Full Judgment Text
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6404 OF 2003
The Commissioner of Customs, New Delhi ... Appellant
Versus
M/s. Caryaire Equipment India Pvt. Ltd. .... Respondent
O R D E R
1. The core issue that falls for our consideration and
decision in this appeal is: whether “aluminium grills”
can be termed as “Extruded aluminium products”? If
the answer is in positive, the assessee would be
covered by Item Serial No.7 of the Product Code 61 of
the Duty Entitlement Passbook Scheme (for short “the
DEPB Scheme”). The assessee has succeeded before
the Customs, Excise and Gold (Control) Appellate
Tribunal (for short 'the Tribunal'). The Revenue in this
appeal calls in question the correctness or otherwise of
the judgment and order of the Tribunal. By the
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impugned judgment and order, the Tribunal has set
aside the order of confiscation of goods and the penalty
imposed by the Commissioner of Customs.
2.
The facts in nutshell are: the assessee is the
manufacturer of aluminium grills made out of extruded
aluminium sections. In its regular business activity, the
assessee had filed a shipping bill dated 18.06.2002,
inter alia, claiming the benefit of the DEPB Scheme
for export of the said products as falling under Item
Serial No. 7 of Product Group: Engineering-Product
Code: 61 at 7% ad valorem . The Customs Officer, on
verification of the shipping bill, has found that the
goods in question are fabricated aluminium products
and therefore, denied the export of goods as being
prima facie liable for confiscation under the Customs
Act, 1962 (for short “the Act”)
3. Thereafter, the assessee, by his letter dated 24.6.2002
had made a request to the Commissioner of Customs
for a personal hearing in lieu of the show cause notice.
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At the time of the personal hearing, the assessee had
contended that the aluminium grills were fabricated
items, but the end-product is made out of the extruded
aluminium. The Commissioner, while rejecting the
contention of the assessee, has passed an order dated
28.6.2002 for confiscation of goods and imposition of
penalty in exercise of his powers under Section 113
and 114 of the Act read with Rules 11 and 14 of the
Foreign Trade (Regulation) Rules, 1993. However, he
had permitted the assessee to redeem the goods on
payment of certain amount of fine.
4. Aggrieved by the aforesaid order of the Commissioner
of Customs, the assessee had carried the matter in
appeal before the Tribunal. The Tribunal, after
appreciating the contention of the assessee, had set
aside the order of the Commissioner vide its order
dated 16.10.2002. In its order, the Tribunal holds that
aluminium grills are nothing but the extruded
aluminium products. Therefore, the Tribunal is of the
opinion that the Commissioner of Customs was not
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justified in passing the order in exercise of his powers
under Section 113 and 114 of the Act.
5. The Revenue, being aggrieved by the judgment and
order passed by the Tribunal, has filed this appeal
under Section 130-E of the Act.
6. Shri Harish Chandra, learned senior counsel appearing
for the Revenue, contends that aluminium grill is
altogether a separate product and the same cannot be
equated with extruded aluminium product which is
mentioned under Entry 7 of the Product Group
Engineering (Code 61). He submits that the benefit of
the DEPB Scheme encompasses within its ambit only
to the extruded aluminium products which are obtained
from the process of aluminium extrusion. Shri
Abhinav Mukerji, learned counsel for the Revenue,
who is assisting Shri Harish Chandra, would elaborate
the process of aluminium extrusion and contends that it
is a product, which is strictly obtained from the process
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of extrusion, without any alterations or modifications,
is eligible for the benefit provided under the DEPB
Scheme. He, therefore, submits that the product
obtained by fabricating the extruded aluminium is not
eligible for the benefit of the Scheme. In support of
their contention, they have produced a xerox copy of
the book titled as “The Complete Technology Book on
Aluminium and Aluminium Products”. A reference is
also made to certain observations made by this Court
while explaining the meaning of the expression “the
product”.
7.
Per contra, Shri Aditya Kumar, learned counsel
appearing for the assessee submits that the expression
“extruded aluminium products” used in Entry 7 of
Code 61 is sufficiently wide to include products which
are made out of the extruded aluminium by fabricating
it. He contends that even the finished end-product
which is in the fabricated form of the extruded
aluminium, the same would fall under Entry 7, as
extruded aluminium product.
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8.
In order to resolve the controversy posed in this appeal
by the parties to the lis, a reference to Duty
Exemption/Remission Scheme requires to be noticed.
Chapter 4 of Exim Policy and Handbook of Procedures
provides for Duty Exemption/Remission Scheme.
