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PETITIONER: M/S. MSCO. PVT. LTD.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT31/10/1984

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) MISRA, R.B. (J)

CITATION:  1985 AIR   76            1985 SCR  (1)1146  1985 SCC  (1)  51        1984 SCALE  (2)676  CITATOR INFO :  RF         1989 SC2278  (9)

ACT:      The  Customs   Act,   1962-Words   "industrial   units" occurring in  the Notification  issued under the Act-Meaning of.      Interpretation  of   statutes-Word   occurring   in   a particular statute  or statutory  instrument-Statute  silent about definition  of the Word-Whether it must be interpreted according to  the subject-matter  of  the  statute  and  not according to  the definition  of the same word given in some other statute.

HEADNOTE:      The appellant  imported some  stainless steel plates at concessional rate  of import duty under a notification which provided : (i) that the importer should import the goods for the manufacture  of all  or any of the articles specified in that notification;  (ii) that  the articles  so manufactured had to be sold to industrial units for their use; (iii) that in case  of violation  of any  one of  the conditions above- mentioned, the  importer was  liable to  pay, in  respect of such quantity  of goods  as  is  not  proved  to  have  been utilised as  per the  notification, an  amount equal  to the difference between  the duty  leviable on  such quantity but for the  exemption contained  in the  notification and  that already paid  at the  time  of  importation.  The  appellant submitted a certificate that the goods imported by him under the notification  had been  consumed and/or  utilised as per the notification.  But the  Assistant Collector  of  Customs rejected the  said certificate  and held  that the appellant was liable to pay the deficient duty in respect of the goods which had  been sold  to hospitals/nursing  homes since they were not  "industrial  units"  within  the  meaning  of  the Customs  Act,  1962.  The  Collector  of  Customs  (Appeals) confirmed the  order in appeal. The revision petition of the appellant before  the Customs,  Excise  and  Gold  (Control) Tribunal, also failed.      The appellant contended before this Court that the word ’industrial units’  contained in  the notification should be given the same meaning as is assigned to the word ’industry’ in the Industrial Dispute Act, 1947.

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    Dismissing the appeal, ^      HELD: (1)  The expression ’industry’ has many meanings. It means  ’skill’,  ’ingenuity’,  ’dexterity’,  ’diligence’, ’systematic work  or labour’,  ’habitual employment  in  the productive arts’,  ’manufacturing establishment  etc.  While construing a  word which  occurs in a statute or a statutory instrument in the 1147 absence of  any definition  in that very document it must be given  the  same  meaning  which  it  receives  in  ordinary parlance  or   understood  in  the  sense  in  which  people conversant  with  the  subject  matter  of  the  statute  or statutory instrument  understand  it.  It  is  hazardous  to interpret a  word in  a accordance  with its  definition  in another statute  or statutory  instrument and  more so  when such statute or statutory instrument is not dealing with any cognate subject.                                           [1149 H; 1150 A-B]      Craies on statute Law [6th Edn.] p. 164 referred to.      (2) ’Industry’  in the  wide sense of the term would be capable of  comprising  three  different  aspects:  (1)  raw materials which  are an  integral  part  of  the  industrial process, (2)  the process  of manufacture or production, and (3) the  distribution of  the products  of the  industry. An analysis of  Entry 24  and 27 of List II, Entry 52 of List I and Entry  33 of  List III  of the  Constitution shows  that ’industry’ ordinarily  means the  process of  manufacture or production.                                         [1151 E- F]      Sh. Tika  Ramji &  Ors. etc.  v.  The  State  of  Uttar Pradesh & Ors. [1956] S.C.R. 393 at p. 420 followed.      (3) It  is true  that in  the Bangalore  Water Supply & Sewerage Board,  etc. v.  R. Rajappa  & Ors. [1978]3 SCR 207 this Court  has held  that hospitals  would also come within the definition  of the  expression ’industry’  given in  the Industrial Dispute  Act, 1947. But that definition cannot be used for  interpreting the word ’industry’ in a notification granting exemption  from customs duty under the Customs Act, 1962. When  the word  to be  construed is  used in  a taxing statute or  a notification  issued thereunder  it should  be understood in its commercial sense. [1151 B-C]      (4) The  new definition given to the word ’industry’ by Parliament in  the Industrial Disputes (Amendment) Act, 1982 (46  of  1982)  also  specifically  excludes  ’hospitals  or dispensaries’ from the category of ’industry’. It shows that the meaning  given  to  the  expression  ’industry’  in  the Industrial Disputes  Act, 1947 cannot be depended upon while construing other  statutes or  statutory instruments  and it should be  confined to  the Industrial  Disputes Act,  1947. Therefore, the  word ’industry’  means only  the place where the process of manufacture or production of goods is carried on  and   it  cannot   in  any  event  include  ’hospitals’, dispensaries or nursing homes. [1151 G-H; 1152 A-B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 3744 of 1984      From the Judgement and order dated the 25th April, 1984 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. C.D.(SB) (T) A.No. 170 of 1980 Order No. 297-B of 1984.      V.N. Deshpande and E.C. Agarwala for the Appellant.

