Madras High Court
Ms.India Cements Ltd vs Cess Commissioner on 20 September, 2007
Author: K.Chandru
Bench: K.Chandru
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 20/09/2007 CORAM: THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.(MD)No.10169 of 2005 W.P.M.P.No.10871 of 2005 and W.V.M.P.No.67 of 2006 Ms.India Cements Ltd., Regd.Off:No.827, Anna Salai, Dhun Buildings, 4th Floor, Chennai 600 002, Rep by Rajan Ramani, General Manager Corporate Affairs. Factory: Sankar Nagar 627 357,' Thalayuthu, Tirunelveli District. ... Petitioner Vs. Cess Commissioner, Ministry of labour, Government of India, Office of Welfare & Cess Commissioner, Labour Welfare organisation, Kendriya Sadan, Sultan Bazar, Hyderabad 500 095. ... Respondent PRAYER Writ Petition filed under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorari, to call for the records of the respondent made in his proceedings No.121/1/2003-04, dated 29.09.2005 and 30.09.2005 and quash the same. !For Petitioner : Mr.S.Silambanan Senior For Mr.S.Karthik For Respondents : Mr.P.Krishnasamy AGSC :ORDER
Heard the arguments of Mr.S.Silambanan learned senior counsel appearing for Mr.S.Karthik and Mr.P.Krishnasamy ACGSC for respondent and have perused the records.
2. This Writ Petition is filed by a Cement Company challenging the two orders, dated 29.09.2005 & 30.09.2005 issued by the respondent/Commissioner.
3. The petitioner Company are having cement factories and also mining leases in respect of several limestone mines. By the orders of the State Government in G.O.3(D).No:68, Industries Department, dated 23.07.1999, they had obtained mining lease in an area comprising of 219.97.5 hectares in Kudankulam Village. Though the lease is for a period of five years, a further condition was put that they should vacate and give vacant possession as and when the land is required for the Kudankulam Atomic Power Project.
4. In order to provide for the levy and collection of a cess on limestone and dolomite for the financing of activities to promote the welfare of persons employed in the limestone and dolomite mines, the Parliament had enacted, "The Limestone and Dolomite Mines Labour Welfare Fund Act, 1972", (Central Act 62 of 1972) hereinafter referred to the Welfare Fund Act, 1972. By virtue of the powers conferred under Section 16 of the Act, rules have been framed by the Central Government known as "The Limestone and Dolomite Mines Labour Welfare Fund Rules, 1973".
5. Section 3 of the Act provides for levy and collection of Cess on Limestone & Dolomite. Section 4 provides for duty of Excise payable. Both Sections are usefully extracted below:-
"Section 3. Levy and collection of cess on limestone and dolomite.- With effect from such date as the Central Government may, by notification in the Official Gazette, appoint, there shall be levied and collected as a cess for the purposes of this Act on so much of limestone and dolomite produced in any mine--
(i) as is sold or otherwise disposed of to the occupier of any factory; or
(ii) as is used by the owner of such mine for any purpose in connection with the manufacture of cement, [iron, steel, ferro-alloys, alloy steels, chemicals, sugar, paper, fertilizers, refractories, iron ore pelletisation or such other article or goods or class of articles or goods as the Central Government may, from time to time, specify by notification in the official Gazette;
a duty of excise, at such rate not exceeding one rupee per metric tonne of limestone or dolomite, as the case may be, as the Central Government may, from time to time, fix by notification in the Official Gazette. Explanation- Where the owner of any limestone or dolomite mine is also the occupier of any factory, then for the purposes of Cl.(ii) all limestone or dolomite, as the case may be, produced in the mine and not sold or otherwise disposed of to the occupier of any other factory shall be deemed, unless the contrary is proved, to have been used by such owner for any purpose in connection with the manufacture of any article or goods referred to in or specified under Cl.(ii)";
"Section 4.Payment of duty of excise:- (1) Every duty of excise leviable under this Act on limestone or dolomite shall be payable:
(a) to the occupier of the factory, by the person by whom such limestone or dolomite is sold or otherwise disposed of to such occupier;
(b) to the Central Government, by the owner of the limestone or dolomite mine where the limestone or dolomite is used by such owner for any purpose in connection with the manufacture of any article or goods referred to in or specified under Cl. (iii) of Sec.3.
within such period as may be prescribed.
(2) All amounts referred to in Cl.(a) of sub-section (1) shall be collected by the occupier of the factory in such manner, and paid by him to the Central Government within such period, as may be prescribed."
6. For non-payment of dues, interest is payable as well as penalty is also provided. For the recovery of amounts due, the mechanism under the Revenue Recovery Act was to be utilised. Under Rule 44, the owner of a limestone mine or an occupier of a factory is bound to submit returns. Rule 44 providing for submission of returns is extracted below:-
"Rule 44.Submission of returns:-(1) Every owner of a limestone or dolomite mine and every occupier of a factory receiving limestone or dolomite shall submit to the Commissioner. In duplicate, a return in Form D and Form E, respectively for each month in accordance with the entries made in the register maintained under sub-rule (1) or sub-rule (2) of rule 43, as the case may be, duly signed by him or any other person authorised by him in this behalf, so as to reach the Commissioner not later than the last day of the month following the month to which the return pertains.