Paragraph 4.37 of the said chapter provides for the
DEPB Scheme. The said paragraph reads as under:
“The Policy relating to Duty Entitlement Passbook Scheme (DEPB)
Scheme is given in Chapter 4 of the Policy. The duty credit under the
scheme shall be calculated by taking into account the deemed import
content of the said export product as per SION and the basic custom
duty payable on such deemed imports. The value addition achieved
by export of such product shall also be taken into account while
determining the rate of duty credit under the scheme.”
Entry 7 of the Product Code 61 in the DEPB schedule reads as under:
“Extruded Aluminium products including pipes and tubes”.
9.
The facts are not in dispute. The assessee is a
manufacturer of aluminium grills made out of the
extruded aluminium. Admittedly, the export of the
aforesaid item was made and shipping bill dated
18.6.2002 was presented before the Customs Officer,
inter alia , claiming the benefit under the aforesaid
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entry. While denying the said benefit, the
Commissioner of Customs has passed an order of
confiscation of the goods and has also levied a penalty,
in exercise of his powers under Section 113 and 114 of
the Act read with Rules 11 and 14 of the Foreign Trade
(Regulation) Rules, 1993. However, he had permitted
the assessee to exercise its right of redemption, if it so
desires. We do not know whether the assessee had
exercised that right. We are not concerned much on
that.
10. Admittedly, the assessee had carried the matter in
appeal before the Tribunal. The Tribunal has given
relief to the assessee by holding that the aluminium
grills are nothing but extruded aluminium products
and, therefore, the assessee is entitled to take benefit of
Item Serial No. 7 of the Product Group: Engineering-
Product Code: 61.
11. As we have already noticed, the only issue which
requires to be considered and decided in this Civil
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Appeal is, whether the aluminium grills can be termed
as Extruded aluminium products, and if it is so,
whether the assessee can take the benefit of the Item 7
of Code 61?
12. To appreciate what is extruded aluminium, a reference
can be made to the literature that is produced by
learned counsel appearing for the parties.
13. The process of “extrusion”, as explained in the
Textbook McGraw-Hill Encyclopedia of Science &
Technology, reads as under :
“Extrusion: The forcing of solid metal through a suitably shaped
orifice under compressive forces. Extrusion is somewhat analogous
to squeezing toothpaste through a tube, although some cold extrusion
processes more nearly resemble forging, which also deforms metals
by application of compressive forces. Most metals can be extruded,
although the process may not be economically feasible for high-
strength alloys.”
The process of the cold extrusion of aluminium can also be noticed
from the aforesaid book. The same is as under:
“Cold extrusion: The extrusion of cold metal is variously termed cold
pressing, cold forging, cold extrusion forging, extrusion pressing, and
impact extrusion. The term cold extrusion has become popular in the
steel fabrication industry, while impact extrusion is more widely used
in the nonferrous field.
The original process (identified as impact extrusion) consists of a
punch (generally moving at high velocity) striking a blank (or slug) of
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the metal to be extruded, which has been placed in the cavity of a
die. Clearance is left between the punch and die walls; as the punch
comes in contact with the blank, the metal has nowhere to go except
through the annular opening between punch and die. The punch
moves a distance that is controlled by a press setting. This distance
determines the base thickness of the finished part. The process is
particularly adaptable to the production of thin-walled, tubular-shaped
parts having thick bottoms, such as toothpaste tubes.
A process requiring less pressure than backward extrusion is the
forward-extrusion process, originally called the Hooker process. A
formed blank (usually a thick-walled cup) is placed in a die cavity and
struck by a punch having a shoulder or enlarged section a short
distance from the end. Upon contact with the blank, the nose or end
of the punch starts to push the center of the blank through the die
cavity, in a manner similar to the action occurring in deep drawing of
sheet metal. After the punch has advanced a short distance, the
shoulder comes in contact with the top of the thick wall of the blank.
The punch shoulder then extrudes the metal through the annular space
between the die and the end of the punch. Thus, in forward extrusion,
the metal moves in the same direction as the punch, whereas in
backward extrusion the metal moves in the opposite direction.”
