{"id":254839,"date":"1998-11-03T00:00:00","date_gmt":"1998-11-02T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ashirwad-ispat-udyog-ors-vs-state-level-committee-ors-on-3-november-1998"},"modified":"2018-05-14T22:56:17","modified_gmt":"2018-05-14T17:26:17","slug":"ashirwad-ispat-udyog-ors-vs-state-level-committee-ors-on-3-november-1998","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ashirwad-ispat-udyog-ors-vs-state-level-committee-ors-on-3-november-1998","title":{"rendered":"Ashirwad Ispat Udyog &amp; Ors vs State Level Committee &amp; Ors on 3 November, 1998"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Ashirwad Ispat Udyog &amp; Ors vs State Level Committee &amp; Ors on 3 November, 1998<\/div>\n<div class=\"doc_author\">Author: Bharucha<\/div>\n<div class=\"doc_bench\">Bench: S.P. Bharucha, S. Rajendra Babu<\/div>\n<pre id=\"pre_1\">           PETITIONER:\nASHIRWAD ISPAT UDYOG &amp; ORS.\n\n\tVs.\n\nRESPONDENT:\nSTATE LEVEL COMMITTEE &amp; ORS.\n\nDATE OF JUDGMENT:\t03\/11\/1998\n\nBENCH:\nS.P.  BHARUCHA, S.  RAJENDRA BABU\n\n\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n<p id=\"p_1\">J U D G M E N T<br \/>\nBHARUCHA, J.\n<\/p>\n<p id=\"p_1\">The principal judgment and order  under\t appeal\t and<br \/>\nthe orders following it, also under appeal, were passed by a<br \/>\nDivision  Bench\t of the High Court of Madhya Pradesh on writ<br \/>\npetitions files by the appellants.\n<\/p>\n<p id=\"p_2\">Very briefly stated, the facts\tare  these  :\t The<br \/>\nappellants  purchase  iron  and\t steel scrap from the Bhilai<br \/>\nSteel Plant and other parties.\tThe scrap, in  the  form  of<br \/>\ndefective  angles,  channels,  tubes  and  coils  is of very<br \/>\nconsiderable size.  The appellants cut\tdown  the  scrap  so<br \/>\nthat  it  may be utilised by rolling mills and forging parts<br \/>\nmanufacturers, gear and pinion manufactures  and  dye  block<br \/>\nmanufactures.\tThe  question  is whether such cutting down,<br \/>\nwith the help of shearing machines and glass cutting, of the<br \/>\nscrap of widths of 2&#8242; to 5&#8242; and\t thickness  upto  2.5&#8243;\tinto<br \/>\nstrips of the size of 2&#8243; to 4&#8243; is a process of &#8220;manufacture&#8221;<br \/>\nwithin\tthe  special definition of that word in section 2(j)<br \/>\nof the Madhya Pradesh General Sales Tax Act.  The definition<br \/>\nreads thus :\n<\/p>\n<p id=\"p_3\">\t&#8220;2(J&#8217;) &#8220;manufacture&#8221; includes any  process<br \/>\n\tor   manner   of   producing,  collecting,<br \/>\n\textracting, preparing or making any  goods<br \/>\n\tand  in\t respect  of trees which have been<br \/>\n\tsevered from the land or which\thave  been<br \/>\n\tfelled,\t also  the  process of lopping the<br \/>\n\tbranches, cutting the trunks or converting<br \/>\n\tthem into logs, poles  or  allies  or  any<br \/>\n\tother  articles\t of  wood,  but\t does  not<br \/>\n\tinclude such manufacture or  manufacturing<br \/>\n\tprocess as may be notified.\n<\/p>\n<p id=\"p_4\">The State Government issued a notification  on\t16th<br \/>\nOctober,  1986\tunder  Section\t12  of the said Act granting<br \/>\nexemption to dealers, who were registered under the said Act<br \/>\nand  had  established  eligible\t industrial  units  in\t any<br \/>\ndistrict  in  the  State and held a provisional or permanent<br \/>\neligibility certificate issued by an officer authorised\t for<br \/>\nthe  purpose,  from  payment  of  tax  to  the extent stated<br \/>\ntherein.  Dealers registered with the Industries  Department<br \/>\nof  the\t Government  of\t Madhya Pradesh who had set up small<br \/>\nscale industrial units and who had made a capital investment<br \/>\nin fixed assets above Rs.lO lakhs  were\t exempted  from\t the<br \/>\nwhole  of  the\ttax if they had set up industries within the<br \/>\nareas  categorised  therein  for   the\t periods   set\t out<br \/>\nthereagainst.\tThe  exemption\twas available subject to the<br \/>\ncondition, inter alia, that it &#8220;shall be available  only  in<br \/>\nrespect\t of  the  sales\t of  the  goods\t which the dealer is<br \/>\nlicensed to manufacture and which are manufactured by him as<br \/>\nalso waste  and\t by  products  obtained\t in  the  course  of<br \/>\nmanufacture.