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2016 (11) TMI 543
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....efinition of "mine" as defined under Explanation (b) of Part-B of Madhya Pradesh Electricity Duty Act, 1949 (for brevity, "the Act"), we shall enumerate the scheme of the Act and the various litigations that have taken place and thereafter advert to the facts in each case. For brevity and to avoid repetition, we have initially referred to the litigation and different orders passed in the case of Hindustan Copper Limited. 3. The erstwhile Central Provinces and Berar Legislative Assembly had enacted the CP and Berar Electricity Duty Act, 1949 which was adopted in the State of Madhya Pradesh and has come to be known as the Madhya Pradesh Electricity Duty Act, 1949. The Preamble to the Act as amended by the State Legislature provides that it is an Act for the levy of duty on sale or consumption of electrical energy. Section 3(1) of the Act accordingly provides for levy of duty on sale or consumption of electrical energy. It stipulates that subject to the exceptions specified in Section 3-A, every distributor of electrical energy and every producer shall pay every month to the State Government at the prescribed time and in the prescribed manner a duty calculated at the rates specifie....
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....ent places by the appellant or as to how in the context of the facts of the case and having due regard to the provisions, the word "adjacent" should be construed, the Court remitted the Writ Petition to the High Court by stating so:- "Under the circumstances, we consider it just and appropriate that the High Court should examine afresh the contentions advanced on behalf of the parties, having due regard to the materials placed on record and in the context of the provisions of the Act touching the controversy. Since we are taking a view to remit the case to the High Court, we do not wish to express one way or the other on the merits of the respective contentions urged by the parties. ..." 6. After the remit, the High Court heard the Writ Petition and dismissed the same. The order passed by the High Court was assailed in appeal, by special leave, in Civil Appeal No. 6725 of 2008. In the second round, the two-Judge Bench stated the facts in detail which are to the effect that the appellant therein is engaged in extraction of copper ore, by open cast mining process involving drilling and blasting the ore in the open pit mine, the ore in the form of boulders are transported ....
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....rievance of the appellant therein pertains to the definition of "mine" the effect of which is to make processing a part of mining and the prescription of a higher rate of duty for "mines" (that is composite activity of mining and processing), while prescribing a lesser rate for other categories of industries. That apart, the Court taking note of the fact that classification of factories into two categories: (a) those which are adjacent to a mine and used for crushing, processing, treating and transporting the mineral; and (b) other factories is permissible. It was urged on behalf of the appellant that the expression "adjacent to the mines" is vague and ambiguous that leads to discriminatory treatment by the authorities. Further, its processing plant, that is, the primary crusher, the secondary crusher, the ball mill, the Concentrator Plant, the tailing pumps, the intake well and the water treatment plant are not situated "adjacent" to its mine and therefore could not be treated as "mine" for the purpose of levy of electricity duty. The Court also took note of the issues framed by the High Court after the order of remit on the earlier occasion. The said issues read as follows:- ....
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.... mining or minerals. What is excisable is "copper concentrate" because there is a process of manufacturing involved. It is seen that Points (iii) and (iv) formulated by the High Court for determination are really relevant. But the points have not been correctly formulated to cover the actual essence of the dispute. The correct question would be as follows: "Whether copper concentrate is a mineral and whether Explanation to Part B of the Act applies even though manufacturing process is involved to bring it into existence?"" In view of the aforesaid, this Court set aside the impugned judgment and remanded the matter to the High Court for fresh consideration of the question framed permitting the parties to place material in support of their respective stands. 10. After the remand, before the High Court it was contended that mineral is something which grows in the mine and is capable of being won or extracted so as to be subjected to the better or precious use. It was further contended that copper ore is extracted at the mine pit and then it is subjected to processing whereafter copper ore becomes copper concentrate which is a different commodity which is an excisable pr....
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....les of Statutory Interpretation Justice G.P. Singh, 12th Edn., Page 349-350 and commended itself to the authorities in Tarlochan Dev Sharma v. State of Punjab & Ors. (2001) 6 SCC 260 and Union of India v. Harjeet Singh Sandhu (2001) 5 SCC 593. After stating the legal proposition in the aforesaid manner, the High Court ruled that the 1949 Act is an enactment meant to provide for levy of duty on sale or consumption of electrical energy and the Act has been enacted in exercise of power under item 48 (b) List II of the Government of India Act, 1953 which corresponds to Entry 53 of List II of the VIIth Schedule of the Constitution of India, namely, tax on consumption or sale of electricity. It referred to Section 3 of the Act and the definition of the term 'mine' and deduced that electricity duty under the Act is a tax which is levied on sale of consumption of electricity and further proceeded to state that if the table appended to Section 3 of the Act is seen, the classification for the purpose of levy of electricity duty is based on the purpose for which the electrical energy is sold or consumed and the classification table for the purpose of levy of duty. Dealing with the facet of cl....
