Holding

In the customs notification, "industry" means only the place where the process of manufacture or production of goods is carried on and does not include hospitals, dispensaries or nursing homes.

Summary

M/S. MSCO Pvt. Ltd. imported stainless‑steel plates under a 1977 customs notification that granted a concessional duty provided the goods were used to manufacture specified articles and the finished articles were sold only to "industrial units". The company supplied certificates that the plates were used accordingly, but the Assistant Collector held that sales to hospitals and nursing homes did not satisfy the "industrial units" condition and demanded payment of deficient duty. The appellant argued that "industrial units" should be given the same meaning as "industry" under the Industrial Disputes Act, 1947, which includes hospitals. The Supreme Court held that, in the absence of a definition in the notification, the word must be given its ordinary commercial meaning—places where manufacturing takes place—and not the expansive definition in the Industrial Disputes Act. Consequently, hospitals, dispensaries and nursing homes are not "industrial units" for the purpose of the customs exemption. The Tribunal’s order was affirmed and the appeal dismissed.

Issues considered

The proper meaning of "industrial units" (or "industry") in the customs notification granting duty exemption.
Whether the definition of "industry" in the Industrial Disputes Act, 1947 applies to the customs notification.
Whether hospitals and nursing homes qualify as "industrial units" under the notification.

Legislation cited

Constitution of Indias. Article 19(6)(ii), s. Seventh Schedule Entries 24, 27 of List II; Entry 33 of List III
Customs Act, 1962s. 12, s. 130-E(b), s. 13(1)
Customs Tariff Act, 1975s. Heading 73.15
Industrial Disputes Act, 1947s. 2(j)
Industrial Disputes (Amendment) Act, 1982

Subjects

customs dutyindustrial unitsstatutory interpretationdefinition of industryexemption notificationhospitalsmanufacturingCustoms Act

Judgment

1146

M/S. MSCO. PVT. LTD.
A

'·
UNION OF INDIA & ORS.

October 31, 1984
B
[E. S. VENKATARAMIAH AND R. B. MISRA, JJ.]

The Custon1s Act, 1962-Words "industrial units" occuring in the Notifica-
tion issued under the Act-Meaning of.

Interpretat;on of statutes-Word occuring in a particular statute or statu-
e tory instrument-Statute silent about definition of the Word-Whether it muit be
interpreted according to the subject-n1atter of the statute and not according to the
definition of the same word given in some other statute.

The appe1lant imported some stainless steel plates at concessional rate of
import duty under a notification Which provided : (i) that the importer should
import the goods for the manufacture of all or any of the articles specified in
that notification ; (ii) that the articles so manufactured had to be sold to indus-
D trial units for their use ; (iii) that in case of violation of any one of the condi-
tions above~mentioned, the importer was liable to pay, in respect of such
quantity of goods as is not proved to have been utilised as per the notification,
an amount equal to the difference between the duty leviable on such quantity
but for the·exemption contained in the notification and that already paid at the
..
time of importation. The appellant submitted. a certificate that the goods im-
ported by him under the notification had bee11: consumed and/or utilised as per
the notification. But the Assistant Collector of Cu~toms rejected the said
E certificate and held that tl'e appellant wa!I. liable to pay the deficient duty in
respect of the goods which had been sold to hospitals/nursing homes since they
were not '!industrial units" within the meaning of the Customs Act, 1962. The
Collector of Customs (Appeals) confirmed the order in appeal. The revision
petition of the appellant before the Customs. Excise and Gold (Control) Tribu..
nal, also failed.

The appellant contended before this Court that the word 'industrial units'
F contained in the notification should be given the sa1ne meaning as is assigned to
the word 'industry' in the Industrial Dispute Act, 1947.

Dismissing the appeal,

HELD : (1) The expression 'industry' has many meanings. It means
'skill', 'ingenuity', 'dexterity', 'diligence', 'systematic work or labour', 'habitual
employment in the productive arts', 'manufacturing establishment etc. While
G construing a word which occurs in a statute or a statutory instrument in the
M(S. MSCO PVT. LTD. V. UNION 1147
•
absence of any definition in that very document it must be given the same mean- A
ing which it receives in ordinary parlance or understood in the sense in \vhich
people con,·ersant with the subject matter of the statute or statutory instrument
understand it. It is hazardous to interpret a word in a accordance with its
definition in another statute or statutory instrument and more so when such
statute or statutory instrument is not dealing with any cognate subject.
[1149 H; 1150 A-BJ
B
Craies on statute Law [6th Edn.] p. 164 referred to.

