IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6404 OF 2003

The Commissioner of Customs, New Delhi       ... Appellant

Versus  

M/s. Caryaire Equipment India Pvt. Ltd.   .... Respondent  

O R D E R

1. The  core  issue  that  falls  for  our  consideration  and  

decision in this appeal is: whether “aluminium grills”  

can be termed as “Extruded aluminium products”?  If  

the  answer  is  in  positive,  the  assessee  would  be  

covered by Item Serial No.7 of the Product Code 61 of  

the Duty Entitlement Passbook Scheme (for short “the  

DEPB Scheme”).  The assessee has succeeded before  

the  Customs,  Excise  and  Gold  (Control)  Appellate  

Tribunal (for short 'the Tribunal').  The Revenue in this  

appeal calls in question the correctness or otherwise of  

the  judgment  and  order  of  the  Tribunal.  By  the  

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impugned  judgment  and  order,  the  Tribunal  has  set  

aside the order of confiscation of goods and the penalty  

imposed by the Commissioner of Customs.

2. The  facts  in  nutshell  are:  the  assessee  is  the  

manufacturer of aluminium grills made out of extruded  

aluminium sections. In its regular business activity, the  

assessee  had  filed  a  shipping  bill  dated  18.06.2002,  

inter alia,  claiming the benefit of the DEPB Scheme  

for export  of the said products as falling under Item  

Serial  No.  7  of  Product  Group:  Engineering-Product  

Code: 61 at 7% ad valorem. The Customs Officer, on  

verification  of  the  shipping  bill,  has  found  that  the  

goods in  question  are fabricated aluminium products  

and  therefore,  denied  the  export  of  goods  as  being  

prima facie liable for confiscation under the Customs  

Act, 1962 (for short “the Act”)

3. Thereafter, the assessee, by his letter dated 24.6.2002  

had made a request to the Commissioner of Customs  

for a personal hearing in lieu of the show cause notice.  

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At the time of the personal hearing, the assessee had  

contended  that  the  aluminium  grills  were  fabricated  

items, but the end-product is made out of the extruded  

aluminium.  The  Commissioner,  while  rejecting  the  

contention of the assessee, has passed an order dated  

28.6.2002 for confiscation of goods and imposition of  

penalty  in  exercise  of  his  powers under  Section 113  

and 114 of the Act read with Rules 11 and 14 of the  

Foreign Trade (Regulation) Rules, 1993.  However, he  

had  permitted  the  assessee  to  redeem  the  goods  on  

payment of certain amount of fine.

4. Aggrieved by the aforesaid order of the Commissioner  

of  Customs,  the  assessee  had  carried  the  matter  in  

appeal  before  the  Tribunal.   The  Tribunal,  after  

appreciating  the  contention  of  the  assessee,  had  set  

aside  the  order  of  the  Commissioner  vide  its  order  

dated 16.10.2002. In its order, the Tribunal holds that  

aluminium  grills  are  nothing  but  the  extruded  

aluminium products. Therefore, the Tribunal is of the  

opinion  that  the  Commissioner  of  Customs  was  not  

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justified in passing the order in exercise of his powers  

under Section 113 and 114 of the Act.

5. The  Revenue,  being  aggrieved  by  the  judgment  and  

order  passed  by  the  Tribunal,  has  filed  this  appeal  

under Section 130-E of the Act.

6. Shri Harish Chandra, learned senior counsel appearing  

for  the  Revenue,  contends  that  aluminium  grill  is  

altogether a separate product and the same cannot be  

equated  with  extruded  aluminium  product  which  is  

mentioned  under  Entry  7  of  the  Product  Group  

Engineering (Code 61).  He submits that the benefit of  

the DEPB Scheme encompasses within its ambit only  

to the extruded aluminium products which are obtained  

from  the  process  of  aluminium  extrusion.   Shri  

Abhinav  Mukerji,  learned  counsel  for  the  Revenue,  

who is assisting Shri Harish Chandra, would elaborate  

the process of aluminium extrusion and contends that it  

is a product, which is strictly obtained from the process  

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of extrusion, without any alterations or modifications,  

is  eligible  for  the  benefit  provided  under  the  DEPB  

Scheme.  He,  therefore,  submits  that  the  product  

obtained by fabricating the extruded aluminium is not  

eligible for the benefit of the Scheme.  In support of  

their contention, they have produced a xerox copy of  

the book titled as “The Complete Technology Book on  

Aluminium and Aluminium Products”.  A reference is  

also made to certain observations made by this Court  

while  explaining the  meaning of the expression “the  

product”.