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    The Judgement of the Court was delivered by 1148      VENKATARAMIAH, J.  This appeal  is filed  under section 130-E(b) of the Customs Act, 1962 against Order No. 297-B/84 dated April  25, 1984 passed by the Customs, Excise and Gold (Control) Tribunal, New Delhi.      The appellant  imported two consignments weighing 0.955 m. tonne  and 1.071  m. tonnes  of  stainless  steel  plates covered by  Bill of  Entry No.  725/111 dated August 2, 1979 and  Bill   of  Entry   No.  520/250  dated  July  16,  1979 respectively. Under  section 12 of the Customs Act, 1962 the appellant was  liable to pay customs duty in accordance with Heading No.  73.15 of  the First  Schedule  to  the  Customs Tariff Act  1975 at the standard rate of 22% ad valorem. But under the  notification dated  July 15, 1977 an importer was liable to  pay import  duty of  40% only  on the  said goods provided the conditions mentioned therein were satisfied. In order to  avail of  the said  concessional rate  of duty the importer should  import the goods for the manufacture of all or any  of the  articles specified  in that notification and should bind  himself by the execution of a bond in such form and for  such sum  as may  be  specified  by  the  Assistant Collector of  Customs to  pay on  demand in  respect of such quantity of imported stainless steel plates as is not proved to the satisfaction of the Assistant Collector of Customs to have been  used for  such manufacture an amount equal to the difference between  the duty  leviable on  such quantity but for the  exemption contained  in the  notification and  that already paid  at the  time of  importation. It  was  further provided that the articles so manufactured had to be sold to industrial units for their use and payment for such articles was to be made by the concerned industrial unit by a crossed cheque drawn  on the  buyer’s own  bank account. Accordingly the appellant  executed two bonds which were guaranteed by a branch of  the Dena  Bank and  cleared the  goods by  paying customs duty  at the concessional rate undertaking to comply with the  requirements of  the notification. Subsequently on March 10,  1980, the  Assistant Collector  called  upon  the appellant  to   pay  full   customs  duty   as  the  end-use certificates in  respect of  the goods  in question  had not been filed before the Customs Department. Then the appellant forwarded the  required certificates issued by its Chartered Accountants certifying  that the  goods had been consumed in the  manufacture   of  the   articles   specified   in   the notification such as pharmaceutical machineries (equipment), pressure vessels,  jacketed vessels  etc. and  the same  had been sold to fertilizers and chemical industry and petroleum and oil  refinery industry.  But the  Assistant Collector of Customs  directed  the  payment  of  Rs.  24,244/-  and  Rs. 26,850/- being  the deficient duty payable in respect of the two consignments  in terms  of the bonds stating that in the course of investigation 1149 it was  revealed that  the appellant  had sold  some of  the manufactured items  to a  local dealer and not to industrial units for their own use and that some items had been sold to hospitals/nursing homes  which were  not  industrial  units. Aggrieved by  the  order  of  the  Assistant  Collector  the appellant filed  two appeals before the Collector of Customs (Appeals), Bombay,  contesting inter  alia the  finding that hospitals were not industrial units. The Appellate Collector rejected  the  appellants  contention  that  hospitals  were industrial units  and hold  that  as  far  as  the  supplies effected by  the appellant  to hospitals  and nursing  homes were concerned  the condition  that the  manufactured  goods

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should be  sold to  industrial units had not been fulfilled. The appeals  were rejected  to that  extent. The  cases were remanded  however  to  the  Assistant  Collector  for  fresh decision on  another issue  with which we are not concerned. Against the  common order passed by the Collector of Customs (Appeals) in  the above said two appeals the appellant filed a revision  petition under  section 131  of the Customs Act, 1962, as it then stood, before the Government of India. That revision petition was later on transferred to the above said Tribunal. The appellant also filed another appeal before the Tribunal directly  since there  were two  appeals before the Appellate Collector.  The principle  contention urged before the Tribunal  was that  the Department  was wrong in holding the hospitals  and nursing  homes were not industrial units. The Tribunal  rejected that  contention  and  dismissed  the appeals. This  appeal is  filed against  the  order  of  the Tribunal.      When the  above case  came up  for admission  the  only ground urged  by the  learned counsel  for the appellant was that the  Tribunal was  not right  in holding that hospitals and nursing  homes were  not  industries  and  reliance  was placed by  him  on  a  decision  of  this  Court  under  the Industrial Disputes Act, 1947 in which it had been held that hospitals,  dispensaries   and  nursing   homes  were   also industries. As  the appellant  has relied  on a  decision of this Court  arising under  the Industrial Disputes Act, 1947 in support of its case which requires to be distinguished we are passing this order giving our reasons although it is not usual to do so when an appeal is dismissed without notice to the respondents.      The expression  ’industry’ has  many meanings. It means ’skill’, ’ingenuity’,  ’dexterity’, ’diligence’, ’systematic work or  labour’, ’habitual  employment  in  the  productive arts’,  ’manufacturing   establishment’  etc.,   But   while construing a  word which  occurs in a statute or a statutory instrument in the absence of any definition in 1150 that very  document it  must be given the same meaning which it receives  in ordinary parlance or understood in the sense in which  people conversant  with the  subject matter of the statute  or   statutory  instrument  understand  it.  It  is hazardous  to  interpret  a  word  in  accordance  with  its definition in  another statute  or statutory  instrument and more so  when such  statute or  statutory instrument  is not dealing with any cognate subject. Craies on Statute Law (6th Edn.) says thus and page 164:           "In  construing  a  word  in  an  Act  caution  is      necessary in  adopting the meaning ascribed to the word      in other  Acts. "It  would  be  a  new  terror  in  the      construction of  Acts of Parliament if we were required      to limit  a word  to an unnatural sense because in some      Act which  is not  incorporated or  referred to such an      interpretation is  given to it for the purposes of that      Act alone." Macbeth v. Chislett [1910] A.C. 220, 223."      When the  word to  be construed  is used  in  a  taxing statute or  a notification  issued thereunder  it should  be understood in  its commercial  sense. It  is well known that under the  law levying  customs duties  sometimes exemptions are given  from the  levy of  the whole or a part of customs duty when  the goods in question are sold either in the form in which  they are  received or  in a  manufactured or  semi manufactured state  to  a  manufacturing  establishment  for purposes of  using them  in manufacturing  finished or semi- finished goods  in order  to lessen the cost of machinery or equipment  employed   in  or  raw  materials  used  by  such

