Orissa High Court
Orissa Cement Ltd. And Anr. And Mukund ... vs Union Of India (Uoi) And Ors. on 17 April, 1995
Equivalent citations: 1995(51)ECC90, 1995(80)ELT255(ORI), 1995(II)OLR318
Author: G.B. Patnaik
Bench: G.B. Patnaik
JUDGMENT G.B. Patnaik, J.
1. In these two writ applications, notice to show cause issued by the Additional Collector, Central Excise and Customs and to pay up the demand amount on the allegation that the petitioner has wilfully contravened the provisions of the Central Excises and Salt Act read with Rules 9(1), 49, 52-A. 173-B, 173-C and 173-G of the Central Excise Rules, 1944,is being challenged. Since identical question of law is involved, on consent of parties, the two writ applications were heard together and are being disposed of by this common judgment.
2. The short question that arises for consideration is whether on the facts averred in the Notice to show cause, it can be said by this Court that there has been no contravention of the provisions of the Act and the Rules, as alleged, and as such the notice would be quashed? Incidentally, it is also necessary to determine the question whether crushing of limestones to small pieces, for manufacture of cement clinker tantamounts to "manufacture" under Section 2(f) of the Central Excises and Salt Act (hereinafter referred to as the "Act'') read with Chapter Note-2 of Cinpter-25 of the Central Excise Tariff Act,
3. The petitioner had a valid Central Excise Licence for manufacture of cement and clinker. In OJC No. 5778/92, notice under Annexure-1 dated. 15-11-1991 was served upon the petitioner on 16-11-1991 calling upon the petitioner to show cause as to why Central Excise Duty amounting to Rs. 47,226/- has not been paid on manufacture of limestone during the period 20-3-1990 to 16-6-1990 and why penalty should not be imposed under Rules 9(2), 52-A (5) and 173-C of the Central Excise Rules (hereinafter referred to as the "Rules") for the alleged contravention of the provisions of the Act and the Rules, as indicated in the notice. Similar notice dated 9-4-1992 was served upon the petitioner in OJC No. 3736/92 on 17-4-992 raising to show cause as to why Central Excise Duty amounting to Rs. 44,65,155/- has not been paid on manufacture of limestone during the period 20-3-1990 to 16-9-1990 and why penalty should not be imposed for the alleged contravention of the provisions of the Act and the Rules as indicated in the said notice, annexed as Annexure-1. The Central Excise authorities had indicated in the notice that crushing of limestone by the petitioner tantamounts to manufacture within the meaning of Section 2(f) of the Act read with Chapter Note-2 of Chapter-25 of the Central Excise Tariff Act and accordingly non-deposit of the Duty wilfully, tantamounts to violation of the provisions of the Act and the Rules and as such the petitioner is liable for levy of penalty. On receipt of the aforesaid notice instead of showing any cause, the petitioner in each of the writ applications has approached this Court on the ground that the notice is without jurisdiction and obtained an interim order from this Court directing stay of operation of the notice under Annexure-1.
Mr. Rath appearing for the petitioner contends that crushing of limestone from big pieces to smaller pieces does not amount to "manufacture" under Section 2(f) of the Act and the deeming provision of "manufacture" under Chapter Note-2 of Chapter-25 also does not state it to be a case of "manufacture" and consequently, the notice must be held to be without jurisdiction.
4. On behalf of the Central Excise authorities, a counter affidavit has been filed and the stand taken In the counter affidavit is that on the assertion made in the notice to show cause, it is not possible for this Court to come to the conclusion that there has been any inherent lack of jurisdiction with the Central Excise authority to issue the notice in question and, therefore, the Court would not be competent to interfere at the stage. The further stand taken is that the crushing of big limestone into smaller pieces does amount to "manufacture" under Section 2(f) of the Act, therefore the petitioner must be held to have violated deliberately the provisions of the Act by nonpayment of the Duty and accordingly the authorities were justified in initiating the proceeding for levy of penalty.
5. In view of the rival stands of the parties, the first question that arises for consideration is as to under what circumstances, the High Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution can even interfere with a notice issued by the authority to show cause as to why penalty will not be levied or demand will not be raised. Generally a writ application at the stage of issue of show cause notice is not entertained being premature, inasmuch as all objections to the notice can be raised before the authority issuing such notice. At that stage it will not be appropriate for the High Court to hold that the concerned authority which has issued the notice will not go into the objections raised by the person who has been called upon to file the show cause. But if the authority purports to take any action which is prima facie shown to be null and void and if it is shown that the authority is devoid of any jurisdiction then the proceeding itself would be liable to be quashed and the person to whom notice has been issued could approach the Court even at the stage of show cause notice. In other words, if the allegations in the notice do not make out the offence for which the notice has been issued, then it would be a case of total lack of jurisdiction on the part of the concerned authority and in such a case the High Court can interfere even at the issuance of notice stage. But on examining the notice to show cause if it is found that certain evidence has to be led on consideration of which only it can be said either the authority lacks jurisdiction or not, then the High Court will not be justified to interfere at the stage of issuance of notice.
