SUPREME COURT OF INDIA
South Eastern Coalfields Limited
Vs
Commissioner, Customs and Central Excise, Madhya Pradesh
Appeal (Civil) 2408 of 2001 (With C.A. Nos.1968-1971/2003 and 8403-8404/2003)
(Ashok Bhan and Markandeya Katju, JJ)
01.08.2006
MARKANDEY KATJU, J.
Civil Appeal No. 2408 of 2001 has been filed against the impugned order dated
30.11.2000 passed by the Customs, Excise and Gold (Control) Appellate Tribunal,
New Delhi.
We have heard learned counsel for the parties.
The facts of the case are that the Central Electrical and Mechanical Workshop
at Korba was established by the appellant, M/s. South Eastern Coalfields Ltd.,
at Korba in 1967 to facilitate repair of all mining machinery and equipment
used in the adjacent coal mines and other collieries. The Central Government
declared this workshop as a mine under the provisions of Section 82 of the Mines Act, 1952 under certificate dated 1.5.1969.
Section 2(J)(viii) of the Mines Act states that mine includes "All
workshop situated within the precincts of a mine and under the same management
and used solely for purposes connected with that mine or a number of mines
under the same management."
Notification No.63/95-CE dated 16.3.1995 was issued by the Central Government
under Section 5A(1) of the Central Excises and Salt Act,
1944 read with sub-section (3) of Section 3 of the Additional
Duties of Excise (Goods of Special Importance) Act, 1957 exempting all
goods manufactured in a mine from duties of excise and additional duties of excise.
The explanation to that notification stated that the word "mine" will
have same meaning as assigned to it in clause (j) of Section 2 of the Mines Act, 1952.
A show cause notice was issued to the appellant by the Superintendent of
Central Excise, Range-Korba vide office letter dated 3.9.1996 for recovery of
central excise duty amounting to Rs.31, 59, 704/- under the provisions of Rule
9(2) read with Section 11A of the Central Excise Act, 1944, alleging
contravention of Rules 9(1), 52A, 53, 173B, 173C, 173G, 174 and 226 read with
Notification No.63/95-CE dated 16.3.1995 as amended. Further, for the
contravention of the aforesaid Rules imposition of interest and penalty was
also proposed. In the show cause notice it was stated that the appellant did not
appear to be entitled to the exemption as provided in Notification No.63/95-CE
dated 16.3.1995 as amended.
The appellant submitted its reply to the show cause notice, on 6.10.1998, in
which they referred to their earlier letter dated 5.9.1998 submitted with
reference to the earlier show cause notice. The appellant was also heard
personally. The defence of the appellant was that the workshop is situated
within the precincts of a mine and hence was entitled to the exemption under
the Notification No.63/95- CE.
The Commissioner by his order dated 22.6.1999 held against the appellant and
ordered the payment of duty amounting to Rs.31, 59, 704/- as mentioned in the
show cause notice and also directed recovery of interest and penalty for
contravention of various rules.
The appellant filed an appeal before the CEGAT, which by order dated 30.11.2000
held that the goods produced by the appellants, were dutiable and the appellant
would not entitled to the exemption contained in the Notification No.63/95-CE.
The Tribunal confirmed the demand of excise duty under the order of the
Commissioner but set aside the penalty imposed on the appellants. Aggrieved,
this appeal has been filed in this Court.
In our opinion, this appeal deserves to be allowed. As already stated above,
the exemption under Notification No.63/95-CE dated 16.3.1995 exempted all goods
manufactured in a mine from excise duty. The Explanation to the exemption
notification states that "mine" has the meaning assigned to it in
Section 2(j) of the Mines Act, 1952
The question, therefore, in this case is that "whether the workshop in
question can be said to be situated within the precincts of the mine".
