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CASE NO.: Appeal (civil)  2408 of 2001

PETITIONER: South Eastern Coalfields Ltd.

RESPONDENT: Commissioner, Customs & Central Excise, M.P.

DATE OF JUDGMENT: 01/08/2006

BENCH: Ashok Bhan & Markandey Katju

JUDGMENT: J U D G M E N T (with C.A. Nos.1968-1971/2003 and 8403-8404/2003)

MARKANDEY KATJU, J.

       Civil Appeal No. 2408 of 2001 has been filed against  the impugned order dated 30.11.2000 passed by the  Customs, Excise and Gold (Control) Appellate Tribunal, New  Delhi.   

       We have heard learned counsel for the parties.

       The facts of the case are that the Central Electrical and  Mechanical Workshop at Korba was established by the  appellant, M/s. South Eastern Coalfields Ltd., at Korba in  1967 to facilitate repair of all mining machinery and  equipment used in the adjacent coal mines and other  collieries.  The Central Government declared this workshop  as a mine under the provisions of Section 82 of the Mines  Act, 1952 under certificate dated 1.5.1969.   

Section 2(J)(viii) of the Mines Act states that mine  includes "All workshop situated within the precincts of a  mine and under the same management and used solely for  purposes connected with that mine or a number of mines  under the same management."

Notification No.63/95-CE dated 16.3.1995 was issued  by the Central Government under Section 5A(1) of the  Central Excises and Salt Act, 1944 read with sub-section (3)  of Section 3 of the Additional Duties of Excise (Goods of  Special Importance) Act, 1957 exempting all goods  manufactured in a mine from duties of excise and additional  duties of excise.  The explanation to that notification stated  that the word "mine" will have same meaning as assigned to  it in clause (j) of Section 2 of the Mines Act, 1952.

A show cause notice was issued to the appellant by the  Superintendent of Central Excise, Range-Korba vide office  letter dated 3.9.1996 for recovery of central excise duty  amounting to Rs.31,59,704/- under the provisions of Rule  9(2) read with Section 11A of the Central Excise Act, 1944,  alleging contravention of Rules 9(1), 52A, 53, 173B, 173C,  173G, 174 and 226 read with Notification No.63/95-CE

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dated 16.3.1995 as amended. Further, for the contravention  of the aforesaid Rules imposition of interest and penalty was  also proposed.  In the show cause notice it was stated that  the appellant did not appear to be entitled to the exemption  as provided in Notification No.63/95-CE dated 16.3.1995 as  amended.

The appellant submitted its reply to the show cause  notice, on 6.10.1998, in which they referred to their earlier  letter dated 5.9.1998 submitted with reference to the earlier  show cause notice. The appellant was also heard personally.  The defence of the appellant was that the workshop is  situated within the precincts of a mine and hence was  entitled to the exemption under the Notification No.63/95- CE.   

The Commissioner by his order dated 22.6.1999 held  against the appellant and ordered the payment of duty  amounting to Rs.31,59,704/- as mentioned in the show  cause notice and also directed recovery of interest and  penalty for contravention of various rules.

The appellant filed an appeal before the CEGAT, which  by order dated 30.11.2000 held that the goods produced by  the appellants, were dutiable and the appellant would not  entitled to the exemption contained in the Notification  No.63/95-CE.  The Tribunal confirmed the demand of excise  duty under the order of the Commissioner but set aside the  penalty imposed on the appellants.  Aggrieved, this appeal  has been filed in this Court.

In our opinion, this appeal deserves to be allowed.  As  already stated above, the exemption under Notification  No.63/95-CE dated 16.3.1995 exempted all goods  manufactured in a mine from excise duty.  The Explanation  to the exemption notification states that "mine" has the  meaning assigned to it in Section 2(j) of the Mines Act,  1952.  Clause (viii) of Section 2(j) of the Mines Act, 1952  defines "mine" to include "all workshops and stores situated  within the precincts of a mine and under the same  management and used solely for the purposes connected  with the mine or a number of mines under the same  management".

The question, therefore, in this case is that "whether  the workshop in question can be said to be situated within  the precincts of the mine".   