14. In the book “The Complete Technology on Aluminium
and Aluminium Products”, a reference is made to the
manufactured forms of the aluminium. A useful
reference can be made to the literature on aluminium
and its manufactured form, from the aforesaid book. It
shows aluminium and its alloys may be cast or formed
by virtually all known processes. Manufactured forms
of aluminium and aluminium alloys can be broken
down into two groups. Standardized products and
Engineered Products. The Standardized products
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include sheet, plate, foil, rod, bar, wire, tube, pipe, and
structural forms. In the same book, it is said that
Engineered products are those designed for specific
applications and include extruded shapes, forgings,
impacts, castings, stampings, power metallurgy (P/M)
parts, machined parts, and metal-matrix composites
(MMCs). The standardized products are again
described to include only the extruded aluminium
product simplicitor. If anything that is done to those
extruded aluminium products, that would become the
engineered products.
15. In the instant case, it is the assessee's stand before the
Commissioner of Customs and also before the
Tribunal, that it fabricates extruded aluminium into
aluminium grills. It is not the case of the assessee
either before the Commissioner of Customs or before
the Tribunal, that aluminium grills are the same as
extruded aluminium products. It is an admitted
position that assessee carries out the fabrication to
derive a product known as aluminium grills made out
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of extruded aluminium products. If that fact situation
is accepted, then the Tribunal was wholly incorrect in
holding that the aluminium grills are nothing but
extruded aluminium products and therefore, they
would fall under Entry 7 of Code 61. The issue before
us can be looked into from another angle also. The
Legislature, while enumerating the goods that would
fall under Item 7 of the Product Code 61 of the DEPB
Schedule, immediately after the expression “extruded
aluminium products” has specifically used the
expression “included” to include pipes and tubes. The
legislature recognizes pipes and tubes which are
engineered out of the extruded aluminium products, as
included under the Item 7. The expression “including
pipes and tubes” following the words “extruded
aluminium products” in Item 7 is restrictive in nature
and will give ‘extruded aluminium products’ a
restrictive meaning in order to include the standardized
products such as pipes and tubes within the meaning of
the term extruded aluminium products.
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16. In South Gujarat Roofing Tiles Manufacturers Assn. &
Anr. v. State of Gujarat & Anr., (1976) 4 SCC 601,
this Court has held thus:
“Though “include” is generally used in interpretation clauses as a
word of enlargement, in some cases the context might suggest a
different intention. Pottery is an expression of very wide import,
embracing all objects made of clay and hardened by heat. If it had
been the legislature's intention to bring within the entry all possible
articles of pottery, it was quite unnecessary to add an explanation. We
have found that the explanation could not possibly have been
introduced to extend the meaning of potteries industry or the articles
listed therein added ex abundanti cautela. It seems to us therefore that
the legislature did not intend everything that the potteries industry
turns out to be covered by the entry. What then could be the purpose
of the explanation. The explanation says that, for the purpose of Entry
22, potteries industry “includes” manufacture of the nine articles of
pottery named therein. It seems to us that the 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; it is exhaustive of the meaning which must
be given to potteries industry for the purpose of Entry 22. The use of
the word “includes” in the restrictive sense is not unknown. The
observation of Lord Watson in Dilworth v. Commissioner of Stamps
which is usually referred to on the use of “include” as a word of
extension, is followed by these lines:
“But the word ‘include’ is susceptible of another construction, which
may become imperative, if the context of the Act is sufficient to show
that it was not merely employed for the purpose of adding to the
natural significance of the words or expressions defined. It may be
equivalent to ‘mean and include’, and in that case it may afford an
exhaustive explanation of the meaning which, for the purposes of the
Act, must invariably be attached to these words or expressions.”
It must therefore be held that the manufacture of Mangalore pattern
roofing tiles is outside the purview of Entry 22.”
17. In Reserve Bank of India & Ors. v. Peerless General
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Finance & Investment Co. Ltd. & Ors., (1987) 1 SCC
424, this Court while analysing the different
connotations of the ‘inclusive definitions’ has held:
“32. We do not think it necessary to launch into a discussion of either
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Dilworth case or any of the other cases cited. All that is necessary
for us to say is this: Legislatures resort to inclusive definitions ( 1 ) to
enlarge the meaning of words or phrases so as to take in the ordinary,
popular and natural sense of the words and also the sense which the
statute wishes to attribute to it, ( 2 ) to include meanings about which
there might be some dispute, or, ( 3 ) to bring under one nomenclature
all transactions possessing certain similar features but going under
different names. Depending on the context, in the process of
enlarging, the definition may even become exhaustive.”