7. Per  contra,  Shri  Aditya  Kumar,  learned  counsel  

appearing for the assessee submits that the expression  

“extruded  aluminium  products”  used  in  Entry  7  of  

Code 61 is sufficiently wide to include products which  

are made out of the extruded aluminium by fabricating  

it.   He  contends  that  even  the  finished  end-product  

which  is  in  the  fabricated  form  of  the  extruded  

aluminium,  the  same  would  fall  under  Entry  7,  as  

extruded aluminium product.  

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8. In order to resolve the controversy posed in this appeal  

by  the  parties  to  the  lis, a  reference  to  Duty  

Exemption/Remission Scheme requires to be noticed.  

Chapter 4 of Exim Policy and Handbook of Procedures  

provides  for  Duty  Exemption/Remission  Scheme.  

Paragraph  4.37  of  the  said  chapter  provides  for  the  

DEPB Scheme. The said paragraph reads as under:

“The Policy relating to Duty Entitlement Passbook Scheme (DEPB)  Scheme is given in Chapter 4 of the Policy.  The duty credit under the  scheme shall be calculated by taking into account the deemed import  content of the said export product as per SION and the basic custom  duty payable on such deemed imports.  The value addition achieved  by  export  of  such  product  shall  also  be  taken  into  account  while  determining the rate of duty credit under the scheme.”   

Entry 7 of the Product Code 61 in the DEPB schedule reads as under:

“Extruded Aluminium products including pipes and tubes”.

9. The  facts  are  not  in  dispute.   The  assessee  is  a  

manufacturer  of  aluminium  grills  made  out  of  the  

extruded  aluminium.  Admittedly,  the  export  of  the  

aforesaid  item  was  made  and  shipping  bill  dated  

18.6.2002 was presented before the Customs Officer,  

inter  alia,  claiming  the  benefit  under  the  aforesaid  

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entry.   While  denying  the  said  benefit,  the  

Commissioner  of  Customs  has  passed  an  order  of  

confiscation of the goods and has also levied a penalty,  

in exercise of his powers under Section 113 and 114 of  

the Act read with Rules 11 and 14 of the Foreign Trade  

(Regulation) Rules, 1993.  However, he had permitted  

the assessee to exercise its right of redemption, if it so  

desires.  We  do  not  know whether  the  assessee  had  

exercised that right.  We are not concerned much on  

that.

10. Admittedly,  the  assessee  had  carried  the  matter  in  

appeal before the Tribunal.    The Tribunal has given  

relief  to  the  assessee  by  holding that  the  aluminium  

grills  are  nothing  but  extruded  aluminium  products  

and, therefore, the assessee is entitled to take benefit of  

Item Serial No. 7 of the Product Group: Engineering-  

Product Code: 61.

11. As  we  have  already  noticed,  the  only  issue  which  

requires  to  be  considered  and  decided  in  this  Civil  

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Appeal is, whether the aluminium grills can be termed  

as  Extruded  aluminium  products,  and  if  it  is  so,  

whether the assessee can take the benefit of the Item 7  

of  Code 61?

12. To appreciate what is extruded aluminium, a reference  

can  be  made  to  the  literature  that  is  produced  by  

learned counsel appearing for the parties.

13. The  process  of  “extrusion”,  as  explained  in  the  

Textbook  McGraw-Hill  Encyclopedia  of  Science  &  

Technology, reads as under :

“Extrusion:  The  forcing  of  solid  metal  through  a  suitably  shaped  orifice under compressive forces.  Extrusion is somewhat analogous  to squeezing toothpaste through a tube, although some cold extrusion  processes more nearly resemble forging, which also deforms metals  by application of compressive forces.  Most metals can be extruded,  although  the  process  may  not  be  economically  feasible  for  high- strength alloys.”

