Commercial sense of manufacture governs electricity duty exemption for mining and stone-cutting operations

The article explains that electricity duty exemptions under the Rajasthan Electricity (Duty) Act, 1962 turned on whether the power was used in the manufacture, production, processing or repair of goods. It states that, in the absence of a statutory definition, "manufacture" is understood in its commercial sense as the emergence of a new and distinct commercial article with a different name, character or use. Pumping water from a mine was treated as an incidental mining activity, not manufacture, and cutting and polishing stone slabs did not create a commercially different product. On that reasoning, the claimed exemption or reduced duty was unavailable.

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Issues: Whether electricity consumed for pumping out water from a mine, and for excavation, cutting and polishing stones into slabs, fell within the exemption or reduced-rate notifications issued under section 3(3) of the Rajasthan Electricity (Duty) Act, 1962 as consumption in the manufacture, production, processing or repair of goods.

Analysis: The exemption notifications originally covered energy consumed by or in respect of mines, but the later notifications withdrew that specific mine-based exemption. The word "manufacture" was not defined in the Act and had to be understood in its commercial sense, meaning the bringing into existence of a new and distinct commercial article having a different name, character or use. Pumping out water from a mine was only incidental to mining operations and did not itself amount to manufacture. Excavation of stones and their subsequent cutting and polishing into slabs did not produce a commercially different article, since the end product remained stone and retained its original identity. The activity was also not shown to be so integrally connected with manufacture as to bring it within the notified expressions.

Conclusion: The consumption of electricity for pumping out water from the mine did not qualify as energy used in the manufacture, production, processing or repair of goods, and the claimed exemption or reduced duty was not available.

Final Conclusion: The appeal succeeded and the plaintiff was not entitled to relief against the electricity duty demands.

Ratio Decidendi: In the absence of a statutory definition, "manufacture" in a taxing notification means the emergence of a new and distinct commercial article, and an auxiliary operation connected with mining does not qualify unless it is integrally linked to such manufacture.

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