M/S. Msco. Pvt. Ltd. Vs. Union of
India & Ors [1984] INSC 205 (31 October 1984)
VENKATARAMIAH, E.S. (J) 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.
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 an 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 there under
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]
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.
The Judgement of the Court was delivered by
1148 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 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 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 elsewhere 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 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.
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