N Civil Appeal Nos
5969 70 NM of 1990
From the Order dated 2181990 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal Nos
EDSBT94580 A and EDSBTA No 58681 A Order No 1284 to 128690 A
Dr Debi Paul Harish Salve Darshan Singh Ms Suman J Khaitan and Ms Priya Hingorani for the appellant
A Subba Rao for the Respondent
The following Order of the Court was delivered These appeals arise out of and directed against the common appellate order dated 2181990 of the Customs Excise and Gold Control Appellate Tribunal New Delhi  Tribunal  for short m  Appeals Nos
EDSBT 94580A and EDSBT5868 1A
By the same order another appeal of the appellant was also disposed of but that matter is not car ried up in appeal here
The appellant Ms Texmaco Ltd pursuant to con tracts entered into in this behalf with the Railway Adminis tration fabricated and delivered to the Railways wagon bodies mounted on wheel sets supplied by the Railways
The invoices raised by the appellant respecting these wagons reflected only the price of the wagon bodies without includ ing the value of the wheel sets on which the wagon bodies were mounted
The goods were cleared for purposes of Excise duties on such invoice value
The Revenue raised demand for recovery of short levy and sought to recover the unpaid duty on the value of the wheel sets also
This claim for recov ery of the short levy having been adjudicated against the appellant an appeal was taken before the Tribunal
Before the Tribunal it would appear two contentions were raised First that the goods manufactured by the appel lant were only the wagon bodies mounted on the wheel sets supplied by the Railway Administration and that therefore the assessable value could only be the value of the wagon bodies excluding the wheel sets 326 supplied by the Railways and secondly that at all events the value in excess of the invoice value  which represented the price of the wagonbodies was exempt from levy of duty under the Exemption Notification No 12075 CE dated 30 April 1975 issued under Rule 8 of the Central Excise Rules 1944
What is implicit in the second contention is that but for the said Notification No 12075 CE dated 3041975 the assessable value would otherwise require the exclusion in it the value of the wheel sets also on the premise that the wheel sets became an integral part of the wagons even though the wheel sets had been supplied free of cost by the Railways themselves
The Notification No 12075 CE exempted so much of the duty of excise   as is in excess of the duty calculated on the basis of invoice prices
On the first contention that the assessable value  of the goods  could not include the wheel sets which were not fabricated or manufactured by the appellant the Tribu nal rejecting the contention said On going through the facts and in view of the clear findings given by the lower authorities that no wagon is complete without the wheels what has been cleared and removed by the appellants is the wagon mounted on wheel sets and not the wagon body alone 
On the issue of determination of assessable value the Supreme Court has held that for the purpose of levy of excise duty the value of the article is the full intrinsic value of the article inclusive of the cost of the materials and components supplied free by the customer and irrespective of the fact that no expenditure was incurred by the manufactur er on such components No fault can be found with this reasoning of the Tribunal indeed considerations of ownership of the goods are extra neous to levy of duties of excise which are imposts on manufacture
The second contention on which Dr Pal laid particu lar emphasis indeed assumes the correctness of the first proposition and claims exemption on the strength of the Notification No 12075 CE
That Notification says The Central Government has exempted goods falling 327 under Item No 68 of the First Schedule to the 1 of 1944 cleared from the factory of manufac ture on sale from so much of the duty of excise leviable thereon as is in excess of the duty calculated on the basis of the invoice price excluding duty and local taxes if any included in such price charged by the manu facturer for the sale of such goods Provided that the aforesaid exemp tion shall be admissible only if i the manufacturer files with the Superin tendent of Central Excise having jurisdiction a written declaration to the effect that he opts to avail of the said exemption ii Omitted as unnecessary iii iv the invoice price is not influenced by any commercial financial or other relation ship whether by contract or otherwise between the manufacturer or any person associated in business with the manufacturer and the buyer other than the relationship created by sale of the aforesaid goods v Omitted as unnecessary
Provided  Omitted as unnecessary The Tribunal also rejected the claims for exemption under the Notification
It said We are unable to agree with the arguments of the appellants  counsel that assessable value of the article is different from the consideration received by the appel lants to claim benefit under Notification 12075
To claim exemption on benefit under Notification 12075 it should be subjected to in compliance with the conditions specified therein
Condition No IV of Notification No 12075 required that the invoice value should be 328 the full commercial price of the article
According to the decision of the Supreme Court supra the value of the article is the in trinsic value and not restricted consideration received by the appellant as urged by the appellants  counsel
In the view we have taken the appellants are not entitled to concession under Notification No 12075 dated 304
1975 
Dr Pal appearing in support of the appeals urged that the Tribunal misdirected itself in law in its construc tion of the exemption Notification and in its reasoning that there was something in Clause iv of the Notification which detracted from the permissibility of its benefit in the present case
Dr Pal said that it was erroneous to read the said condition as requiring the invoice value  to be the full commercial price of the goods including therein the value of the wheelsets
Dr Pal said that clause iv did no more than merely importing the requirement that the invoice price should reflect a transaction at arms  length and not that appellant s invoice price should also include the value of the wheel sets supplied by the Railways
Dr Pal further urged that the very purpose of the exemption was to relieve the manufacturer from bearing the burden of the duty on such part of the assessable value as did not reflect the value of his supply and services but represented the value of the wheel sets supplied by the Railway Adminis tration itself free of charge
