ASHIRWAD ISPAT UDYOG AND ORS.versusSTATE LEVEL COMMITTEE AND ORS.

A                   ASHIRWAD ISPAT UDYOG AND ORS.
                                            \I.

                    STATE LEVEL COMMITTEE AND ORS.

                                NOVEMBER 3, 1998
                                                                                           •.
B            [S.P. BHARUCHA AND S. RAJENDRA BABU, JJ.]


          SALES TAX:

          MP. General Sales Tax Act: Section 2(j).

C          "Manufacture"-Meaning-Construing of-Iron and steel scrap-
    Processing of-Held: Meaning of an expression construed with reference to
    one statute does not apply to other statutes unless the definition of the expression
    is similar-The plain construction of the definition in the statute must prevail-
    Hence, iron and steel scrap processing is manufacture-Interpretation of
D   Statutes.

          Words and Phrases:

          "Manufacture"-Meaning of-In the context ofS.2(j) ofthe MP. General
    Sales Tax Act.

E         The appellant purchased iron and steel scrap from a steel plant and
    cut down the scrap for being utilised by rolling mills and other
    manufacturers. The appellant obtained eligibility certificate from the
    respondent for exemption of tax under a Government notification issued
    under Section 12 of the M.P. General Sales Tax Act. Subsequently, the said
    eligibility certificate was cancelled on the ground that the iron and steel scrap
F   processing was not "manufacture" within the special definition of that word
    under Section 2(j) of the Act. The appellant filed a writ petition before the
    High Court challenging the aforesaid cancellation of the eligibility
    certificate, which was dismissed. Hence this appeal.

          Allowing the appeal, this Court
G
          HELD: 1.1. The meaning of an expression construed with reference
    to one statute does not apply to other statutes unless the definition of the
    expression is similar. The clear words of the definition, therefore, must be
    given due weight and cannot be overlooked merely because in other co11texts
    the word "manufacture" has been judicially held to refer to the pro<:ess of
H                                          542
    ASHIRWAD ISPAT UDYOG v. STA TE LEVEL COMMITTEE [S.P. BHARUCHA, J.J 543

manufacture of new articles. The plain construction of a special definition        A
of a word in a particular Act must prevail. (546-C)

      1.2. In the special definition given in Section 2(j) of the M.P. Generul
Sales Tax Act, the Word 'manufacture' has been defined as including a
process or manner of producing, collecting, extracting, preparing or making
any goods. There can be no doubt whatsoever that "collecting" goods does           B
not result in the production of a new article. There is, therefore, inherent
evidence in the definition itself that the narrow meaning of the word
"manufacture" was not intended to be applied in the said Act. Again, the
definition speaks of"the process oflopping the branches (of trees), cutting
the trunks". The lopping of branches and the cutting of trunks of trees also,      C
self~vidently, does not produce a new article. [546-D-F)


       1.3. The appellants treat iron and steel scrap of considerable bulk
cutting it down by mechanical processes into pieces that may be conveniently
utilised in rolling mills and foundries. Such treatment making saleable goods
would fall within the wide definition of "manufacture" under Section 2(j)          D
of the Act. [546-G)

    CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 12518-
12520 of 1996 Etc. Etc.
                                                                                   E
     From the Judgment and Order dated 13.5.96 of the Madhya Pradesh
High Court in M.P. Nos. 1333, 1430 and 2200 of 1991.

      K.K. Venugopal, B.Sen, Joseph Vellapally, S.K. Gambhir, Prakash
Srivastava, Lalit Ahluwalia, Praveen Kumar, Tarun Gulati, Vivek Gambhir,
U.U. Lalit, K.K. Gupta, S.K. Agnihotri, Mrs. Madhur Dadlani and Ms.                F
Kamakshi Mehlwal for the appearing parties.

      The Judgment of the Court was delivered by

       BHARUCHA, J. The principal judgment and order under appeal and              G
the orders following it, also under appeal, were passed by a Division Bench
of the High Court of Madhya Pradesh on writ petitions filed by the appellants.

      Very briefly stated, the facts are these : The appellants purchase iron
and steel scrap from the Bhilai Steel Plant and other parties. The scrap, in the
form of defective angles, channels, tubes and coils is of very considerable        H
    544                         SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A size. The appellants cut down the scrap so that it may be utilised by rolling
    mills and forging parts manufacturers, gear and pinion manufactures and dye
    block manufactures. The question is whether such cutting down, with the
    help of shearing machines and glass cutting, of the scrap of widths of 2' to
    5' and thickness upto 2.5" into strips of the size of 2" to 4" is a process of
B   "manufacture" within the special definition of that word in section 20) of the
    Madhya Pradesh General Sales Tax Act. The definition reads thus :

                 "2(1) "manufacture" includes any process or manner of producing,
            collecting, extracting, preparing or making any goods and in respect
            of trees which have been severed from the land or which have been
C           felled, also the process of lopping the branches, cutting the trunks or
            converting them into logs, poles or ballies or any other articles of
                                                                                 •
            wood, but does not include such manufacture or manufacturing process
            as may be notified.

          The State Government issued a notification on 16th October, 1986
D under Section 12 of the said Act granting exemption to dealers, who were
    registered under the said Act and had established eligible industrial units in
    any district in the State and held a provisional or permanent eligibility
    certificate issued by an officer authorised for the purpose, from paymi:nt of
    tax to the extent stated therein. Dealers registered with the Industries
E   Department of the Government of Madhya Pradesh who had set up small
    scale industrial units and who had made a capital investment in fixed assets
    above Rs. 10 lakhs were exempted from the whole of the tax if they had set
    up industries within the areas categorised therein for the periods set out
    thereagainst. The exemption was available subject to the condition, inter a/ia,
    that it "shall be available only in respect of the sales of the goods which the
F   dealer is licensed to manufacture and which are mdllufactured by him as also
    waste and by products obtained in the course of manufacture."

