a notification which
provided : (i) that the importer should import the goods for
the manufacture of all or any of the articles specified in
that notification; (ii) that the articles so manufactured
had to be sold to industrial units for their use; (iii) that
in case of violation of any one of the conditions above-
mentioned, the importer was liable to pay, in respect of
such quantity of goods as is not proved to have been
utilised as per the notification, an amount equal to the
difference between the duty leviable on such quantity but
for the exemption contained in the notification and that
already paid at the time of importation. The appellant
submitted a certificate that the goods imported by him under
the notification had been consumed and/or utilised as per
the notification. But the Assistant Collector of Customs
rejected the said certificate and held that the appellant
was liable to pay the deficient duty in respect of the goods
which had been sold to hospitals/nursing homes since they
were not "industrial units" within the meaning of the
Customs Act, 1962. The Collector of Customs (Appeals)
confirmed the order in appeal. The revision petition of the
appellant before the Customs, Excise and Gold (Control)
Tribunal, also failed.
The appellant contended before this Court that the word
’industrial units’ contained in the notification should be
given the same meaning as is assigned to the word ’industry’
in the Industrial Dispute Act, 1947.
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Dismissing the appeal,
^
HELD: (1) The expression ’industry’ has many meanings.
It means ’skill’, ’ingenuity’, ’dexterity’, ’diligence’,
’systematic work or labour’, ’habitual employment in the
productive arts’, ’manufacturing establishment etc. While
construing a word which occurs in a statute or a statutory
instrument in the
1147
absence of any definition in that very document it must be
given the same meaning which it receives in ordinary
parlance or understood in the sense in which people
conversant with the subject matter of the statute or
statutory instrument understand it. It is hazardous to
interpret a word in a accordance with its definition in
another statute or statutory instrument and more so when
such statute or statutory instrument is not dealing with any
cognate subject.
[1149 H; 1150 A-B]
Craies on statute Law [6th Edn.] p. 164 referred to.
(2) ’Industry’ in the wide sense of the term would be
capable of comprising three different aspects: (1) raw
materials which are an integral part of the industrial
process, (2) the process of manufacture or production, and
(3) the distribution of the products of the industry. An
analysis of Entry 24 and 27 of List II, Entry 52 of List I
and Entry 33 of List III of the Constitution shows that
’industry’ ordinarily means the process of manufacture or
production. [1151 E-
F]
Sh. Tika Ramji & Ors. etc. v. The State of Uttar
Pradesh & Ors. [1956] S.C.R. 393 at p. 420 followed.
(3) It is true that in the Bangalore Water Supply &
Sewerage Board, etc. v. R. Rajappa & Ors. [1978]3 SCR 207
this Court has held that hospitals would also come within
the definition of the expression ’industry’ given in the
Industrial Dispute Act, 1947. But that definition cannot be
used for interpreting the word ’industry’ in a notification
granting exemption from customs duty under the Customs Act,
1962. When the word to be construed is used in a taxing
statute or a notification issued thereunder it should be
understood in its commercial sense. [1151 B-C]
(4) The new definition given to the word ’industry’ by
Parliament in the Industrial Disputes (Amendment) Act, 1982
(46 of 1982) also specifically excludes ’hospitals or
dispensaries’ from the category of ’industry’. It shows that
the meaning given to the expression ’industry’ in the
Industrial Disputes Act, 1947 cannot be depended upon while
construing other statutes or statutory instruments and it
should be confined to the Industrial Disputes Act, 1947.
Therefore, the word ’industry’ means only the place where
the process of manufacture or production of goods is carried
on and it cannot in any event include ’hospitals’,
dispensaries or nursing homes. [1151 G-H; 1152 A-B]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3744 of
1984
From the Judgement and order dated the 25th April, 1984
of the Customs Excise and Gold (Control) Appellate Tribunal,
New Delhi in Appeal No. C.D.(SB) (T) A.No. 170 of 1980 Order
No. 297-B of 1984.
V.N. Deshpande and E.C. Agarwala for the Appellant.
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The Judgement of the Court was delivered by
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VENKATARAMIAH, J. This appeal is filed under section
130-E(b) of the Customs Act, 1962 against Order No. 297-B/84
dated April 25, 1984 passed by the Customs, Excise and Gold
(Control) Tribunal, New Delhi.