This being the position of law, the next question that arises for consideration is whether in crushing of big limestones to smaller pieces for being used in the manufacture of clinkers] any process of manufacture of small pieces of limestone can at all be said to be involved within the meaning of Section 2(f) of the Act. In view of the inclusive definition of the expression manufacture under Section 2(f) of the Act, it would, therefore be necessary to decide whether the deemed definition under Chapter Note-2 of Chapter-25 of the Central Excise Tariff Act, it would tantamount to ''manufacture". Mr. Rath's contention on this score is that the expression "manufacture" should imply a change, a transformation or a new and different article emerging having a distinctive name, character or use. This contention is advanced on the basis of the decision of the Supreme Court In the case of Union of India and Anr. v. Delhi Cloth and General Mills Co. Ltd. etc., AIR 1963 SC 791. But the aforesaid decision will be not of much assistance to the petitioner's contention whether under the statute itself, the expression has been defined and, therefore, in a proceeding under the provisions of the Central Excise and Salt Act, as in the present case, it has to be decided in terms of Section 2(f) read with Chapter Note-2 of Chapter-25 of the Central Excise Tariff Act.
The word "includes" is used in interpretation clauses to enlarge the meaning of the words in the statute. When such word is used in an interpretation clause, it 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. A Court of law in coustruing a statute with an interpretation clause using the expression "includes" is bound to give effect to the direction in the statute itself unless it can be shown that the context of that particular passage where the expression is used shows clearly that the meaning is not in this place to be given effect to. The Supreme Court in the case of The Corporation of the City of Nagpur v. Its Employees, etc., AIR 1960 SC 675, held that an inclusive definition is a well-recognised device to enlarge the meaning of the word defined and, therefore, the word "industry" must be construed as comprehending not only such things as it signifies according to its natural import but also those things the definition declares that it should include. If a definition has been given to a word in any Act then such definition should normally be adopted in interpreting the statute. Under Section 2(f) of the Central Excise and Salt Act, the expression "manufacture" includes any process: (i) incidental or ancillary to the, completion of a manufactured product: (ii) which is specified in relation to any goods in the section or Chapter Notes of the Schedule to the Central Excise Tariff Act, 1985, as amounting to "manufacture" Under Chapter Note-2 of Chapter-25, except where their context otherwise requires in heading Nos. 25.01, 25.03 and 25.05 products which have been washed, crushed, ground, powdered, levigated, sifted, screened or concentrated by flotation, magnetic separation or other mechanical or physical processes have been indicated. It is because of this artificial definition in Chapter Notes, the petitioner is said to have been involved in the manufacturing of limestone and has not paid any Duty thereon. Mr. Rath's main argument is that in Chapter Note-2 of Chapter-25 (heading NO 25.05) it has not been stated to be "manufacture" whereas in several other Chapter Notes, it has been clearly indicated that it shall amount to manufacture : See Chapter Note-2 of Chapter-9, Chapter Note-3 of Chapter-21, Chapter Note-2 of Chapter-24, Chapter Note-5 of Chapter-30, Chapter Note-6 of Chapter-32, Chapter Note-4 of Chapter-33, Chapter Note-6 of Chapter-39, Chapter Note-4 of Chapter-51, Chapter Note-7 of Chapter-58, Chapter Note-2 of Chapter-83 and Chapter Note-3 Chapter-87. But in view of the inclusive definition of "manufacture" and in view of Section 2(f)(ii) and Chapter Note-2 of Chapter-25, whether in a given case, the process is "manufacture" or not has to be adjudged and determined having regard to the facts and circumstances of the case and in this view of the matter Whether the operation of crushing bigger limestones to smaller pieces would tantamount to "manufacture" in view of the extended meaning of definition, would depend upon the facts of the case. In view of the aforesaid conclusion of ours, it would be difficult for us to hold that the notice to show cause has been issued without jurisdiction and, on the other hand, this will be a matter to be gone into in the proceeding that has been initiated.
6. In view of the aforesaid conclusion, in the facts and circumstances of the present case, the writ application must be held to be premature, and the notice to show cause cannot be quashed in exercise of jurisdiction under Article 226 of the Constitution. Each of the writ applications accordingly fails and is dismissed.
Since the petitioner had approached this Court on receipt of notice to show cause, and had obtained an interim order of stay, if no show cause has been furnished, then the petitioner should file show cause within four weeks from today whereafter the authority issuing the notice would conclude the proceeding in accordance with law.
We make no order as to costs.
D.M. Patnaik, J.
I agree.