           Under the terms of the said notification the appellants obtained eligibility
    certificates from the District Level Committees established for the purpose,
G   after due enquiry and verification. The State Level Committees, aftc:r the
    lapse of some time, issued to the appellants notices requiring them to show
    cause why their eligibility certificates insofar as they related to iron and steel
    scrap processing should not be cancelled on the ground that no manufacture
    of new items resulted. The State Level Committees, ultimately did cancel the
    eligibility certificates on the said ground. In the case of C.A. Nos. 14156-
H   14158/96, Mis. Laxmi /spat Industries and Ors. v. State of MP., and of some
        ASHIRWAD ISPAT UDYOG v. STA TE LEVEL COMMITTEE [S.P. BHARUCHA, J.] 545

    others the eligibility certificates were refused. The appellants challenged the   A
    orders of cancellation/refusal by way of writ petitions.

.          The High Court, in the judgment under appeal, dismissing the writ
    petitions, placed great stress on decisions under the Excise Act and other
    statutes relating to the meaning of the word "manufacture" as used therein
    and concluded that the activity that was carried on by the appellants was not     B
    "manufacture" for "simply because iron scraps are purchased and cut in a
    manner required by various customer, that will not change the basic character
    of iron scrap and it is only the processing by twisting, fabricating or giving
    it a particular shape required by customers. Such type of processing will not
    change the identity of the material and that will not amount to a manufacturing   C
    or processing of the same. As the definition of 'manufacture" given in the
    Sales Tax Act includes processing, therefore, such transformation of basic
    iron material into various shapes will not be treated to be manufacture so as
    to entitle for exemption under the exemption notification''.

           Learned counsel for the applicants submitted that it was clear from the D
    said Act that the definition of 'manufacture' therein was not restricted to the
    production of new articles. The said notification also indicated this when it
    stated that the exemption thereunder would not be available to "pressing of
    iron/steel scrap into blocks". Reliance was placed upon a notification issued
    on lst October, 1978 under the said Act wherein it was stated that the E
    "slaughtering of animals and obtaining meat, hides and skins" would not be
    treated as a process of manufacture for the purpose of the definition of
    "manufacture" in Section 2G). Reference was made to an order passed on 9th
    February, 1993 by the Board of Revenue, Madhya Pradesh, where the very
    same issue was considered in relation to some of the appellants in the context
    of suo motu orders passed by the Deputy Commissioner of Sales Tax holding F
    that the activity of the appellants was not covered by the said definition of
    "manufacture" and, accordingly, the raw materials specified in their registration
    certificates were ordered to be deleted. The Board of Revenue, analysing the
    said definition of "manufacture'', observed, "The process of manner of
    collecting or preparing do not mean to include collection or preparation of G
    new goods, but means to prepare the available goods to make it saleable.
    With this object the legislature have amended the definition of manufacture
    so as to widen the tax network. When the legislati.ire creates such definition
    with this object this Court do not derive powers to restrict the definition of
    manufacture for grant of benefits to new industrial units." In view of its
    discussion, the Board of Revenue held that, inspite of the fact that the raw H
    546                       SUPREME COURT REPORTS [1998] SUPP. 2 S.C.R.

A materials more or less retained their identity and no new product came into
    existence, the process and manner of the appellants' activity would amount
    to a process of "manufacture" within the meaning of that word in the said
    Act.
          Learned counsel for the respondents relied upon decisions pertainini: to
B the meaning of the word "manufacture", particularly under the Excise Act,
    and contended that since, admittedly, no new product emerged from the
                                                                                      t
    process employed by the appellants, there was no manufacture and, therefore,
    the High Court was right in the view that it took.

         Decisions construing the meaning of the word 'manufacture' as used in
C other statutes do not apply unless the definition of that word in the particular
  statute under consideration is similar to that construed in the decisions. The
  plain construction of the special definition of the word in a particular Act
  must prevail. In the special definition given in section 2(j) of the said Act
  'manufacture' has been defined as including a process or manner of producing,
D collecting, extracting preparing or making any goods. There can be no doubt
  whatsoever that "collecting" goods does not result in the production of a new
  article. There is, therefore, inherent evidence in the definition itself that the
  narrow meaning of the word "manufacture" was not intended to be applied
  in the said Act. Again, the definition speaks of "the proces:i of lopping the
  branches (of trees), cutting the trunks". The lopping of branches and the
E cutting of trunks of trees also, self evidently, does not produ•:e a new article.
  The clear words of the definition, therefore, must be given due weight and
  cannot be overlooked merely because in other contexts the word "manufacture"
  has been judicially held to refer to the process of manufacturn of new articles.

          The appellants treat iron and steel scrap of considerabfo bulk by cutting
F it down by mechanical processes into pieces that may be conveniently utilised
    in rolling mills and foundries. Such treatment making saleable goods, would,
    in our opinion, fall within the wide definition of "manufacture" under Section
    2(j) of the said Act.

          In the result, the appeals are allowed. The judgment and orders under
G appeal are set aside. Relief shall now be granted to the appellants by the
    respondent authorities in consonance with this judgment and order.
          No order as to costs.
    v.s.s.                                                       Appeals allowed.