The process of the cold extrusion of aluminium can also be noticed  

from the aforesaid book. The same is as under:

“Cold extrusion: The extrusion of cold metal is variously termed cold  pressing, cold forging, cold extrusion forging, extrusion pressing, and  impact extrusion.  The term cold extrusion has become popular in the  steel fabrication industry, while impact extrusion is more widely used  in the nonferrous field. The  original  process  (identified  as  impact  extrusion)  consists  of  a  punch (generally moving at high velocity) striking a blank (or slug) of  

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the metal to be extruded, which has been placed in the   cavity of a  die.  Clearance is left between the punch and die walls; as the punch  comes in contact with the blank, the metal has nowhere to go except  through  the  annular  opening  between  punch  and  die.   The  punch  moves a distance that is controlled by a press setting.  This distance  determines the base thickness of  the finished part.   The process is  particularly adaptable to the production of thin-walled, tubular-shaped  parts having thick bottoms, such as toothpaste tubes. A  process  requiring  less  pressure  than  backward  extrusion  is  the  forward-extrusion process, originally called the Hooker process.  A  formed blank (usually a thick-walled cup) is placed in a die cavity and  struck  by  a  punch  having  a  shoulder  or  enlarged  section  a  short  distance from the end.  Upon contact with the blank, the nose or end  of the punch starts to push the center of the blank through the die  cavity, in a manner similar to the action occurring in deep drawing of  sheet  metal.   After  the  punch  has  advanced  a  short  distance,  the  shoulder comes in contact with the top of the thick wall of the blank.  The punch shoulder then extrudes the metal through the annular space  between the die and the end of the punch.  Thus, in forward extrusion,  the  metal  moves  in  the  same  direction  as  the  punch,  whereas  in  backward extrusion the metal moves in the opposite direction.”  

14. In the book “The Complete Technology on Aluminium  

and Aluminium Products”, a reference is made to the  

manufactured  forms  of  the  aluminium.   A  useful  

reference can be made to the literature on aluminium  

and its manufactured form, from the aforesaid book.  It  

shows aluminium and its alloys may be cast or formed  

by virtually all known processes.  Manufactured forms  

of  aluminium  and  aluminium  alloys  can  be  broken  

down  into  two  groups.  Standardized  products  and  

Engineered  Products.  The  Standardized  products  

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include sheet, plate, foil, rod, bar, wire, tube, pipe, and  

structural  forms.  In  the  same  book,  it  is  said  that  

Engineered  products  are  those  designed  for  specific  

applications  and  include  extruded  shapes,  forgings,  

impacts, castings, stampings, power metallurgy (P/M)  

parts,  machined  parts,  and  metal-matrix  composites  

(MMCs).  The  standardized  products  are  again  

described  to  include  only  the  extruded  aluminium  

product  simplicitor.  If  anything that  is done to those  

extruded aluminium products, that would become the  

engineered products.

15. In the instant case, it is the assessee's stand before the  

Commissioner  of  Customs  and  also  before  the  

Tribunal,  that  it  fabricates  extruded  aluminium  into  

aluminium grills.   It  is  not  the  case  of  the  assessee  

either before the Commissioner of Customs or before  

the  Tribunal,  that  aluminium  grills  are  the  same  as  

extruded  aluminium  products.  It  is  an  admitted  

position  that  assessee  carries  out  the  fabrication  to  

derive a product known as aluminium grills made out  

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of extruded aluminium products.  If that fact situation  

is accepted, then the Tribunal was wholly incorrect in  

holding  that  the  aluminium  grills  are  nothing  but  

extruded  aluminium  products  and  therefore,  they  

would fall under Entry 7 of Code 61.  The issue before  

us  can  be  looked  into  from another  angle  also.  The  

Legislature,  while  enumerating the goods that  would  

fall under Item 7 of the Product Code 61 of the DEPB  

Schedule, immediately after the expression “extruded  

aluminium  products”  has  specifically  used  the  

expression “included” to include pipes and tubes.  The  

legislature  recognizes  pipes  and  tubes  which  are  

engineered out of the extruded aluminium products, as  

included under the Item 7. The expression “including  

pipes  and  tubes”  following  the  words  “extruded  

aluminium products” in Item 7 is restrictive in nature  

and  will  give  ‘extruded  aluminium  products’  a  

restrictive meaning in order to include the standardized  

products such as pipes and tubes within the meaning of  

the term extruded aluminium products.  