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manufacturing establishment.  The object  of  granting  such exemption  is   to  give   encouragement  to   factories  or establishments which  carry on  manufacturing business.  The appellant, however,  relies upon the meaning assigned to the word ’industry’  in the  Industrial Disputes  Act,  1947  in support of  its case.  The expression ’industry’ is no doubt given a  very wide  definition  in  section  2  (j)  of  the Industrial Disputes Act, 1947. It reads thus:           "2  (j)  ’industry’  means  any  business,  trade,      undertaking, manufacture  or calling  of employers  and      includes any  calling, service, employment, handicraft,      or industrial occupation or avocation of workmen."      The above  definition is  given in  the context  of the subject matter  with which the Industrial Disputes Act, 1947 is concerned.  The pith and substance of that act is to make provision for settlement of 1151 disputes between  employers and  employees in  institutions, establishments, industrial  or business  houses or factories of various  kinds. It  is true  that in the Bangalore Water- Supply and  Sewerage Board,  etc. v.  R. Rajappa & Ors. this Court has  hold that  hospitals would  also come  within the definition  of   the  expression  ’industry’  given  in  the Industrial Disputes  Act, 1947  which  is  as  wide  as  the legislature could have possibly made it. But that definition cannot be  used for  interpreting the  word ’industry’  in a notification granting  exemption from customs duty under the Customs Act,  1962. A  perusal  of  the  provisions  of  the Constitutions shows  that the expression ’industry’ does not ordinarily posses  such wide meaning. In Article 19 (6) (ii) the word  ’industry’ does not include ’trade’, ’business’ or ’service’ which  are specifically  referred to therein. Then we have  the expression  ’industry’ in  Entires 7  and 52 of List I,  Entry 24 of List II and Entry 33 of List III of the Seventh Schedule to the Constitution. The said expression in these  entries   does  not  include  trade  or  commerce  or distribution of goods which are found else where in the said Lists. What is of significance is that in List II ’hospitals and dispensaries’  are specifically  referred to  in Entry 6 and they  cannot, therefore,  possibly fall  under Entry  24 thereof which  refers to  ’industries’. As  observed by this Court in Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors.  ’industry’ in  the wide  sense of  the term would be capable of  comprising  three  different  aspects:  (1)  raw materials which  are an  integral  part  of  the  industrial process, (2)  the process  of manufacture or production, and (3) the  distribution of  the products  of the industry. But raw materials  are dealt  with by  Entry 27  of List II, the process of  manufacture or production by Entry 24 of List II except where  the industry  is a controlled industry when it would fall  under Entry 52 of List I and the products of the industry would  fall under  Entry 27 of List II except where they are  products of  controlled industry  when they  would fall under  Entry 33  of List  III.  An  analysis  of  these provisions  shows   that  ’industry’  ordinarily  means  the process of  manufacture or  production. We  have referred to the above  provisions of  the Constitution  only to show how that expression  is understood  ordinarily. It  may also  be relevant to  mention here  that the  new definition given to the word ’industry’ by Parliament in the Industrial Disputes (Amendment) Act,  1982 (46  of 1982)  specifically  excludes ’hospitals or dispensaries’ from the category of ’industry’. It shows that the meaning given to the expression ’industry’ in the Industrial 1152

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Disputes Act,  1947 cannot be depended upon while construing other statutes  or statutory  instruments and  it should  be confined to the Industrial Disputes Act, 1947. We are of the view that  in the  notification under which the exemption is claimed by  the petitioner,  the word  ’industry’ means only the place  where the process of manufacture or production of goods is  carried on  and it  cannot in  any  event  include ’hospitals, dispensaries or nursing homes’.      The decision  of the  Tribunal does  not call  for  any interference.      The appeal is therefore, rejected. M.L.A                                       Appeal dismissed 1