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TMI Blog2016 (11) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the meaning of ‘mine’ for the aforesaid reason. Thus, the Ferro Manganese Plant, being a unit involved in manufacturing of ferromanganese alloy as opposed to a unit involved in crushing, treating, processing, etc. of manganese ore, cannot be treated within the extended definition of ‘mine’ within the Explanation (b) of Part B of Table of Rates of Duty to Section 3(1) of the Act. The Ferromanganese Alloy so manufactured by the appellant using the mineral Manganese at its Ferromanganese plant is an entirely different product from its mineral raw material both physically and even chemically. Moreover, unlike Manganese ore a ferromanganese alloy can never be found in the natural state and it has to be manufactured from the manganese ore and other minerals only. The same logic applies to copper concentrate as a different and distinct product comes into existence. Thus analyzed, we find that in both the cases, the different products in commercial parlance have emerged. Hence, we are inclined to think that the principle of noscitur a sociis has to be applied. As a logical corollary, tariff has to be levied as meant for manufacturing unit. Therefore, the analysis made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty calculated at the rates specified in the table below on the units of electrical energy sold or supplied to a consumer or consumed by himself for his own purposes or for purposes of his township or colony, during the preceding month. The table to Section 3(1) prescribes different rates of duty depending for the purpose for which the electrical energy is sold. Part-B of the table provides for different rates of duty for the electrical energy sold, supplied or consumed for the purposes therein. Item 3 to the said table reads as follows:- 3. Mines (other than captive mines of cement industry) 40 4. The numeral 40 comes under the heading rate of duty as percentage of the electricity tariff per unit . The Explanation (b) to Section 3(1) defines mine as under:- Explanation .-(b) Mine means a mine to which the Mines Act, 1952 (No. 35 of 1952) applies and includes the premises or machinery situated in or adjacent to mine and used for crushing, processing, treating or transporting the mineral. 5. It is necessary to state here that Hindustan Copper Limited had filed a Writ Petition to strike down the provision of Section 3 and the Table Part-B Item 4 (which is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oulders are transported to the primary crusher (situated at a distance of 2.53 km from the mine), where it is crushed into pebbles/pieces and such crushed ore is then carried on a conveyor to a secondary crusher (situated at about 5 km from the mine) for further crushing into smaller pebbles. After the said stage, small pieces/pebbles are then carried by a conveyor to the Concentrator Plant (situated at 5.5 km from the mine). 7. This Court further proceeded to state the facts adumbrated as projected by the appellant before the High Court. It was asserted that:- 4. In the Concentrator Plant, the ore is milled into powder in the ball mills. Such powder mixed with water is carried in the form of slurry to floatation cells. In the floatation cells, the slurry is subjected to froth floatation process and the copper concentrate is removed and dried in vacuum driers and stored in concentrate storage sheds. The tailing pumps are at a distance of 8 km. A large quantity of water is required for the Concentrator Plant for being used in milling. Water is also required for the factory township. The required water is pumped from the mines through pumps located at an intake well (situated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows:- (i) Whether prescribing different rates of tax for processing plant and machinery adjacent to a mine ( factory falling within the extended definition of mine ), and other factories is discriminatory and arbitrary and therefore violative of Articles 14 and 19 of the Constitution of India? (ii) Whether definition of the word mine in Explanation (b) in the Table under Section 3 of the Act, gives unguided discretion to authority under the Act to decide what is adjacent to a mine and therefore invalid.? (iii) Whether use of the words adjacent to a mine would mean only the premises or machinery abutting to or adjacent to the mine, and not premises or the plant/machinery situated at a distance of about 2.5 to 6 km? (iv) Whether the State had applied different yardsticks in charging duty to petitioner and in charging duty to Bhilai Steel, Balco, Manganese Ore India Ltd. and thereby practised discrimination? 9. It is imperative to state here that a contention was advanced by the appellant therein that the High Court had not considered the real issues and the questions formulated for determination did not cover the actual issues and disputes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On that basis, it was urged that copper concentrate is not a mineral and consequently, Explanation (b) to Part-B of Section 3 of the Act will not apply. Reliance was placed on State of W.B. v. Kesoram Industries Ltd. and others (2004) 10 SCC 201 and Uranium Corporation of India Ltd., Bihar v. Collector of Central Excise, Patna 1985 (19) ELT 609. On behalf of the State, it was urged that copper concentrate is a mineral regard being had to the definition contained in Section 2(jj) of the Mines Act, 1952 (for short, the 1952 Act ) as well as Schedules I and II appended to the Mines and Minerals (Development and Regulation) Act, 1957. The Division Bench was commended to the authority in V.P. Pithupitchai and another v. Special Secretary to the Govt. of T.N. (2003) 9 SCC 534 and the decision of the Division Bench of the High Court in Stone Crusher Owners Association and other v. M.P. Electricity Board and others MP No. 673/1993. On behalf of the respondents, the competent authority of the M.P. Electricity Board contended that the copper ore does not cease to be a mineral merely because it is subjected to the stated processing and therefore the copper concentrate does not lose it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation, the High Court observed that:- The classification made under Section 3 of the Act has a clear nexus with the object sought to be achieved, namely, raising revenue by grouping different types of industries and prescribing different rates of duty depending upon the nature of the industry. The highest rate of electricity duty is prescribed by the legislature in its wisdom for the mining industry. The object of prescribing the highest rate of electricity duty appears to tax the person/industry exploiting the nature wealth which is non-renewable. The exploiter has been required to contribute more, so that such contribution is, hopefully, utilized for the welfare of the people to whim such natural wealth belongs . 