(2) 'Industry' in the wid~ sense of the term would be capable of compri-
sing three different aspects: (I) raw materials which are an integral part of the
!\ industrial process, (2) the process of manufacture or production, and (3) the
distribution of the products of the industry. An analysis of Entry 24 and 27 of
List JI, Entry 52 of List I and Entry 33 of List 111 of the Constitution shows
that 'industry' ordinarily means the process of manufacture or production. c
[1151 E-F]

Sh. Tika Ran1ji & Ors. etc. v. The State of Uttar Pradesh & Ors. [19561
S.C.R. 393 at p. 420 followed.

(3) It is true that in the Bangalore Water Supply & Sewerage Board, etc. D
v. R. Rajappa & Ors. [1978]3 SCR 207 this Court has held that hospitals would
a!S:o come within the definition of the expression 'industry' given in the Industrial
Dispute Act, 1947. But that definition cannot be used for interpreting the word
'industr:y' in a notification granting exemptiou from customs duty under the
Customs Act, 1962. When the word to be construed is used in a taxing statute
or a notification issued thereunder it should be understood in its co1nmcrcial
,, -sense. [1151 B-CJ
E
'
w (4) The new definition given to the word 'industry' by ParJiament in the
Industrial Disputes (Amendment) Act, 1982 (46of1982) also specifically excludes
'hospitals or dispensaries' from the category of 'industry'. It shows. that the
n1eaning given to the expression 'industry' in the Industrial Disputes Aci, 1947
cannot be depended upon while construing other si.atutes or statutory intruments
and it should be confined to the Industrial Disputes Act, 1947. Therefore, the
word 'industry' n1eans only the place where the process of manufacture or pro- F
duction of goods is carried on and it cannot in any event include 'hospitals',
dipensarics or nursing homes. (1151G-H;1152 A-BJ

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 37~4 of 1984
Fram the Judgement and order dated the 25th April, 1984 of
the Customs Excise and Gold (Control) Appellate Tribunal, New
Delhi in Appeal No. C.D.(SB) (T) A.No. 170 of 1980 Order No. 297-B
G
of 1984.

V.N. Deshpande and E.G. Agarwa/a for the Appellant.

The Judgment of the Court was delivered by
H
1148 SUPREME COURT REPORTS [1985] 1 S.C.R.
A
VENKATARAMlAH, J.This appeal is filed under section 130-E(b)
·•
of the Customs Act, 1962 against Order No. 297-B/84 dated April 25,
1984 passed by the Customs, Excise and Gold (Control) Tribunal
New Delhi. '
The appellant imported two consignments weighing 0.955 m.
B tonne and 1.071 m. tonnes of stainless steel plates covered by Bill of
Entry No. 725/111 dated August 2, 1979 and Bill of Entry No. 520/
250 dated July 16, l 979 respectively. Under section 12 of the Customs
Act, 1962 the appellant was liable to pay customs duty in accordance
with Heading No. 73.15 of the First Schedule to the Customs Tariff
Act 1975 at the standard rate of 220% ad valorem. But under the
c notification dated July 15, 1977 an importer was liable to pay import
duty of 40% only on the said goods provided the conditions men-
tioned therein were satisfied. In order to avail of the said concessional
rate of duty the importer should import the goods for the manufacture
of all or any of the articles specified in that notification and should
bind himself by the execution of a bond in such form and for such
sum as may be specifid by the Assistant Collector of Customs to pay
D
on demand in respect of such quantity of imported stainless steel
plates as is not proved to the satisfaction of the Assistant Collector of
Customs to have been used for such manufacture an amount equal to·
the difference between the duty leviable on such quantity but for the
exemption contained in the notification and that already paid at the
£ time of importation. It was further provided that the articles so
manufactured had to be sold to industrial units for their use and
payment for such articles was to be made by the concerned indus-
trial unit by a crossed cheque drawn on the buyer's own bank
account. Accordingly the appellant executed two bonds which were
guaranteed by a branch of the Dena Bank and cleared the goods by
F paying customs duty at the concessional rate undertaking to comply
with the requirements of the noiif10ation. Subsequently on March 10,
1980, the Assistant Collector called upon the appellant to pay full
customs duty as the end-use certificates in respect of the goods in
question had not been filed before the Customs Department. Then
the appellant forwarded the required certificates issued by its Char-
G tered Accountants certifying that the goods had been consumed in the
manufacture of the articles specified in the notification such as
pharmaceutical machineries (equipment), pressure vessels, jacketted
vessels etc. and the same had been sold to fertilizers and chemical
industry and petroleum and oil refinery industry. But the Assistant
Collector of Customs directed the payment of Rs. 24,244/- and Rs.
26,850/- being the deficient duty payble in respect of the two consign-
H ments in terms of the bonds stating that m the course of mvestigatwn
M/S. MSCO PVT. LTD. v. UNION (Venkataramiah, J.) 1149