(2) If by reason of the fact that no limestone or dolomite was produced or disposed of in any manner by the owner of a mine, or likewise no limestone or dolomite was received or no duty of excise collected by the occupier of the factory, during any month, such owner or the occupier, as the case may be, shall submit to the Commissioner. In duplicate, a nil return for that month, accompanied by a certificate to the effect duly signed by him or any other person duly authorised by him in this behalf, so as to reach the Commissioner not later than the last day of the month following the month to which the return pertains.
(3) Notwithstanding anything contained in sub-rule (1), or sub-rule (2), if the Commissioner is satisfied with respect to the owner of any mine that no limestone or dolomite was produced or disposed of by him, or respect to the occupier of any factory that no limestone or dolomite or duty of excise was received by him, during the preceding twelve months, he may by a permit in writing allow such owner or occupier to submit in place of monthly return, a consolidated return in Form D and Form E, as the case may be, for such period not exceeding one year as may be specified in the permit and the consolidated return so submitted shall reach the Commissioner not later than the last day of the month immediately following the period specified in the permit. (4) A return under sub-rule (1),(2) or (3) shall be sent by registered post with acknowledgment due."
7. In the light of the annual return submitted by the petitioner in form H-8 for the year 2003-2004 for the Kudankulam limestone mine was examined by the respondent. In respect of Kudankulam mines the figures furnished by the petitioner did not tally with the production as well as the closing balance. The figures shown in form H-B are as under:-
Opening Balance Production Dispatches from mine head Closing balance at mine head 24,40,289.77 14,00,332.83 9,07,192.49 29,33,430.11
8. The respondent found that in respect of Kudankulam mines, the production of dispatch figures are different and as per the Welfare Fund Act, 1972, they had paid Cess only on the dispatched quantity. It was stated that on enquiry, the petitioner has kept two stock points. One near the mine and another at 5 KM away from the mines. In the stock point near the mine is a non-royalty and non-cess paid raw material are stored. The other stockyard at 5 KM away is a royalty and Cess paid materials are kept.
9. The Senior Mines Manager of the petitioner company confirmed to the respondent that 29,33,430 Metric tonnes was kept at the mine site. Therefore, it was demanded by the respondent that they must pay Rs.29,33,430/- as on 31.03.2004 at the rate of Rs.1/- per tonne. This was intimated by the impugned notice dated 29.09.2005 and by a further demand notice dated 30.09.2005, directing the petitioner to pay the entire amount of Rs.29,33,430/- together with interest at a rate of 12% p.a in terms of Section 11 of the Welfare Fund Act, 1972.
10. Mr.S.Silambanan, the learned Senior Counsel contented that it is only when the limestone is quarried and taken for captive consumption or sold or otherwise disposed of the duties payable under the Act. In the present case, in view of the peculiar arrangement with the Government in terms of the lease deed, the petitioner had quarried more than the requirement and therefore, it will be inequitable to pay cess on the non-royalty paid limestone. This argument overlooks the explanation appended to Section 3 under the Welfare Act, 1972. It is not the difficulties of the petitioner, which has to be taken into account. The further contention that only when the limestone is sold, their liability arises is contrary to the provisions of the Act.
11. The Act is intended to give effect to Article 39-b and 39-c of the Constitution of India. The Supreme Court vide its Judgement relating to Hindustan Steel Works Construction Ltd., Vs. Limestone and Dolomite Mines Welfare And Cess Commissioner and Another reported in [1996] 10 SCC 188, dealt with the provisions of the Act in question and directed as to how the Act should be interpreted when there was any doubt. The following passage found in paragraph 3 is usefully extracted below:-
"It has to be borne in mind that the primary purpose of the Act is to build a Labour Welfare Fund, a measure well deserved for the Labour, and the excise duty imposed is in the nature of a cess to achieve that purpose. So the provision by its own compulsion requires to be construed widely as otherwise the purpose of legislation would be frustrated".
12. In the light of the above, this Court has no hesitation to reject the contentions put forth on behalf of the petitioner. The orders passed by the respondent does not suffer from any infirmity or illegality. Accordingly, this Writ Petition stands dismissed. No costs. The connected M.P.No.10871 of 2005 will stand dismissed. W.V.M.P.No.67 of 2006 will stand closed as unnecessary. The Writ Petitioner is directed to comply with the impugned orders within a period of two weeks from the date of receipt of a copy of this order.
To Cess Commissioner, Ministry of labour, Government of India, Office of Welfare & Cess Commissioner, Labour Welfare organisation, Kendriya Sadan, Sultan Bazar, Hyderabad 500 095.