&#8221;\n<\/p>\n<p id=\"p_5\">Under\tthe  terms  of\tthe  said  notification\t the<br \/>\nappellants  obtained  eligibility  certificates\t  from\t the<br \/>\nDistrict Level Committees established for the purpose, after<br \/>\ndue enquiry  and  verification.\t The State Level Committees,<br \/>\nafter the lapse of  some  time,\t issued\t to  the  appellants<br \/>\nnotices\t requiring  them to show cause why their eligibility<br \/>\ncertificates insofar as they related to iron and steel scrap<br \/>\nprocessing should not be cancelled on  the  ground  that  no<br \/>\nmanufacture   of   new\t items\tresulted,  The\tState  Level<br \/>\nCommittees,   ultimately   did\t cancel\t  the\t eligibility<br \/>\ncertificates on\t the  said  ground.    In  the\tcase of C.A.<br \/>\nNos.l4156-14158\/96, M\/s.  Laxmi Ispat Industries &amp; Ors.\t Vs.<br \/>\nState of  M.P.\t  and  of  some\t  others   the\t eligibility<br \/>\ncertificates were  refused.    The appellants challenged the<br \/>\norders of cancellation\/refusal by way of writ petitions.<br \/>\nThe  High  Court,  in  the  judgment  under  appeal,<br \/>\ndismissing  the\t writ  petitions,  placed  great  stress  on<br \/>\ndecisions under the <a href=\"\/doc\/110162683\/\" id=\"a_1\">Excise Act<\/a> and other  statutes  relating<br \/>\nto the meaning of the word &#8220;manufacture&#8221; as used therein and<br \/>\nconcluded  that\t the  activity\tthat  was  carried on by the<br \/>\nappellants was not &#8220;manufacture&#8221; for  &#8220;simply  because\tiron<br \/>\nscraps are purchased and cut in a manner required by various<br \/>\ncustomer,  that\t will not change the basic character of iron<br \/>\nscrap and it is only the processing by twisting, fabricating<br \/>\nor giving it a particular shape required by customers.\tSuch<br \/>\ntype of processing will\t not  change  the  identity  of\t the<br \/>\nmaterial  and  that  will  not\tamount to a manufacturing or<br \/>\nprocessing of the same.\t As the definition of  &#8216;manufacture&#8221;<br \/>\ngiven\tin   in\t the  <a href=\"\/doc\/1645178\/\" id=\"a_1\">Sales  Tax  Act<\/a>  includes\t processing,<br \/>\nvarious\t shapes\t will not be treated to be manufacture so as<br \/>\nto entitle for exemption under the exemption notification&#8221;.<br \/>\nLearned counsel for the applicants submitted that it<br \/>\nwas  clear  from  the  said  Act  that\tthe  definition\t  of<br \/>\n&#8216;manufacture&#8217;  therein\twas not restricted to the production<br \/>\nof new articles.  The said notification also indicated\tthis<br \/>\nwhen  it  stated  that the exemption thereunder would not be<br \/>\navailable to &#8220;pressing of  iron\/steel  scrap  into  blocks&#8221;.<br \/>\nReliance  was  placed  upon  a\tnotification  issued  on 1st<br \/>\nOctober, 1978 under the said Act wherein it was stated\tthat<br \/>\nthe  &#8220;slaughtering  of animals and obtaining meat, hides and<br \/>\nskins&#8221; would not be treated as a process of manufacture\t for<br \/>\nthe  purpose  of  the definition of &#8220;manufacture&#8221; in <a href=\"\/doc\/1931703\/\" id=\"a_2\">Section<br \/>\n2(j)<\/a>.\tReference  was\tmade  to  an  order  passed  on\t 9th<br \/>\nFebruary,  1993\t by  the  Board\t of Revenue, Madhya Pradesh,<br \/>\nwhere the very same issue was considered in relation to some<br \/>\nof the appellants in the context of suo motu  orders  passed<br \/>\nby  the\t Deputy\t Commissioner  of  Sale Tax holding that the<br \/>\nactivity of the appellants  was\t not  covered  by  the\tsaid<br \/>\ndefinition   of\t &#8220;manufacture&#8221;\tand,  accordingly,  the\t raw<br \/>\nmaterials specified in their registration certificates\twere<br \/>\nordered to  be deleted.\t The Board of Revenue, analysing the<br \/>\nsaid definition of &#8220;manufacture&#8221;, observed, &#8220;The process  of<br \/>\nmanner\tof  collecting\tor  preparing do not mean to include<br \/>\ncollection or preparation of new goods, but means to prepare<br \/>\nthe available goods to make it saleable.  With\tthis  object<br \/>\nthe  legislature  have amended the definition of manufacture<br \/>\nso as to widen\tthe  tax  network.    