Full Judgment Text
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PETITIONER:
RAIASTHANSTATEELECTRICITY BOARD
Vs.
RESPONDENT:
ASSOCIATED STONE INDUSTRIES & ANR. ...
DATE OF JUDGMENT: 08/05/2000
BENCH:
Syed Shah Mohammed Quadri, Shivaraj V. Patil
JUDGMENT:
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SHIVARAJV. PATIL.
In the light of the contentions raised and
submissions, made before us. the only question that arises
for consideration and decision in this appeal is whether
pumping out water from a mine comes within the meaning of
manufacture, production, processing or repair of goods so as
to claim exemption from duty under Notifications issued
under sub-section 3 of Section 3 of the Rajasthan
Electricity (Duty) -Act. 1962 (for short the ’Act’)?
2. This appeal is by the Rajasthan State Electricity
Board. Jaipur, theDefendant in the.suit. . ^
3. In short and substance, the facts which are
considered relevant and necessary for disposal of this
appeal are the following.
4. The Plamfl’ff-Respondent No". I --is a registered
’ public Iimited company. It is engaged in excavating
stones from the collieries and thereafter converting them
into slabs by cutting and polishing. The Rajasthan State
Government levied electricity duty under the provisions of
the Act. A Notification dated 26.3.1962 was issued by the
State under Section 3(3) of the Act granting exemption from
tax on the energy consumed by a consumer in any industry in
the manufacture, production, processing or repair of goods
and by or in respect of any mine as defined in the Indian
Mines. Act, 1923.
5. Subsequently a notification was issued on 2.3.1963
superseding the aforesaid Notification dated 23.3.1962.
remitting the electricity duty on the energy consumed in
electro-chemical industry and in electric furnaces of
elecro-thermo industries and-reducing such-duty
on the energy consumed in other industries in
themanufactnre. production: processing or repair of goods,
from 3 naya paise per unit to I naya paisc per unit.
Further one more Notification was issued on 1.11.1965
superseding the earlier two Notifications mentioned above
and fixing duly at 5 paise per unit as the rate at which
electricity duty shall be computed. However, by clause ’(c)
of the said nolification, the State of Rajasthan reduced the
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duty on the energy consumed in industries other than those
mentioned in clause (a) of the Notification in the
manufacture, production, processing or repair of goods to I
paise per unit. The same was later on enhanced to 2. paise
by Notification dated 5.3.1979.
6. The Defendant issued three notices dated
30.6.1972, 2i.l2.i97^aiW 30.1 L1974 asking the Plaintiff to
pay electricity duty at tile full rate of 0.05 per unit
holding that the Plaintiff was not entitled either for
exemption of electricity duly or to a reduced rate of -
duty. Hence the Plaintiff filed the suit for injunction
.restraining the--. defendant from realising the
electricity duty as per the demands made in the said
notices. The trial court dismissed the suit. The Plaintiff
filed tile appeal in the court of the District Judge at
Kota. The learned
Distntct Judge allowed the appeal reversing the
judgment, and decree of the trial court and passed the
decree in favour of the Plaintiff.: The Defendant filed the
second appeal in the High Court of Judicature for Rajasthan
at Jaipur Bench, Jaipur. The learned Single Judge of the
High Court dismissed the appeal confirming the judgment and
decree passed in favour of the Plaintiff. Hence the
Defendant has filed, this appeal challenging the validity
and correctness of the said judgment and decree passed by
the High Court.
7. Shri Pradeep Aggarwal learned counsel for the
defendant No. I - appellant urged that (1) consumption of
energy" for pumping out water from the mine cannot be
construed as energy consumed by industry in the manufacture,
production, processing or repair of the goods: further
excavating.stones from a mine and thereafter cutting and
polishing them into slabs did not amount to any manufacture.
(2) The subsequent two notifications dated 2.3.1963 and
1.11.1965 have clearly removed exemption in relation to any
mine.. In support of his submissions, he relied on the
decision of this Court in Collector of Central Excise,
Jaipur vs. Rajasthott State Chemical Works. Deedwana,
Rajasthan (1991) 4 SCC 473.
8. Per contra., the learned counsel for the plaintiff
made submissions supporting the impugned judgment and
decree. He argued that excavation of stones thereafter
cutting and polishing them into slabs amounted to
manufacture.
9. We have considered the submissions made by the
learned counsel for the parties. The 3 Notifications to the
extent they are relevant are extracted hereunder:-
Notification dated 26.3.1962
"In pursuance of sub-clause 3 of clause 3 of the.
Rajasthan Electricity (Duty) Bill, 1962, read with the
declaration inserted therein under section 3 of the
Rajasthan Provisional Collection of Taxes Act. 1958
(Rajasthan Act 23 of 1958), the State Government being of
the opinion that it inexpedient in public interest to-do^
so, hereby exempts from tax the-energy-consumed -
(1) by a consumer in any industry in the manufacture.
production, processing or repair of goods’, and (2) by or in
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respect of any mine as defined in the Indian Mines Act, 1923
(Central Act of 1923)-"
Notification dated 2.3.1963
’’In exercise of the powers conferred by sub-section
(3) of section 3 of the Rajasthan Electricity (Duty Act,
1962 (Rajasthan) Act 12 of 1962) and in supersession of
Excise and Taxation Department Notification No.