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16. In South Gujarat Roofing Tiles Manufacturers Assn. &  

Anr. v. State of Gujarat  & Anr.,  (1976) 4 SCC 601,  

this Court has held thus:

“Though  “include”  is  generally  used  in  interpretation  clauses  as  a  word  of  enlargement,  in  some  cases  the  context  might  suggest  a  different  intention.  Pottery  is  an  expression  of  very  wide  import,  embracing all objects made of clay and hardened by heat. If it had  been the legislature's intention to bring within the entry all possible  articles of pottery, it was quite unnecessary to add an explanation. We  have  found  that  the  explanation  could  not  possibly  have  been  introduced to extend the meaning of potteries industry or the articles  listed therein added ex abundanti cautela. It seems to us therefore that  the legislature  did not  intend everything that  the potteries  industry  turns out to be covered by the entry. What then could be the purpose  of the explanation. The explanation says that, for the purpose of Entry  22, potteries industry “includes” manufacture of the nine articles of  pottery named therein.  It  seems to us that the word “includes” has  been used here in the sense of ‘means’; this is the only construction  that the word can bear in the context. In that sense it is not a word of  extension, but limitation; it is exhaustive of the meaning which must  be given to potteries industry for the purpose of Entry 22. The use of  the  word  “includes”  in  the  restrictive  sense  is  not  unknown. The  observation of Lord Watson in Dilworth v.  Commissioner of Stamps  which is  usually  referred to  on the  use  of  “include” as a  word of  extension, is followed by these lines: “But the word ‘include’ is susceptible of another construction, which  may become imperative, if the context of the Act is sufficient to show  that  it  was  not  merely  employed for  the  purpose of  adding to  the  natural significance of the words or expressions defined. It may be  equivalent to ‘mean and include’, and in that case it may afford an  exhaustive explanation of the meaning which, for the purposes of the  Act, must invariably be attached to these words or expressions.”  It must therefore be held that the manufacture of Mangalore pattern  roofing tiles is outside the purview of Entry 22.”

17. In  Reserve Bank of India & Ors. v. Peerless General  

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Finance & Investment Co. Ltd. & Ors., (1987) 1 SCC  

424,  this  Court  while  analysing  the  different  

connotations of the ‘inclusive definitions’ has held:  

“32. We do not think it necessary to launch into a discussion of either  Dilworth case2 or any of the other cases cited. All that is necessary  for us to say is this: Legislatures resort to inclusive definitions (1) to  enlarge the meaning of words or phrases so as to take in the ordinary,  popular and natural sense of the words and also the sense which the  statute wishes to attribute to it, (2) to include meanings about which  there might be some dispute, or, (3) to bring under one nomenclature  all  transactions  possessing certain  similar  features  but  going under  different  names.  Depending  on  the  context,  in  the  process  of  enlarging, the definition may even become exhaustive.”

18. In Godfrey Phillips India Ltd. & Anr. v. State of U.P.  

& Ors.,    (2005) 2 SCC 515, this Court has observed  

thus:  

“73. Having rejected the second premise contended for by Mr Salve,  the next question is whether the language of Entry 62 List II would  resolve the issue. The juxtaposition of the different taxes within Entry  62 itself is in our view of particular significance. The entry speaks of  “taxes  on  luxuries  including taxes  on  entertainments,  amusements,  betting and gambling”.  The word “including” must  be given some  meaning. In ordinary parlance it indicates that what follows the word  “including” comprises or is contained in or is a part of the whole of  the word preceding. The nature of the included items would not only  partake  of  the  character  of  the  whole,  but  may  be  construed  as  clarificatory of the whole. 74.  It  has  also  been  held  that  the  word “includes”  may in  certain  contexts  be  a  word  of  limitation (South  Gujarat  Roofing  Tiles   Manufacturers Assn. v. State of Gujarat28). …”

19. In Karnataka Power Transmission Corporation & Anr.  

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v. Ashok Iron Works Private Limited, (2009) 3 SCC  

240,  this  Court  while  considering  the  meaning  and  

connotations of the word ‘inclusive’ has held thus:

