Holding

The word "precincts" in the exemption notification must be given a broad meaning of the surrounding region, so a workshop situated in the environs of a mine and under the same management is within the precincts of the mine and qualifies for exemption.

Summary

South Eastern Coalfields Ltd. operated an electrical and mechanical workshop at Korba to repair mining equipment for adjacent coal mines. The Central Government had declared the workshop a "mine" under Section 82 of the Mines Act, 1952. The assessee claimed exemption from central excise duty under Notification No. 63/95‑CE, which exempted goods manufactured in a mine, arguing that the workshop was situated within the "precincts" of a mine. The Commissioner rejected the claim, and the CEGA Tribunal upheld the duty demand, holding that registration of the mine under the Factories Act barred the exemption. The Supreme Court examined whether the term "precincts" should be given a narrow or broad meaning and whether the Factories Act registration was relevant. Applying the purposive rule of interpretation, the Court held that "precincts" means the surrounding area or environs, so the workshop qualifies as within the precincts of a mine and is entitled to exemption. The Court set aside the tribunal’s order and allowed the appeal.

Issues considered

Whether a workshop located in the environs of a mine and under the same management falls within the meaning of "precincts" of a mine for the purpose of Notification No. 63/95‑CE.
Whether the registration of a mine under the Factories Act, 1942, affects the entitlement to exemption under the Central Excise Act.

Legislation cited

Additional Duties of Excise (Goods of Special Importance) Act, 1957s. 3(3)
Central Excise Act, 1944s. 11A
Central Excises and Salt Act, 1944s. 5A(1)
Mines Act, 1952s. 20(viii), s. 2(j)(viii), s. 82

Subjects

excise duty exemptionprecincts interpretationpurposive rule of constructionMines ActFactories Actcentral excisestatutory interpretationworkshop

Judgment

A SOUTH EASTERN COALFIELDS LTD.
V.

COMMISSIONER, CUSTOMS & CENTRAL EXCISE, M.P.

AUGUST I, 2006

B (ASH OK BHAN AND MARKANDEY KA TJU, JJ.]

Central Excises and Salt Act, 1944:

s.5A(l)-Notification No. 63195-CE dated 16.3.1995-Exemption from
C excise duty to 'mines' as defined in s.2lj)(viii) of Mines Act-Workshop
established within precincts ofmine to facilitate repair ofall mining machinery
and equipment used in adjacent coalmines and other collieries-Claim for
exemption under the Notification---Held, keeping in view the purpose of the
notification, the word "precincts" used therein has to be given a broader
D meaning-And thE notification has to be interpreted so as to include within
the definition ofmine a workshop situated in an area or environs thereof-The
workshop is, therefore, entitled to exemption under the notification-- Mines
Act, 1952-ss. 20)(viii) and 82-/nterpretation of Statutes-Purposive rule of
interpretation.

E Words and Phrases:

"Precincts "-Occurring in Notification No. 63195-CE dated 16.3.1995-
Meaning of

Appellant-assessee established an electrical and mechanical
F workshop to facilitate repair of all mining machinery and equipment used
in the adjacent coal mines and other collieries. Under s.82 of the Mines
Act, 1952, the Central Government declared this workshop as a mine.
Under s.2(j)(viii) of the Mines Act, 'mine' would include "all workshops
situated within the precincts of a mine and under the same management
and used solely for purposes connected with that mine or a number of
G mines under the same management." By Notification No. 63/95-CE dated
163.1995 all goods manufactured in a mine were exempted from duties of
excise and additional duties of excise. The assessee was issued a show cause
notice for recovery of central excise duty for alleged contravention of

H
Central Excise Rules, 1944 and Notification No. 63/95-CE dated 16.3.1995,
200 -
SOUTH EASTERN COALFIELDS LTD. v.COMMR .• CUSTOMS&CENTRAL EXCISE, M.P. 20 J

stating that, in respect of the workshop, the assessee was not entitled to A
exemption provided under the said Notification. For contravention of the
1944 Rules interest and penalty was also proposed. The Commissioner did
not accept the plea of the assessee that the workshop was situated within
the precincts of the mine and, therefore, was entitled to exemption under
Notification No. 63/95-CE. He ordered payment of the duty along with B
interest and penalty. The CEGAT dismissed the appeal of the assessee
holding that since the mine was registered under the Factories Act, 1942,
it could not have the benefit of the exemption Notification NO. 63/95-CE.
Aggrieved, the assessee filed the present appeals.