The appellant imported two consignments weighing 0.955
m. tonne and 1.071 m. tonnes of stainless steel plates
covered by Bill of Entry No. 725/111 dated August 2, 1979
and Bill of Entry No. 520/250 dated July 16, 1979
respectively. Under section 12 of the Customs Act, 1962 the
appellant was liable to pay customs duty in accordance with
Heading No. 73.15 of the First Schedule to the Customs
Tariff Act 1975 at the standard rate of 22% ad valorem. But
under the notification dated July 15, 1977 an importer was
liable to pay import duty of 40% only on the said goods
provided the conditions mentioned therein were satisfied. In
order to avail of the said concessional rate of duty the
importer should import the goods for the manufacture of all
or any of the articles specified in that notification and
should bind himself by the execution of a bond in such form
and for such sum as may be specified by the Assistant
Collector of Customs to pay on demand in respect of such
quantity of imported stainless steel plates as is not proved
to the satisfaction of the Assistant Collector of Customs to
have been used for such manufacture an amount equal to the
difference between the duty leviable on such quantity but
for the exemption contained in the notification and that
already paid at the time of importation. It was further
provided that the articles so manufactured had to be sold to
industrial units for their use and payment for such articles
was to be made by the concerned industrial unit by a crossed
cheque drawn on the buyer’s own bank account. Accordingly
the appellant executed two bonds which were guaranteed by a
branch of the Dena Bank and cleared the goods by paying
customs duty at the concessional rate undertaking to comply
with the requirements of the notification. Subsequently on
March 10, 1980, the Assistant Collector called upon the
appellant to pay full customs duty as the end-use
certificates in respect of the goods in question had not
been filed before the Customs Department. Then the appellant
forwarded the required certificates issued by its Chartered
Accountants certifying that the goods had been consumed in
the manufacture of the articles specified in the
notification such as pharmaceutical machineries (equipment),
pressure vessels, jacketed vessels etc. and the same had
been sold to fertilizers and chemical industry and petroleum
and oil refinery industry. But the Assistant Collector of
Customs directed the payment of Rs. 24,244/- and Rs.
26,850/- being the deficient duty payable in respect of the
two consignments in terms of the bonds stating that in the
course of investigation
1149
it was revealed that the appellant had sold some of the
manufactured items to a local dealer and not to industrial
units for their own use and that some items had been sold to
hospitals/nursing homes which were not industrial units.
Aggrieved by the order of the Assistant Collector the
appellant filed two appeals before the Collector of Customs
(Appeals), Bombay, contesting inter alia the finding that
hospitals were not industrial units. The Appellate Collector
rejected the appellants contention that hospitals were
industrial units and hold that as far as the supplies
effected by the appellant to hospitals and nursing homes
were concerned the condition that the manufactured goods
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should be sold to industrial units had not been fulfilled.
The appeals were rejected to that extent. The cases were
remanded however to the Assistant Collector for fresh
decision on another issue with which we are not concerned.
Against the common order passed by the Collector of Customs
(Appeals) in the above said two appeals the appellant filed
a revision petition under section 131 of the Customs Act,
1962, as it then stood, before the Government of India. That
revision petition was later on transferred to the above said
Tribunal. The appellant also filed another appeal before the
Tribunal directly since there were two appeals before the
Appellate Collector. The principle contention urged before
the Tribunal was that the Department was wrong in holding
the hospitals and nursing homes were not industrial units.
The Tribunal rejected that contention and dismissed the
appeals. This appeal is filed against the order of the
Tribunal.
When the above case came up for admission the only
ground urged by the learned counsel for the appellant was
that the Tribunal was not right in holding that hospitals
and nursing homes were not industries and reliance was
placed by him on a decision of this Court under the
Industrial Disputes Act, 1947 in which it had been held that
hospitals, dispensaries and nursing homes were also
industries. As the appellant has relied on a decision of
this Court arising under the Industrial Disputes Act, 1947
in support of its case which requires to be distinguished we
are passing this order giving our reasons although it is not
usual to do so when an appeal is dismissed without notice to
the respondents.
The expression ’industry’ has many meanings. It means
’skill’, ’ingenuity’, ’dexterity’, ’diligence’, ’systematic
work or labour’, ’habitual employment in the productive
arts’, ’manufacturing establishment’ etc., But while
construing a word which occurs in a statute or a statutory
instrument in the absence of any definition in
1150
that very document it must be given the same meaning which
it receives in ordinary parlance or understood in the sense
in which people conversant with the subject matter of the
statute or statutory instrument understand it. It is
hazardous to interpret a word in accordance with its
definition in another statute or statutory instrument and
more so when such statute or statutory instrument is not
dealing with any cognate subject. Craies on Statute Law (6th
Edn.) says thus and page 164:
"In construing a word in an Act caution is
necessary in adopting the meaning ascribed to the word
in other Acts. "It would be a new terror in the
construction of Acts of Parliament if we were required
to limit a word to an unnatural sense because in some
Act which is not incorporated or referred to such an
interpretation is given to it for the purposes of that
Act alone." Macbeth v. Chislett [1910] A.C. 220, 223."