Before the Tribunal reliance was placed by the learned  counsel for the assesse on an earlier order of the Tribunal in  Central Coalfields Ltd. vs. CCE, Jamshedpur dated  16.9.1997, in which it was held that the word "precincts"  cannot be restricted to an area of four Kms.  In that case  the Tribunal held that the workshop in question was situated  within the precincts of the mines to which it was catering,  even though it was situated at a distance of 50 Kms. from  the said mine.   

In the present case the Tribunal  rejected the  assessee’s claim for exemption on the ground that since the  mine was registered under the Factories Act, it cannot have  the benefit of exemption in the Notification No.63/95-CE  since as per Section 2(m) of the Factories Act a factory  means any premises including the precincts thereof but does  not include a mine subject to the operation of the Mines Act,

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1952.

In our opinion the registration of a mine under the  Factories Act has nothing to do with the assessee’s claim for  exemption under the Central Excise Act.  In fact the  reference to the Factories Act itself was wholly irrelevant  and we fail to see what the Factories Act has to do with the  present case.  The present case is covered by the Central  Excise Act and has nothing to do with the Factories Act.  Hence the view taken by the Tribunal is, with due respect to  it, clearly erroneous.   

It has to be considered in the present case whether the  workshop in question is said to be a workshop within the  precincts of a mine.   

The word ’precincts’ is not a word of clear import which  has a single, clear-cut meaning.  Collin’s English  Dictionary defines ’precincts’ to mean "the surrounding  region or area".

In the New Shorter Oxford English Dictionary, the  word ’precinct’ is shown to have several meanings among  which are the following:    

"The area within the boundaries (real or  imaginary) of a building or place; the  grounds; the interior; esp. an enclosed  or clearly defined area around a  cathedral, college, etc. Also, the  surroundings or environs of a place."

       In the Advanced Law Lexicon, 3rd Edition, by  P.Ramanatha Aiyar, the word ’precinct’ has been shown to  have several meanings including a space enclosed by walls  or other boundaries.

       In Black’s Law Dictionary, 7th Edition, the word  ’precinct’ is defined as follows:

"A geographical unit of government,  such as an election district, a police  district, or a judicial district."   

From a perusal of the above definitions, it appears that  the word "precincts" does not have a single meaning, rather  it has several meanings.

One word can have several meanings, and one  meaning can have several words (synonyms). For instance,  the word ’ball’ can mean a round object for playing games  like cricket, football, etc; it can also mean a dance; it can  also mean having a nice time, etc.  Similarly, in Sanskrit the  words "kamal", "pankaj", "rajeev", "neeraj", "jalaj", "saroj",  etc. have the same meaning i.e. Lotus.

According to the literal rule of interpretation, if the  meaning of a word or expression is clear, there is no scope  for interpretation and we have to follow the plain and  grammatical meaning.

However, where the meaning of a word or expression is  not clear, obviously the literal rule of interpretation cannot

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be applied, and hence we have to take resort to other rules  of interpretation e.g. the Heydon’s mischief rule, the  purposive rule, etc.  In our opinion in the present case the  purposive rule should be applied.  Under this rule, we have  to see the purpose for which the provision was made.   Looking at it from this angle, we are of the opinion that the  word ’precincts’ has to be given the broader meaning and  not the narrower meaning.     In other words, we have to interpret the word ’precinct’  in the exemption notification to mean the surrounding region  or area, as defined in Collins English Dictionary or the  surroundings or environs of a place as defined in the New  Shorter Oxford English Dictionary.  This is because the  purpose of the exemption notification is to grant exemption  from excise duty to goods produced in a mine so as to  encourage the mining industry.  A workshop which is in an  area in the environs of a mine and is existing solely for the  purpose connected with the mine and under the same  management, is obviously directly serving the mining  operations.  Hence, we have to interpret the notification so  as to include such a workshop within the definition of a mine  for the purpose of grant of exemption, as that would  encourage the mining industry.

     For the reasons given above the appeal is allowed.   The impugned order is set aside.  No costs.

Civil Appeal Nos. 1968-1971/2003 & 8403-8404/2003

       In view of the decision in Civil Appeal No.  2408/2001, these appeals are allowed. The impugned orders  are set aside.  No costs.