Before the Tribunal reliance was placed by the learned counsel for the assesse
on an earlier order of the Tribunal in Central Coalfields Ltd. vs. CCE,
Jamshedpur dated 16.9.1997, in which it was held that the word
"precincts" cannot be restricted to an area of four Kms. In that case
the Tribunal held that the workshop in question was situated within the precincts
of the mines to which it was catering, even though it was situated at a
distance of 50 Kms. from the said mine.
In the present case the Tribunal rejected the assessee's claim for exemption on
the ground that since the mine was registered under the Factories Act, it
cannot have the benefit of exemption in the Notification No.63/95-CE since as
per Section 2(m) of the Factories Act a factory means any premises including
the precincts thereof but does not include a mine subject to the operation of
the Mines Act, 1952.
In our opinion the registration of a mine under the Factories Act has nothing
to do with the assessee's claim for exemption under the Central Excise Act. In
fact the reference to the Factories Act itself was wholly irrelevant and we
fail to see what the Factories Act has to do with the present case. The present
case is covered by the Central Excise Act and has nothing to do with the
Factories Act. Hence the view taken by the Tribunal is, with due respect
to it, clearly erroneous.
It has to be considered in the present case whether the workshop in question is
said to be a workshop within the precincts of a mine.
The word 'precincts' is not a word of clear import which has a single,
clear-cut meaning. Collin's English Dictionary defines 'precincts' to mean
"the surrounding region or area".
In the New Shorter Oxford English Dictionary, the word 'precinct' is shown to
have several meanings among which are the following:
"The area within the boundaries (real or imaginary) of a building or
place; the grounds; the interior; esp. an enclosed or clearly defined area
around a cathedral, college, etc. Also, the surroundings or environs of a
place."
In the Advanced Law Lexicon, 3rd Edition, by P.Ramanatha Aiyar, the word
'precinct' has been shown to have several meanings including a space enclosed
by walls or other boundaries.
In Black's Law Dictionary, 7th Edition, the word 'precinct' is defined as
follows:
"A geographical unit of government, such as an election district, a police
district, or a judicial district."
From a perusal of the above definitions, it appears that the word
"precincts" does not have a single meaning, rather it has several
meanings.
One word can have several meanings, and one meaning can have several words
(synonyms). For instance, the word 'ball' can mean a round object for playing
games like cricket, football, etc; it can also mean a dance; it can also mean
having a nice time, etc. Similarly, in Sanskrit the words "kamal",
"pankaj", "rajeev", "neeraj", "jalaj",
"saroj", etc. have the same meaning i.e. Lotus.
According to the literal rule of interpretation, if the meaning of a word or
expression is clear, there is no scope for interpretation and we have to follow
the plain and grammatical meaning.
However, where the meaning of a word or expression is not clear, obviously the
literal rule of interpretation cannot be applied, and hence we have to take
resort to other rules of interpretation e.g. the Heydon's mischief rule, the
purposive rule, etc. In our opinion in the present case the purposive rule
should be applied. Under this rule, we have to see the purpose for which the
provision was made. Looking at it from this angle, we are of the opinion that
the word 'precincts' has to be given the broader meaning and not the narrower
meaning.
In other words, we have to interpret the word 'precinct' in the exemption
notification to mean the surrounding region or area, as defined in Collins
English Dictionary or the surroundings or environs of a place as defined in the
New Shorter Oxford English Dictionary. This is because the purpose of the
exemption notification is to grant exemption from excise duty to goods produced
in a mine so as to encourage the mining industry. A workshop which is in an
area in the environs of a mine and is existing solely for the purpose connected
with the mine and under the same management, is obviously directly serving the
mining operations. Hence, we have to interpret the notification so as to
include such a workshop within the definition of a mine for the purpose of
grant of exemption, as that would encourage the mining industry.
For the reasons given above the appeal is allowed. The impugned order is set
aside. No costs.
Civil Appeal Nos. 1968-1971/2003 & 8403-8404/2003
In view of the decision in Civil Appeal No. 2408/2001, these appeals are
allowed. The impugned orders are set aside. No costs.