F.9(2>-E&T/62/1 dated the 26th March. 1962, the State
Government being of the opinion that it is expedient in
public interest to do so. hereby remits the electricity’
duly- on the energy consurned in electro’ chemical
industries and in electric furnaces of electro-thernal
industries and reduces such duty on the energy consumed in
other industries in the manufacture, production, processing
or repair of goods, from three naya paise per unit to one
paisa per unit."
Notification dated 1.11.1965
"In exercise of the powers conferred by section 3 of
the Rajasthan Electricity (Duty) Act, 1962 (Rajasthan Act 12
of 1962) and in supersession of Government Notification No.
F.9(2)/E&T/62-li dated the 26^ March, 1962 and No.
F.(6)FD/RT/63 dated the 2th March. 1963, the Stole
Government being of the opinion that it is expedient in
public interest to do so. herebv fixes, with immediate
effect, five parse per unit as the rate at which tlie
electricity duty.’shall be computed and subject to the
conditions laid down: in the third proviso to the said
section -
(a) remits, with immediate effect the electricity duty
on the energy consumed (i) in electrochemical industries,
and (ii) in electro furnaces of electro thermal industries.
(b) remits with effect on and from the 1st November,
1964. the electricity’ duty on energy consumed by or in
respect of any municipal Board or Council or Panchayat or
Panchayat Samiti or other authority for the purpose of or in
respect of public street lighting; and
(c) reduces with immediate effect such duty on the
energy consumed in industries, other than those mentioned in
(a) above, in the manufacturc.. production, processing or
repair of good to (two paise per unit)".
10. There is no dispute that the controversy
reiated-to claim for exemption or reduced rate of duty in
relation lo consumption energy for pumping out water from
the mines. In the Notification dated 26.3.1962 the tax was
exempted expressly for the energy’ consumed by or ill
respect of mines as defined in the Indian Mines Act. .1923.
The two subsequent Notifications of 2.3.1963 and 1.11.1965
have omitted provision of exemption in respect of mines. It
is not the case of the Plaintiff that electrical energy was
consumed in any industry in the manufacture, production,
.processing or repair of goods. The specific case of the
Plaintiff is that the electrical energy was consumed for
pumping out water ’from mines to make mines ready tor mining
activity namely, excavating stones and thereafter catting
and.. polishing them into slabs. The 1963 Notification
superseded the 1962. Notification and 1965 Notification
superseded both 1962 and 1963 - Notifications. As already
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noticed above. 1963 and 1965 Notifications have not made
any provision for exemption of duty on the electricity-
consumed by or in respect of mines, it is the ca.se of
the Plaintiff that" the electricity- was used for the
purpose of pumping out water from the mines to facilitate
mining activity’, namely excavating of stones. It must be
also kept in mind that a mining activity’ is distinguished
from a manufacturing activity, it appears this removal of
exemption in the said Notifications in respect of mines was
done consciously so as to bring the mining activity within
the purview of Section 3 of the Act. Hence we consider it
unnecessary to deal with the notification of 1962 in
relation to the claim for exemption by or in respect of a
mine.
11. The word "manufacture" is not defined in the Act
under which aforementioned three Notifications were issued.
The word "manufacture" used in the Notifications under
Section 3(3) of the Act, a taxing statute should be
understood in its commercial sense, in the absence of the
definition of it in the statute itself. The definitions of
"manufacture" given in other enactments such as Factories
Act, Industrial Dispute Act or the Excise Act cannot be
applied while interpreting the expression "manufacture"
inrelation totlie^rovisions of the Act.
The learned Judge in the judgment under appeal has
stated "it is also admitted that. the. electricity was
utilised for pumping out water from the mines, it cannol be
disputed that the Plaintiff could not have worked his mines
unless the water had been lumped out from themia^s and,
therefore, pumping out the water from the mines was
incidental with the excavation of stones on the mines"
Further having referred to various decisions dealing
with ’manufacturing" and "manufacturing process" has stated
thus-.-
"In my opinion, the pumping out of water from mines
was necessary and essential for carrying of the work of
excavation of stones from the mines and, therefore, it
should be held to be a part of the manufacturing process of
the whole industries and business carried out by the
plaintiff."