“14. The  learned  counsel  also  submitted  that  the  word  “includes”  must be read as “means”. In this regard, the learned counsel placed  reliance upon two decisions of this Court, namely; (1) South Gujarat  Roofing Tiles Manufacturers Assn. v. State of Gujarat1 and (2) RBI v.  Peerless General Finance and Investment Co. Ltd.2  

15. Lord Watson in Dilworth v. Stamps Commr.3 made the following  classic statement: (AC pp. 105-06) “…  The  word  ‘include’  is  very  generally  used  in  interpretation  clauses in order to enlarge the meaning of words or phrases occurring  in  the  body of  the  statute;  and when it  is  so  used these  words  or  phrases must be construed as comprehending, not only such things as  they signify according to their natural import, but also those things  which the interpretation clause declares that they shall include. But  the word ‘include’ is susceptible of another construction, which may  become imperative, if the context of the Act is sufficient to show that  it was not merely employed for the purpose of adding to the natural  significance of the words or expressions defined. It may be equivalent  to ‘mean and include’, and in that case it may afford an exhaustive  explanation of the meaning which, for the purposes of the Act, must  invariably be attached to these words or expressions.”

16. Dilworth3 and few other decisions came up for consideration in  Peerless General Finance and Investment Co. Ltd.2 and this Court  summarised the legal position that (Peerless case2, SCC pp. 449-50,  para 32) inclusive definition by the legislature is used: “32. … (1) to enlarge the meaning of words or phrases so as to take in  the  ordinary,  popular  and natural  sense  of  the  words  and also  the  sense  which  the  statute  wishes  to  attribute  to  it;  (2)  to  include  meanings about which there might be some dispute; or (3) to bring  under  one  nomenclature  all  transactions  possessing  certain  similar  features but going under different names.”

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17. It goes without saying that interpretation of a word or expression  must  depend  on  the  text  and  the  context.  The  resort  to  the  word  “includes”  by  the  legislature  often  shows  the  intention  of  the  legislature that it wanted to give extensive and enlarged meaning to  such expression. Sometimes, however, the context may suggest that  word  “includes”  may  have  been  designed  to  mean  “means”.  The  setting,  context  and object  of  an enactment  may provide sufficient  guidance for interpretation of the word “includes” for the purposes of  such enactment.”

20. Principles  of  Statutory  Interpretation  (12th Edition,  

2010) by Justice G.P. Singh, at pg. 181, has discussed  

in  detail  the  different  connotations  of  the  word  

‘include’ while laying stress on the restrictive as well  

as exhaustive explanation of the word ‘inclusive’ thus:

“The word ‘include’ is very generally used in interpretation clauses   in order to enlarge the meaning of words or phrases occurring in the   body of the statute; and when it is so used those words or phrases   must be construed as comprehending, not only such things, as they   signify according to their natural import, but also those things which  the  interpretation  clause  declares  that  they  shall  include.  But  the   word  ‘include’  is  susceptible  of  another  construction,  which  may  become imperative, if the context of the Act is sufficient to show that   it was not merely employed for the purpose of adding to the natural   significance of the words or expressions used. It may be equivalent to   ‘mean  and  include’  and  in  the  case  it  may  afford  an  exhaustive   explanation of the meaning which for the purposes of the Act must   invariably  attached  to  those  words  or  expressions.  Thus the  word   include may in certain contexts be a word of limitation.”

21. In view of the aforesaid reasons,  in our opinion,  the  

goods in question namely, the aluminium grills cannot  

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fit  into Item 7 of the Product Code 61 of the DEPB  

Schedule  in  order  to  claim  benefit  of  the  DEPB  

Scheme  and  therefore,  we  cannot  sustain  the  order  

passed by the Tribunal.

22. In the  result,  while  allowing the  appeal  filed  by the  

Revenue,  we  set  aside  the  impugned  judgment  and  

order  passed  by  the  Tribunal  and  restore  the  order  

passed by the Commissioner of Customs. No costs.

Ordered accordingly.  

.....................................J. (H.L. DATTU)

.....................................J. (ANIL R. DAVE)

NEW DELHI, FEBRUARY 14, 2012  

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