12. After so stating, it adverted to the anatomy of the definition of the term mine and observed that the expression creates a legal fiction and, therefore, the definition will embrace only what is comprised within the ordinary meaning of mine part, together with what is mentioned in the inclusive part of the definition and, therefore, as per well settled rules of statutory interpretation has to be read with regard to subject and object of the Act. The Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Mr. P.P. Rao, learned senior counsel appearing for Hindustan Copper Ltd. urged that the High Court has fallen into grave error by imposing the electricity duty on the basis of the definition engrafted under Explanation (b) to Section 3(1) of the 1949 Act. It was contended by Mr. Rohtagi that manganese order is a mineral under the Mines Act, 1952 but ferro manganese is not a mineral because the said mineral is converted into alloy and ceases to be a mineral. Mr. P.P. Rao, learned senior counsel submitted that copper is a mineral but copper concentrate does not contain any character of a mineral and, therefore, the duty has to be charged at the rate of 8% and not at the rate of 40%. 15. Mr. Saurabh, learned counsel for the State, per contra, contended that the definition is an inclusive one and hence, when the mineral is processed for the purpose of conversion to alloy, duty at the rate of 40% is leviable. Learned counsel for the State would submit that the view expressed by the High Court is absolutely defensible. 16. The thrust of the matter is whether the aforesaid activity after the mineral i.e. ore has been mined would be covered by the word processing used in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. (2004) 1 SCC 755 We would prefer to construe the said word in the Explanation with reference to the words before and after for the word processing used therein. The word processing herein, we think, should be interpreted and understood with the associated words crushing and treating . The word processing is susceptible of the meaning keeping in view the word crushing and treatment used before and afterwards. 19. We are absolutely conscious that noscitur a sociis rule is not applied when the language is clear and there is no ambiguity, which according to us does exist and perceptible in the Explanation in question. A very broad and a wide definition of the term processing if applied, would include manufacture of a new or distinct product. Manufacture normally involves a series of processes either by hand or machine. If a restricted construction is not applied it would create and give rise to unacceptable consequences. It is not the intent to treat and regard manufacturing activities as processing. Manufacturing, as is understood, means a series of processes through different stages in which the raw material is subjected to change by different operations. [For d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would fall outside the scope of the word processing . The restricted construction will also be acceptable in view of the use of the word mineral in the end of the Explanation. The word mineral in the Explanation is the product which was mined and is put to crushing , processing , treatment and transporting the mineral. In other words, mineral means mineral which was mined and not a new product created by using or processing the mineral mined. 21. Be it noted, learned counsel for the appellants would submit that the metals and minerals available in the earth are rarely found in the pure forms and degree of purity that the ultimate users demand. They are intimately mixed, physically or chemically and often both, with other substances. For use, the good must be separated from the worthless substances. The sum total of the treatments to which the ores are subjected to in order to separate and discard their worthless fractions by essentially physical means is called Ore Dressing . The various modes of Ore Dressing include handpicking, sorting, screening, washing, jigging, magnetic separation, crushing, grinding, etc. In this process, there is no change in the chemical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the appellant, Manganese Ore India Ltd. has, within its manganese ore mine area, an Integrated Manganese Beneficiation Plant (IMB Plant) as also a Ferro Manganese Plant (FMP). Following is the seriatim in which the mining/processing/manufacturing takes place:- a. First Stage : The appellant mines manganese ore from its mines. There is a levy of electricity duty on the appellant s consumption of electricity during mining at 40%, which the appellant is not disputing. b. Second State: Such mines manganese ore is processed by removal of impurities in the appellant s Integrated Manganese Beneficiation Plant (IMB Plant). During this process the cleaning of mineral takes place by various methods to remove impurities and foreign contents for the enrichment of the manganese content and during this process, the manganese mineral remains a mineral. There is a levy of electricity duty on the appellant s consumption of electricity of IMB Plant at 40%, which the appellant is not disputing. It is relevant to note that 95% to 98% of such processed manganese ore is sold in open market. Remaining is then sent as a raw material to the appellant s Ferro Manganese Plant (FMP). c. Third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle with a distinctive character and use, as a result of the processing, the essential condition justifying manufacture of goods is satisfied. The following passage in the Permanent Edition of Words and Phrases was referred to with approval in Delhi Cloth and General Mills, AIR 1963 SC 791 at p. 795: Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. 13. In a series of decisions [to wit, Decorative Laminates (India) (P) Ltd v. CCE, (1996) 10 SCC 46, Union of India v. Parle Products (P) Ltd. 1994 Supp. (3) SCC 662, Laminated Packings (P) Ltd v. CCE, (1990) 4 SCC 51 and Empire Industries Ltd. v. CCE, (1985) 3 SCC 314] the view taken consistently by this Court is that the moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name whether it be the result of one process or several processes, manufacture takes place; the transformati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. 15. Adverting to facts of the present case, the assessee after plucking or receiving the raw coffee berries makes it undergo nine processes to give it the shape of coffee beans. The net product is absolutely different and separate from the input. The change made in the article results in a new and different article which is recognized in the trade as a new and distinct commodity. The coffee beans have an independent identity distinct from the raw material from which it was manufactured. A distinct change comes about in the finished product. 16. Submission of the learned counsel for the Revenue that the assessee was doing only the processing work and was not involved in the manufacture and production of a new article cannot be accepted. The process is a manufacturing process when it brings out a complete transformation in the original article so as to produce a commercially different article or commodity. That process itself may con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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