If Clause iv was construed in the way in which the Tribunal did the effect counsel said would be to take away with one hand what the notifica tion gave with the other
Shri Subba Rao learned counsel for the Revenue with his usual tenacity contended that Clause iv of the Notifi cation signified and imported idea of full value of the manufactured goods being required to be reflected in the invoice and that the reasoning of and the conclusion reached by the Tribunal was correct
On a consideration of the matter we are afraid the Tribu nal fell in to an error in its understanding of the notifi cation
The Notification posits and predicates the possibil ity that the invoice value  could be lesser than the assessable value and taking into account the need to mitigate the hardship on the manufacturer of being called upon to pay  duty on the value in excess of the invoice value seeks to exempt the manufacturer from payment of duty in excess of the duty calculated on the basis of the i nvoice price 
There is no dipute in this case that the invoice price represented the value of the wagons less the value of the wheel sets supplied by the Railways
The invoice price 329 could not be required to include the value of the wheel sets
But the assessable value would take into account the full commercial value including that of the wheel sets
It is in order to mitigate the hardship that may arise by requiring the manufacturer to pay duty on this difference in such cases that the Notification No 12075 came to be promulgated
There is nothing in Clause iv which enjoins upon the appellant to include the value of the wheel sets
The contract between the parties does not also require this
The way in which the Tribunal looked at the Notification is neither good sense nor good law
Such con struction would make the Notification and the exemption contemplated thereunder meaningless
The need for the exemp tion arose in view of the fact that assessable value was higher than the invoice value 
Requiring the former and the latter to be the same as something compelled by Clause iv is really to construe the Notification against itself
Shri Subba Rao placed strong reliance on the pro nouncement of this Court in Ms Burn Standard Company Ltd  Anr
vs Union of India  Ors 1991 3 Judgments Today 108
On the contentions raised and argued in that case the judgment if we may say so with great respect is correct
The question of the effect of the exemption Notification No 12075 CE was not raised and argued in that case
That apart the exemption Notification itself makes it clear that it does not apply or is attracted to every case automatical ly but that the manufacturer should expressly opt for the benefit of the Notification
Since no such claim was made in that case the decision therein is of no assistance to the revenue
We accordingly allow these appeals set aside the order of the authorities as well the affirming order of the Tribunal under appeal and hold that the appellant was enti tled under the said Notification No 12075CE to exemption from that part of the duty as was in excess of the invoice price which we hold was not required to include the value of the wheel sets
VPR Appeals allowed


Summary:
The Regional Director State Employees Corporation the appellant in the instant case claimed for covering the factories of the respondents Ms High Land Coffee Works of PFX Sakdanha  Sons under the provisions of the 
Section 14 of the Act excludes seasonal factory from the scope of the Act
The seasonal factory is defined under section 212of the Act
The factories of the respondents were excluded from the operation of the Act since they were declared to be seasonal factories within the meaning of the definition of section 212 of the Act
By amending Act 44 of 1966 which came into force from 28th January 1966the definition of seasonal factory  has been amended and accordingly the seasonal factory means a factory which exclusively engaged in one or more of the manufacturing processes detailed in the definition and includes a factory which is engaged for a period not exceed ing seven months in a year
The expressions manufacturing process  power shall have the meaning respectively assigned to them in the 
So after the amendment the Corporation called upon the respondents to pay the contributions payable under the Act and threatened to take coercive steps to recover the arrears under the Revenue Recovery Act and prosecute them
The respondents challenged the demand made by the appel lants in the Employees Insurance Court contending that even the amending of 1966 has not altered the definition of seasonal factory would still excludes such factory from the opera tion of the Act
The Employees Insurance Court accepted the plea of the respondents and even the Karnataka High Court agreed to the view of aforesaid Court
So the Corporation appealed to this Court
The sole question before the Court for consideration is whether the respondents  factories in view of the amendment to the definition of seasonal factory have lost the benefit of exclusion from the Act
Dismissing the appeals and the special leave petition the Court HELD That in the instant case the High Court observa tion that the purpose of the definition by the amending act was to enlarge and not to restrict the Statutory concept of seasonal factory so the position of the respondents estab lishments as seasonal factories remain unaltered
This view seems to be justified because the objects reasons of the Bill of the amending Act clearly indicates that the proposed amendment was to bring within the scope of the definition of seasonal factory  a factory which works for a period of not exceeding seven months in a year a in any process of blending packing or repacking of tea or coffee b in such other manufacturing processes as the Central Government may by notification in the official Gazettee specify
Thus amendment is clearly in favour of widening the definition of seasonal factory  because the word include  in the Statutory definition is generally used to enlarge the mean ing of the preceeding words
This is well accepted statutory construction that in interpretation clauses in order to enlarge the words or phrases occuring in the body of the statute the word include is very generally used
310F 311C Stroud s Dictionary 5th Edn
3 page 1263
CIT Andhra Pradesh vs Ms Taj Mahal Hotel Secun derabad 971  3 SCC 550 and State of Bombay vs The Hospital Mazdoor Sabha Ors 1960 2 SCR p 666 at 875 referred to