On the question: whether the workshop in question could be said to C
be situated within the precincts of the mine,

Allowing the appeals, the Court

HELD: I. The word "precincts" does not have a single meaning,
rather it has several meanings. Where the meaning of a word or expression D
is not clear, obviously the literal rule of interpretation cannot be applied,
and hence resort has to be taken to other rules of interpretation. In the
present case the purposive rule should be applied, and the word 'precincts'
has to be given the hroader meaning and not the narrower one. Therefore,
the word 'pre~incts' in the exemption Notification No. 63/95-CE dated
16.3.1995 has to be interpreted to mean the surrounding region or area; E
or, the surroundings or environs of a place. This is because the purpose
of the exemption notification is to grant exemption from excise duty to
goods produced in a mine so as to encourage the mining industry. A
workshop which is in an area or in the environs of a mine and js existing
solely for the purpose connected with the mine and under the same
F
management, is obviously, directly serving the mining operations. Hence,
the notification has to be interpreted so as to include such a workshop
within the definition of 'mine' for the purpose of grant of exemption, as
that would encourage the mining industry. The impugned order is,
therefore, set aside. (205-C; F-H; 206-A-B]
G
.
·-
Collin's English Dictionary; New Shorter Oxford English Dictionary;
P. Ramanath Aiyar 's Advance Law Lexicon, 3rd Edn.; Black's Law
Dictionary, 7th Edn. - referred to.

2. The present case is covered by the Central Excise Act, 1944 and
registration of a mine under the Factories Act has nothing to do with the H
202 SUPREME COURT REPORTS [20061 SUPP. 4 S.C.R.

A assessee's claim for exemption under the Central Excise Act. In fact the
reference to the Factories Act in the present case was wholly irrelevant.
Hence the view taken by the Tribunal is clearly erroneous. (204-E-F(

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2408 of200 I.

B From the Final Order No. 1929/2000 B dated 30.11.2000 of the Customs,
Excise & Gold (Control) Appellate Tribunal, New Delhi, Bench-B, in appeal
No. E/2441/99-B.

WITH

C C.A. Nos. 1968-1971 and 8403-8404/2003.

Joseph Vellapally, \'. Sridharan, Alok Yadav, Ajit Kr. Sinha, T. Ramesh,
S. Nanda Kumar, Muthu Krishnan, Ananda Selvan and Rakesh K. Sharma
for the Appellant.
•
D A.K. Ganguli, Ashok K. Panda, Tufail A Khan, Manpreet S. Doabia
and B.K. Prasad for the Respondents.

The Judgment of the Court was delivered by

MARKANDEY KATJU, J. Civil Appeal No. 2408 of2001 has been
E filed against the impugned order dated 30.11.2000 passed by the Customs,
Excise and Gold (Control) Appellate Tribunal, New Delhi.

We have heard learned counsel for the parties.

The facts of the case are that the Central Electrical and Mechanical
F Workshop at Korba was established by the appellant, M/s. South Eastern
Coalfields Ltd., at Korba in 1967 to facilitate repair of all mining machinery
and equipment used in the adjacent coal mines and other collieries. The
Central Government declared this workshop as a mine under the provisions
of Section 82 of the Mines Act, 1952 under certificate dated 1.5.1969.

G Section 2(J)(viii) of the Mines Act states that mine includes "All
workshop situated within the precincts of a mine and under the same
management and used solely for purposes connected with that mine or a
number of mines under the same management."
'.
H
Notification No.63/95-CE dated 16.3.1995 was issued by the Central
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SOUTH EASTERN COALFIELDS LTD. ,;.COMMR. CUSTOMS & CENTRAL EXCISE, M.P.[MARKANDEY KA TJU. l.J2QJ

Government under Section 5A(l) of the Central Excises and Salt Act, 1944 A
read with sub-section (3) of Section 3 of the Additional Duties of Excise
(Goods of Special Importance) Act, 1957 exempting all goods manufactured
in a mine from duties of excise and additional duties of excise. The explanation
to that notification stated that the word "mine" will have same meaning as
assigned to it in clause (j) of Section 2 of the Mines Act, 1952.
B
A show cause notice was issued to the appellant by the Superintendent
of Central Excise, Range-Korba vide office letter dated 3.9.1996 for recovery
of central excise duty amounting to Rs.31,59,704/- under the provisions of
Rule 9(2) read with Section 11 A of the Central Excise Act, 1944, alleging
contravention of Rules 9(1), 52A, 53, 173B, 173C, 173G, 174 and 226 read C
with Notification No.63/95-CE dated 16.3.1995 as amended. Further, for the
contravention of the aforesaid Rules imposition of interest and penalty was
also proposed. In the show cau~e notice it was stated that the appellant did
not appear to be entitled to the exemption as provided in Notification No.63/
95-CE dated 16.3.1995 as amended.
D
The appellant submitted its reply to the show cause notice, on 6.10.1998,
in which they referred to their earlier letter dated 5.9.1998 submitted with
reference to the earlier show cause notice. The appellant was also heard
personally. The defence of the appellant was that the workshop is situated
within the precincts of a mine and hence was entitled to the exemption under
•i the Notification No.63/95-CE. E
The Commissioner by his order dated 22.6.1999 held against the
appellant and ordered the payment of duty amounting to Rs.31,59,704/- as
mentioned in the show cause notice and also directed recovery of interest and
penalty for contravention of various rules.
F
The appellant filed an appeal before the CEGA T, which by order dated
30.11.2000 held that the goods produced by the appellants, were dutiable and
the appellant would not entitled to the exemption contained in the Notification
No.63/95-CE. The Tribunal confirmed the demand of excise duty under the
order of the Commissioner but set aside the penalty imposed on the appellants. G
Aggrieved, this appeal has been filed in this Court.