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....ed, processed, treated or transported' is not copper concentrate' but the ore. The electricity in question is being consumed for such "crushing, processing, treating or transportation"." 13. Dwelling upon the word "adjacent" and the argument raised pertaining to discrimination between industries located in close proximity of the mine and other industries carrying on the same activity, namely, 'crushing, processing, treating or transportation', which are not located in such close proximity of the mine, the Division Bench opined that:- "The word 'adjacent' does not mean 'adjoining' or 'abutting', but has a wider connotation, and would include close proximity such being in the same locality. This proposition is not disputed, and therefore, it is not necessary to refer to the case law cited for the meaning of the word 'adjacent'. In reply the learned Additional Advocate General submits that this differentiation is justified because the increased overheads such as transportation costs have been considered for not subjecting the far away industries to higher tax". 14. When the matter was listed for hearing, Mr. Mukul Rohtagi, learned Attorney General appearing for the Mang....
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.... from earth irrespective of whether such activity is carried on at the surface or in the bowel, but it must be an activity for winning a mineral. For the purpose of Item 3 'mine' to which electrical energy is sold, supplied or consumed, it would include machinery or premises situated in the adjacent to the mine, provided the electricity is used for crushing, processing, treating or transporting the minerals. The word 'mineral' used in the aforesaid Explanation under the Act would have reference to the mineral which is mined and is then crushed, processed, treated or transported. The word 'processing' used in the Explanation has to be interpreted in the context and for the purpose of the said item. Process can be given either a wide or a narrow meaning. In the context in which it is used in the Explanation, we are disposed to think that it must be given a meaning which emerges when we apply the rule of noscitur a sociis which means that the meaning of the word is to be judged by the company it keeps. [See : Rohit Pulp and Paper Mills Ltd. v. Collector of Central Excise (1990) 3 SCC 447]. The rule of noscitur a sociis has been applied and accepted in Ahmedabad Pvt. Primary Teachers' ....
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....ch a new or different article other than the one which has been mined, is produced. It relates and signifies the composite activity of mining and processing. The intent is not to include processes which would lead to creation of a different commodity as known in the commercial world for otherwise even manufacturing activity would get covered, whereas manufacturing unit is liable to pay electricity tariff at a lower rate. The intent and purpose is certainly not to compel and force a manufacturing unit being set up at an acceptable distance from the mine, for the manufacturing unit adjacent to the mine would have to pay electricity tariff at a higher rate. Pertinently, a manufacturing unit set up by another entity, whether adjacent to the mine or not, would pay a lower tariff. Such absurdity and irrationality has to be avoided. In the present context, we would, therefore, hold 'processing' would mean activities in order to make the mineral mined marketable, saleable and transportable, without substantially changing the identity of the mineral, as mined. When there is a substantial change at the mineral mined and the process results in a different commodity being produced or transform....
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....incipal base metals present in them. The names of Ferro alloys are abbreviated by using chemical symbols, e.g., FeMn, FeSi and FeCr standing for Ferro Manganese, Ferro Silicon and Ferro Chromium, respectively. Manufacturing of Ferro manganese alloy involves the use of manganese ore as a raw material which is subjected along with other raw material (Dolomite, Iron Ore, Coke, Coal and Carbon Paste), to Electro thermic smelting. The manufacturing of Ferro Manganese by Electro thermic smelting is a continuous smelting with the electrodes submerged deep into the charge. The smelting includes the stages as follows: pre-heating of the materials, drying and removal of volatiles, reduction of oxides, and smelting of the metal and slag. The same reasoning and manufacturing processing is required to create copper concentrate, a new and different commercial product. It is not the mineral as mined. 23. It is urged that Ferromanganese is an alloy and is not a mineral. The same is an alloy of manganese and iron and is not available in natural form. It is manufactured in the ferromanganese plant of the appellant - Manganese Ore India Ltd. by using raw materials LIKE manganese ore, iron, coal, c....
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.... the manganese ore (mineral) was in the IMB Plant (second stage), where the appellant is paying electricity duty at 40%. The same rate cannot be applied in the Ferro Manganese Plant (the third stage) as it cannot be taken to be within the meaning of 'mine' for the aforesaid reason. 25. Learned counsel for the appellants would contend that in numerous decisions, this Court has reiterated that if a new substance is brought into existence or if a new or different article having a distinctive name, character or use results from particular processes, such process or processes would amount to manufacture. In the case of Gramophone Co. of India Ltd. v. Collector of Customs, Calcutta (2000) 1 SCC 549 , this Court held:- "11. The term "manufacture" is not defined in the Customs Act. In the allied Act, namely the Central Excise Act, 1944 also, the term "manufacture" is not to be found defined though vide clause (f) of Section 2 an inclusive definition is given of the term "manufacture" so as to include certain processes also therein. 12. "Manufacture" came up for the consideration of the Constitution Bench in Ujagar Prints v. Union of India (1989) 3 SCC 488. It was held ....
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....ufacture" it has to be given a meaning as is understood in common parlance. It is to be understood as meaning the production of articles for use from raw or prepared materials by giving such materials new forms, qualities or combinations whether by hand labour or machines. If the change made in the article results in a new and different article then it would amount to a manufacturing activity. 14. This Court while determining as to what would amount to a manufacturing activity, held in CST v. Pio Food Packers, 1980 Supp. SCC 174 : that the test for determination whether manufacture can be said to have taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity, but is recognized in the trade as a new and distinct commodity. It was observed: (SCC p. 176, para 5) "Commonly manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the....