2000 (5) TMI 1061 - SC - Indian Laws

Whether pumping out water from a mine comes within the meaning of manufacture, production, processing or repair of goods so as to claim exemption from duty under Notifications issued under sub-section 3 of Section 3 of the Rajasthan Electricity (Duty) Act 1962? Held that - The energy consumed for pumping out water from a mine out water from a mine cannot be accepted as the energy consumed by a consumer in any industry in the manufacture, production, processing or repair of goods so as to claim exemption or reduced rate of duty by the plaintiff by virtue of the afore mentioned two notificationss dated 2.3.1963 and 1.11.1965. Appeal is entitled to succeed.

Summary

Issues Involved:
1. Whether pumping out water from a mine constitutes "manufacture, production, processing or repair of goods" to claim exemption from duty under the Rajasthan Electricity (Duty) Act, 1962.
2. The applicability of subsequent notifications dated 2.3.1963 and 1.11.1965 in relation to the exemption or reduced rate of duty.

Issue-wise Detailed Analysis:

1. Definition and Scope of "Manufacture, Production, Processing or Repair of Goods":

The primary issue revolves around whether the activity of pumping out water from a mine can be classified under "manufacture, production, processing or repair of goods" for the purpose of claiming exemption from electricity duty as per the notifications issued under the Rajasthan Electricity (Duty) Act, 1962. The plaintiff argued that the process of excavating stones and subsequently cutting and polishing them into slabs amounted to manufacture. However, the court noted that the word "manufacture" is not defined in the Act and should be understood in its commercial sense. The court referenced previous judgments to clarify that "manufacture" implies bringing into existence a new and distinct article with a different name, character, or use. The court concluded that cutting and polishing stones into slabs did not produce a new and distinct commercial product, and thus did not qualify as "manufacture."

2. Applicability of Notifications Dated 2.3.1963 and 1.11.1965:

The court examined the subsequent notifications which superseded the initial notification dated 26.3.1962. The 1962 notification exempted energy consumed by or in respect of any mine. However, the notifications dated 2.3.1963 and 1.11.1965 removed this exemption. The court emphasized that these notifications did not provide for any exemption of duty on electricity consumed by or in respect of mines. The plaintiff's claim that the electricity used for pumping out water from the mines was part of the manufacturing process was not specifically pleaded. The court highlighted that mining activity is distinct from manufacturing activity and that the removal of exemption in the subsequent notifications was a conscious decision to include mining activities within the purview of Section 3 of the Act.

Conclusion:

The court concluded that the energy consumed for pumping out water from a mine cannot be considered as energy consumed in the manufacture, production, processing, or repair of goods. Consequently, the plaintiff was not entitled to claim exemption or a reduced rate of duty under the notifications dated 2.3.1963 and 1.11.1965. The appeal by the Rajasthan State Electricity Board was allowed, setting aside the judgment and decree under appeal, and dismissing the plaintiff's suit. Each party was ordered to bear its own costs.