When  the\t legislature<br \/>\ncreates\t such  definition with this object this Court do not<br \/>\nderive power to restrict the definition of  manufacture\t for<br \/>\ngrant  of  benefits to new industrial units.&#8221; In view of its<br \/>\ndiscussion, the Board of Revenue held that, inspite  of\t the<br \/>\nfact  that  the\t raw  materials\t more or less retained their<br \/>\nidentity and no new product came into existence, the process<br \/>\nand manner of the appellants&#8217; activity\twould  amount  to  a<br \/>\nprocess\t of &#8220;manufacture&#8221; within the meaning of that word in<br \/>\nthe said Act.\n<\/p>\n<p id=\"p_6\">Learned\t counsel  for  the  respondents\t relied upon<br \/>\ndecisions  to  the  meaning  if\t the   word   &#8220;manufacture&#8221;,<br \/>\nparticularly under the <a href=\"\/doc\/110162683\/\" id=\"a_3\">Excise Act<\/a>, and contended that since,<br \/>\nadmittedly, no new product emerged from the process employed<br \/>\nby  the appellants, there was no manufacture and, therefore,<br \/>\nthe High Court was right in the view that it took.<br \/>\nDecisions   construing\t the  meaning  of  the\tword<br \/>\n&#8216;manufacture&#8217; as used in other statutes do not apply  unless<br \/>\nthe  definition of that word in the particular statute under<br \/>\nconsideration is similar to that construed in the decisions.<br \/>\nThe plain construction of the  special\tof  the\t word  in  a<br \/>\nparticular Act\tmust prevail.  In the the special definition<br \/>\ngiven in <a href=\"\/doc\/197743596\/\" id=\"a_4\">section 2(j)<\/a> of the said Act &#8216;manufacture&#8217; has been<br \/>\ndefined as including  a\t process  or  manner  of  producing,<br \/>\ncollecting, extracting preparing or making any goods.  There<br \/>\ncan  be no doubt whatsoever that &#8220;collecting&#8221; goods does not<br \/>\nresult in the production  of  a\t new  article.\t  There\t is,<br \/>\ntherefore,  inherent  evidence in the definition itself that<br \/>\nthe  narrow  meaning  of  the  word  &#8220;manufacture&#8221;  was\t not<br \/>\nintended to  be\t applied  in  the  said\t Act.\t Again,\t the<br \/>\ndefinition speaks of &#8220;the process of  lopping  the  branches<br \/>\n(of trees),  cutting  the  trunks&#8221;.  The lopping of branches<br \/>\nand the cutting of trunks of  trees  also,  self  evidently,<br \/>\ndoes not  produce  a  new  article.   The clear words of the<br \/>\ndefinition, therefore, must be given due weight\t and  cannot<br \/>\nbe  overlooked\tmerely\tbecause\t in  other contexts the word<br \/>\n&#8220;manufacture&#8221; has been\tjudicially  held  to  refer  to\t the<br \/>\nprocess of manufacture of new articles.\n<\/p>\n<p id=\"p_7\">The  appellants\t treat\tiron  and  steel  scrap\t  of<br \/>\nconsiderable bulk by cutting it down by mechanical processes<br \/>\ninto  pieces  that  may\t be  conveniently utlised in rolling<br \/>\nmills and foundries.  Such treatment, making saleable goods,<br \/>\nwould, in our opinion, fall within the\twide  definition  of<br \/>\n&#8220;manufacture&#8221; under <a href=\"\/doc\/197743596\/\" id=\"a_5\">Section 2(J)<\/a> of the said Act.<br \/>\nIn the\tresult,\t the  appeals  are  allowed.\t The<br \/>\njudgment &#8216;and  orders  under  appeal  are set aside.  Relief<br \/>\nshall  now  be\tgranted\t to the appellants by the respondent<br \/>\nauthorities in consonance with this judgment and order.<br \/>\nNo order as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Ashirwad Ispat Udyog &amp; Ors vs State Level Committee &amp; Ors on 3 November, 1998 Author: Bharucha Bench: S.P. Bharucha, S. Rajendra Babu PETITIONER: ASHIRWAD ISPAT UDYOG &amp; ORS. Vs. RESPONDENT: STATE LEVEL COMMITTEE &amp; ORS. DATE OF JUDGMENT: 03\/11\/1998 BENCH: S.P. BHARUCHA, S. RAJENDRA BABU ACT: HEADNOTE: JUDGMENT: J U [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-254839","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Ashirwad Ispat Udyog &amp; Ors vs State Level Committee &amp; Ors on 3 November, 1998 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ashirwad-ispat-udyog-ors-vs-state-level-committee-ors-on-3-november-1998\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Ashirwad Ispat Udyog &amp; 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