When the word to be construed is used in a taxing
statute or a notification issued thereunder it should be
understood in its commercial sense. It is well known that
under the law levying customs duties sometimes exemptions
are given from the levy of the whole or a part of customs
duty when the goods in question are sold either in the form
in which they are received or in a manufactured or semi
manufactured state to a manufacturing establishment for
purposes of using them in manufacturing finished or semi-
finished goods in order to lessen the cost of machinery or
equipment employed in or raw materials used by such
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manufacturing establishment. The object of granting such
exemption is to give encouragement to factories or
establishments which carry on manufacturing business. The
appellant, however, relies upon the meaning assigned to the
word ’industry’ in the Industrial Disputes Act, 1947 in
support of its case. The expression ’industry’ is no doubt
given a very wide definition in section 2 (j) of the
Industrial Disputes Act, 1947. It reads thus:
"2 (j) ’industry’ means any business, trade,
undertaking, manufacture or calling of employers and
includes any calling, service, employment, handicraft,
or industrial occupation or avocation of workmen."
The above definition is given in the context of the
subject matter with which the Industrial Disputes Act, 1947
is concerned. The pith and substance of that act is to make
provision for settlement of
1151
disputes between employers and employees in institutions,
establishments, industrial or business houses or factories
of various kinds. It is true that in the Bangalore Water-
Supply and Sewerage Board, etc. v. R. Rajappa & Ors. this
Court has hold that hospitals would also come within the
definition of the expression ’industry’ given in the
Industrial Disputes Act, 1947 which is as wide as the
legislature could have possibly made it. But that definition
cannot be used for interpreting the word ’industry’ in a
notification granting exemption from customs duty under the
Customs Act, 1962. A perusal of the provisions of the
Constitutions shows that the expression ’industry’ does not
ordinarily posses such wide meaning. In Article 19 (6) (ii)
the word ’industry’ does not include ’trade’, ’business’ or
’service’ which are specifically referred to therein. Then
we have the expression ’industry’ in Entires 7 and 52 of
List I, Entry 24 of List II and Entry 33 of List III of the
Seventh Schedule to the Constitution. The said expression in
these entries does not include trade or commerce or
distribution of goods which are found else where in the said
Lists. What is of significance is that in List II ’hospitals
and dispensaries’ are specifically referred to in Entry 6
and they cannot, therefore, possibly fall under Entry 24
thereof which refers to ’industries’. As observed by this
Court in Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh
& Ors. ’industry’ in the wide sense of the term would be
capable of comprising three different aspects: (1) raw
materials which are an integral part of the industrial
process, (2) the process of manufacture or production, and
(3) the distribution of the products of the industry. But
raw materials are dealt with by Entry 27 of List II, the
process of manufacture or production by Entry 24 of List II
except where the industry is a controlled industry when it
would fall under Entry 52 of List I and the products of the
industry would fall under Entry 27 of List II except where
they are products of controlled industry when they would
fall under Entry 33 of List III. An analysis of these
provisions shows that ’industry’ ordinarily means the
process of manufacture or production. We have referred to
the above provisions of the Constitution only to show how
that expression is understood ordinarily. It may also be
relevant to mention here that the new definition given to
the word ’industry’ by Parliament in the Industrial Disputes
(Amendment) Act, 1982 (46 of 1982) specifically excludes
’hospitals or dispensaries’ from the category of ’industry’.
It shows that the meaning given to the expression ’industry’
in the Industrial
1152
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Disputes Act, 1947 cannot be depended upon while construing
other statutes or statutory instruments and it should be
confined to the Industrial Disputes Act, 1947. We are of the
view that in the notification under which the exemption is
claimed by the petitioner, the word ’industry’ means only
the place where the process of manufacture or production of
goods is carried on and it cannot in any event include
’hospitals, dispensaries or nursing homes’.
The decision of the Tribunal does not call for any
interference.
The appeal is therefore, rejected.
M.L.A Appeal dismissed
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