it v,as revealed that the appellant had sold some of the manufactured A
items to a local dealer and not to· industrial units for their own use
and that some items bad been sold to hospitals/nursing homes
which were not industrial units. Aggrieved by the order of the Assis-
tant Collector the appellant filed two appeals before the Collector of
Customs (Appeals), Bombay, contesting inter alia the finding that
hospitals were not industrial units. The Appellate Collector rejected B
the appellants contention that hospitals were industrial units and bold
that as far as the supplies effected by the appellant to hospitals and
nursing homes were concerned the condition that the manufactured
goods should be sold to industrial units had not been fulfilled. The
appeals were rejected to that extent. The cases were remanded how-
ever to the Assistant Collector for fresh decision on another issue . c
with which we are not concerned. Against the common order passed
by the Collector of Customs (Appeals) in the above said two appeals
the appelant filed a revision petition under section 13 l of the Customs
Act, 1962, as it then stood, before the Government of India. That
revision petition was later on transferred to the above said Tribunal
The appellant also filed another appeal before the Tribunal directly D
since there were two appeals before the Appellate Collector. The
principle contention urged before the Tribunal was that the Depart-
ment \\as wrong in holding the hospitals and nursing homes were
not industrial units. The Tribunal rejected that contention and
dismissed the appeals. This appeal is filed against the order of the
Tribunal.
E

When the above case came up for admission the only ground
urged by the learned counsel for the appellant was that the Tribunal
was not right in holding that hospitals and nursing homes were not
industries and reliance was placed by him on a decision of this Court
under the Industrial Disputes Act, 1947 in which it had been held F
that hospitals, dispensaries and nursing homes were also industries.
As the appellant has relied on a decision of this Court arising under
the Industrial Disputes Act, 1947 in support of its case which
requires to be distinguished we are passing this order giving our
reasons although it is not usual to do so when an appeal is dismissed
without notice to the respondents.
G
The expression 'industry' has many meanings. It means 'skill',
'ingenuity', 'dexterity', 'diligence', 'systematic work or Jabour',
'habitual employment in the productive arts', 'manufacturing
establishment' etc., But while construing a word v,hich occurs in a
statute or a statutory instrument in the absence of any definition in ff

'

-j
1150 SUPREME COURT REPORTS [1985) I S.C R.
A that very docum~nt it must be given the same meaning which it
receives in ordinary parlance or understood in the sense in which t
people conversant Y<ith the subject matter of the statute or statutory
- instrument understand it. It is hazardous . to interpret a word in
accordance "ith its definition in another statute or statutory instru-
ment and more so when such statute or statutory instrument is not
B dealing with any cognate subject. Craies on Statute Law (6th Edn.)
says thus and page 164 :