18. In Godfrey Phillips India Ltd. & Anr. v. State of U.P.
& Ors., (2005) 2 SCC 515, this Court has observed
thus:
“73. Having rejected the second premise contended for by Mr Salve,
the next question is whether the language of Entry 62 List II would
resolve the issue. The juxtaposition of the different taxes within Entry
62 itself is in our view of particular significance. The entry speaks of
“taxes on luxuries including taxes on entertainments, amusements,
betting and gambling”. The word “including” must be given some
meaning. In ordinary parlance it indicates that what follows the word
“including” comprises or is contained in or is a part of the whole of
the word preceding. The nature of the included items would not only
partake of the character of the whole, but may be construed as
clarificatory of the whole.
74. It has also been held that the word “includes” may in certain
contexts be a word of limitation ( South Gujarat Roofing Tiles
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Manufacturers Assn . v. State of Gujarat ). …”
19. In Karnataka Power Transmission Corporation & Anr.
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v. Ashok Iron Works Private Limited, (2009) 3 SCC
240, this Court while considering the meaning and
connotations of the word ‘inclusive’ has held thus:
“14. The learned counsel also submitted that the word “includes”
must be read as “means”. In this regard, the learned counsel placed
reliance upon two decisions of this Court, namely; ( 1 ) South Gujarat
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Roofing Tiles Manufacturers Assn . v. State of Gujarat and ( 2 ) RBI v.
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Peerless General Finance and Investment Co. Ltd.
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15. Lord Watson in Dilworth v. Stamps Commr . made the following
classic statement: (AC pp. 105-06)
“… The word ‘include’ is very generally used in interpretation
clauses in order to enlarge the meaning of words or phrases occurring
in the body of the statute; and when it is so used these words or
phrases must be construed as comprehending, not only such things as
they signify according to their natural import, but also those things
which the interpretation clause declares that they shall include. But
the word ‘include’ is susceptible of another construction, which may
become imperative, if the context of the Act is sufficient to show that
it was not merely employed for the purpose of adding to the natural
significance of the words or expressions defined. It may be equivalent
to ‘mean and include’, and in that case it may afford an exhaustive
explanation of the meaning which, for the purposes of the Act, must
invariably be attached to these words or expressions.”
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16. Dilworth and few other decisions came up for consideration in
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Peerless General Finance and Investment Co. Ltd. and this Court
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summarised the legal position that ( Peerless case , SCC pp. 449-50,
para 32) inclusive definition by the legislature is used:
“ 32. … ( 1 ) to enlarge the meaning of words or phrases so as to take in
the ordinary, popular and natural sense of the words and also the
sense which the statute wishes to attribute to it; ( 2 ) to include
meanings about which there might be some dispute; or ( 3 ) to bring
under one nomenclature all transactions possessing certain similar
features but going under different names.”
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17. It goes without saying that interpretation of a word or expression
must depend on the text and the context. The resort to the word
“includes” by the legislature often shows the intention of the
legislature that it wanted to give extensive and enlarged meaning to
such expression. Sometimes, however, the context may suggest that
word “includes” may have been designed to mean “means”. The
setting, context and object of an enactment may provide sufficient
guidance for interpretation of the word “includes” for the purposes of
such enactment.”
th
20.
Principles of Statutory Interpretation (12 Edition,
2010) by Justice G.P. Singh, at pg. 181, has discussed
in detail the different connotations of the word
‘include’ while laying stress on the restrictive as well
as exhaustive explanation of the word ‘inclusive’ thus:
“The word ‘include’ is very generally used in interpretation clauses
in order to enlarge the meaning of words or phrases occurring in the
body of the statute; and when it is so used those words or phrases
must be construed as comprehending, not only such things, as they
signify according to their natural import, but also those things which
the interpretation clause declares that they shall include. But the
word ‘include’ is susceptible of another construction, which may
become imperative, if the context of the Act is sufficient to show that
it was not merely employed for the purpose of adding to the natural
significance of the words or expressions used. It may be equivalent to
‘mean and include’ and in the case it may afford an exhaustive
explanation of the meaning which for the purposes of the Act must
invariably attached to those words or expressions. Thus the word
include may in certain contexts be a word of limitation.”
21. In view of the aforesaid reasons, in our opinion, the
goods in question namely, the aluminium grills cannot
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fit into Item 7 of the Product Code 61 of the DEPB
Schedule in order to claim benefit of the DEPB
Scheme and therefore, we cannot sustain the order
passed by the Tribunal.
22. In the result, while allowing the appeal filed by the
Revenue, we set aside the impugned judgment and
order passed by the Tribunal and restore the order
passed by the Commissioner of Customs. No costs.
Ordered accordingly.
.....................................J.
(H.L. DATTU)
.....................................J.
(ANIL R. DAVE)
NEW DELHI,
FEBRUARY 14, 2012
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