In our opinion, this appeal deserves to be allowed. As already stated
above, the exemption under Notification No.63/95-CE dated 16.3. I 995
exempted all goods manufactured in a mine from excise duty. The Explanation
to the exemption notification states that "mine" has the meaning assigned to H
204 SUPREME COURT REPORTS [2006] SUPP. 4 S.C.R.

A it in Section 2GJ of the Mines Act, 1952. Clause (viii) of Section 20) of the
Mines Act, 1952 defines "mine" to include "all workshops and stores situated
within the precincts of a mine and under the same management and used
solely for the purposes connected with the mine or a number of mines under
the same ma:rngement".

B The question, therefore, in this case is that "whether the workshop in
question can be said to be situated within the precincts of the mine''.

Before the Tribunal reliance was placed by the learned counsel for the
assesse on an earlier order of the Tribunal in Central Coalfields Ltd. v. CCE,
C Jamshedpur dated 16.9.1997, in which it was held that the word "precincts"
cannot be restricted to an area of four Kms. In that case the Tribunal held
that the workshop in question was situated within the precincts of the mines
to which it was catering, even though it was situated at a distance of 50 Kms.
from the said mine.

D In the present case the Tribunal rejected the assessee' s claim for
exemption on the ground that since the mine was registered under the Factories
Act, it cannot have the benefit of exemption in the Notification No.63/95-CE
since as per Section 2(m) of the Factories Act a factory means any premises
including the precincts thereof but does not include a mine subject to the
operation of the Mines Act, 1952.
E
In our opinion the registration of a mine under the Factories Act has
nothing to do with the assessee 's claim for exemption under the Central
Excise Act. In fact the reference to the Factories Act itself was wholly
irrelevant and we fail to see what the Factories Act has to do with the present
case. The present case is covered by the Central Excise Act and has nothing
F to do with the Factories Act. Hence the view taken by the Tribunal is, with
due respect to it, clearly erroneous.

It has to be considered in the present case whether the workshop in
question is said to be a workshop within the precincts of a mine.

G The word 'precincts' is not a word of clear import which has a single,
clear-cut meaning. Collin's English Dictionary defines 'precincts' to mean
"the surrounding region or area".

In the New Shorter Oxford English Dictionary, the word 'precinct' is
H shown to have several meanings among which are the following:
SOUTH EASTERN COALFIELDS LTD. ,,.COMMR., CUSTOMS & CENTRAL EXCISE, M P.[MARKANDEY KAT JU, I 12 Q5

"The area within the boundaries (real or imaginary) of a building or A
place; the grounds; the interior; esp. an enclosed or clearly defined
area around a cathedral, college, etc. Also, the surroundings or
environs of a place. "

In the Advanced Law Lexicon, 3rd Edition, by P. Ramanatha Aiyar, the
word 'precinct' has been shown to have several meanings including a space B
enclosed by walls or other boundaries.

In Black's Law Dictionary, 7th Edition, the word 'precinct' is defined
as follows:

"A geographical unit of government, such as an election district, a C
police district, or a judicial district."

From a perusal of the above definitions, it appears that the word
"precincts" does not have a single meaning, rather it has several meanings.

One word can have several meanings, and one meaning can have several D
words (synonyms). For instance, the word 'ball' can mean a round object for
playing games like cricket, football, etc; it can also mean a dance; it can also
mean having a nice time, etc. Similarly, in Sanskrit the words "kamal",
"pankaj", "rajeev", "neeraj'', "jalaj", "saroj", etc. have the same meaning i.e.
Lotus.
E
According to the literal rule of interpretation, if the meaning of a word
or expression is clear, there is no scope for interpretation and we have to
follow the plain and grammatical meaning.

However, where the meaning of a word or expression is not clear,
obviously the literal rule of interpretation cannot be applied, and hence we F
have to take resort to other rules of interpretation e.g. the Heydon 's mischief
rule, the purposive rule, etc. In our opinion in the present case the purposive
rule should be applied. Under this rule, we have to see the purpose for which
the provision was made. Looking at it from this angle, we are of the opinion
that the word 'precincts' has to be given the broader meaning and not the G
narrower meaning.

In other words, we have to interpret the word 'precinct' in the exemption
notification to mean the surrounding region or area, as defined in Collins
English Dictionary or the surroundings or environs of a place as defined in
the New Shorter Oxford English Dictionary. This is because the purpose of H
206 SUPREME COURT REPORTS [2006) SUPP. 4 S.C.R.

A the exemption notification is to grant exemption from excise duty to goods
produced in a mine so as to encourage the mining industry. A workshop
which is in an area in t~e environs of a mine and is existing solely for the
purpose connected with the mine and under the same management, is obviously
directly serving the mining operations. Hence, we have to interpret the
B notification so as to include such a workshop within the definition of a mine
for the purpose of grant of exemption, as that would encourage the mining
industry.

For the reasons given above the appeal is allowed. The impugned order
is set aside. No costs.
c Civil Appeal Nos. 1968-197112003 & 8403-840412003
In view of the decision in Civil Appeal No. 2408/2001, these appeals
are allowed. The impugned orders are set aside. No costs.

R.P. Appeals allowed.

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