"In construing a \Verd in an Act caution is necessary in
adopting the meaning . ascribed to the word in other Acts. •
c "It would be a new terror in the construction of Acts of
Parliament if we were required to limit a word to an unna-
tural sense because in . some Act which is not incorporated
or referred to such an interpretation is given to it for the
purposes of that Act alone.", Macbeth v. Chis/et/ (1910]
.A.C. 220, 223."
D (
When the word to be construed is used in a taxing statute or a
notification issued thereunder it should be understood in its commer..
cial sense. It is well known that under the law levying customs duties
sometimes exemptions are g.ven from the levy of the Y<hole or a part
of customs duty when the goods in question are sold either in the
E form in which they are received or in a manufactured or semimanu-
factured state 'to a manufacturing establishment for purposes of r
using them in manufacturing finished or semifinished goods in order
to lessen the cost of machinery or equipment employed in or raw
matearils used by such manufacturing establishment. The object of
granting such exemption is to give encouragement to factories or
F establishments which carry on manufacturing business. The appellant,
' - however, 1 .relies upon the meaning assigned to the word 'industry' in
the Industrial Disputes Act, 1947 in support of its case. · The expres-
. sion 'industry' is no doubt given a very Y<ide definition in section 2
f ......
<D of the Industrial Disputes Act, 1947. It reads thus :
/ . - ('
~
G "2 (j) 'industry' means any business, trade, underta- ~
'
, king, manufacture or calling of employers and includes any
calling, service, employment, handicraft, or mdustrial
occupation or avocation of workmen."
:.;. \

Th~ above definition is given in the context of the subject
matter with which the Industrial Disputes Act, 1947 is concerned. The
H pith and substance of that act is to make provision for settlement of
M/S. MSCO PVT. LTD. v. UNION (Venkataramiah, J.) IJ51

disputes between employers and employees in institutions, establish- A
ments, industrial or business houses or factories of various kinds. It is
true that in the Bang/ore Water-Supply and Sewerage Board, etc. v. R.
Rajappa & Ors.' 0 this Court has hald that hospitals would also come
within the definition of the expression 'industry' given in the Industrial
Disputes Act, 1947 which is as wide as the legislature could have pos-
sibly made it. But that definition cannot be used for interpreting the B
- word 'industry' in a notification granting exemption from customs
duty under the Customs Act, 1962. A perusal of the provisions of the
Constitutions shows that the expression 'industry' does not ordinarily
possess such wide meaning. In Article 19 (6) (ii) the word 'industry'
does not include 'trade', 'business' or 'service' which are specifically
referred to therein. Then we have the expression 'industry' in Entires c
7 ands2 of List I, Entry 24 of List II and Entry 33 of List III of the
Seventh Schedule to the Constitution. The said expression in these
entries does. not include trade or commerce or distribution of goods
which are found else where in the said Lists. What is of significance
is that in List II 'hospitals and dispensaries' are specifically referred
to in Entry 6 and they cannot, therefore, possibly fall under Entry 24 D
thereof which refers to 'industries'. As observed by this Court in
Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors.'"
'industry' in the wide sense of the term would be capable of compris-
ing three different aspects : (1) raw materials which are an integral
part of the industrial process, (2) the process of manufacture or pro- E
duction, and (3) the distribution of the products of the industry. But
raw materials are dealt with by Entry 27 of List II, the process of
' manufacture or production by Entry 24 of List II except where the
industry is a controlled industry when it would fall under Entry 52 of
List I and the products of the industry would fall under Entry 27 of
List II except where they are products of controlled industry when F
they would fall under Entry 33 of List III. An analysis of these
provisions shows that 'industry' ordinarily means the process of
manufacture or production. We have referred to the above provisions
of the Constitution only to show how that expression is understood
• ordinarily. It may also be relevant to mention here that the new
'
definition given to the word 'industry' by Parliament in the Industrial G
Disputes (Amendment) Act, 1982 (46 of 1982) specifically excludes
'hospitals or dispensaries' from the category of 'industry'. It shows
that the meanin& given to !be expression 'industry' in the Industrial

H
(I) [1978] 3 S.C.R. 207.
(2) [1956] S.C.R. 393 at 4lQ.
1152 SUPREME COURT REPORTS [1985] 1 S.C.R.

Disputes Act, 1947 cannot be depended upon while construing othe1
statutes or statutory instruments and it should be confined to the
Industrial Disputes Act, 1947. We are of the view that in the notifi-
cation under which the exemption is claimed by the petitioner, the
word 'industry' means only the place where the process of mam1-
facturc or production of goods is carried on and it cannot in any
B event include 'hospitals, dispensaries or nursing homes'.

The decision of the Tribunal does not call for any interference.

The appeal is, therefore, rejected. (

M.L.A Appeal dismissed