13. In the ’Notification dated 26.3.1962 the State
had exempted from duty the energy consumed in any industry-
in the manufacture,. production, processing or repair of
goods and also by or-in respect of any mine as defined in
the Indian Mines Act, 1923. As can be seen from subsequent
two Notifications of 2.3.1963 andl.ll.l965 the exemption
given to the mines .in the ’Notification,dated
26.3.;1962^was.,: withdrawn. The intention appears to be
clear that the exemption
available to mines speciticaiiy. was taken .away. it
appears the Plaintiff did not plead specifically that the
electricity was being used for pumping out water from the
mines which formed part of the manufacturing process. This
apart excavation of stones ti’oma mine- and thereafter
cutting them and polishmg them into slabs did not amount to
manufacture of goods. The word "manufacture" generally and
in the ordinal parlance in the absence of its definition in
tlie Act should be understood to mean bringing to existence
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a new and different article having distinctive name.
character or use after undergoing some transformation. When
no new product as such comes into existence, there is no
process of manufacture. The cutting and polishing stones
into slabs is not a process of manufacture for obvious and
simple reason that no new and distinct commercial product
came into existence as the end product still remained stone
and thus its original identity continued.
14. This Court in Union of India & Ors. Vs. Delhi
Cloth and General Mills Co. Ltd. & Ors. (1977 E.L.T.
(J.199) as to the meaning of "manufacture" in para 14 has
stated thus:-
"The word "manufacture" used ns a verv is generally
understood to mean as "bringing into existence a new
substence" and does not mean mereiy "to produce sonic change
in a substance", however minor in consequence the change may
be. Tills distinction is well brought about in a passage
thus quoted in-Permanent Edition of Words and Phrases. Vol.
26. from an American Judgment. The passage runs thus’
"Manufacture implies a change, but every change is not
manufacture and yet even’ change of an article is the result
of treatment labour and transformation: a new and different
article must emerge having a distinctive name, character or
use."
Para 17 of the .same judgment reads thus:- -
"These definitions make it clear that to become
"goods" an article must be something which can ordinarily
come to the market to be brought and sold."
15. In the case of Collector of Central Excise,
JaqJur Vs.
Rajasthan State Chemical Works, Deedwana, Rajasthan
-((1991) 4 SCC 473) this Court was considering "process"
connected with the manufacture; for manufacturing common
salt brine pumped into salt pans by using diesel pump and
for man.ufacturing lime, coke, .and limestones lifted to the
platform at the head kiln by aid of power. It was held that
pumping of brine and lifting of raw-material constituted
processes in or in relation to the manufacture. Para .16 of
the judgment reads thus:-
"The expression "m the manufacture of goods" would
normally encompas!S the entire process earned on by the
dealer of converting raw materials into finished goods.
Where any particular process is so integrally connected with
the ultimate production of goods that but for that process
manufacture or processing of goods would be commercially
inexpedient, goods required in that process would, in our
judgment, iail within the expression "in the nianutacture of
goods."
This Court in the same judgment in para 21 has stated
thus:-
"A process is a manufacturing process when it brings
out a complete transformation ’for the whole componenis so
as to produce a commercially different article or a
commodity. But that process itself may consist of several
processes which may or may not bring about any change at
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every intermediate stage. But the .activities or the
operations may be so integrally connected that the final
result is the production of a commercially different
article. Therefore, any activity or operation which is the
e.ssential requirement and is so related to the further
operations tor the end result would also be a process in or
in relation to manufacture to attract the relevant clause in
the exemption notification. In our view, the word ’process’
in the context in which it appears in the aforesaid
notification includes an operation or activity in relation
to manufacture."
16. In conclusion, it is said that if any operation
in the course of manufacture is so integrally connected with
the further operations which result in the emergence of
manufactured goods and such operation is carried on with the
aid of powder, the .process-in or in
relation to the manufacture must be deemed to be one
carried with the aid of power. Pumping out of water,
excavation of,stones and cutting and polishing them into
slabs cannot be said to-be, integrally connected in the
manufacturing of goods.
17. Keeping in view what is stated aboye,we iindit
difficult to accept the view of the learned Judge that the
energy consumed for pumping out of water from the
mines^houldbeheld to be a part of ˜. the manufacturing
process of the. whole industry and the- business carried
out by the Plaintiff. It is also not possible to accept
that excavation of stones and thereafter cuttmg and
polishing them into slabs resulted in any manufacture of
goods. On the basis of evidence,. the trial court found
that there are two separate electric meters; one for
pumping cutwater whenever requited, the other for the
workshop to which the stones excavated are carried. The
trial court also concluded that the electricity consumed for
pumping out water was not consumed in the manufacturing
business of the Plaintiff.
18. In the light of what is stated above, we are of
the considered opinion that the energy consumed for pumping
out water from a mine
Caimot be accepted as the energy consumed by a
consumer in any industry’ in the manufacture, production,
processing or repair of goods so as to claim exemption or
reduced rate of duty by the plaintiff by virtue of the
aforenientioned two notificationss dated 2.3.1963 and
1.11.1965. In the view. we have taken, the appeal is
entitled to succeed. Hence it is allowed, the judgment and
decree under appeal are set aside and the suit of the
plaintiff is dismissed. Parties to bear their own costs, in
the tacts and circumstances of the case.