1. Revenue is in appeal against Order-in-Appeal No. 22/JSR/93, dated 14-5-93 passed by Collector of Central Excise (Appeals), Calcutta. The issue involved is whether the explosives used by the respondent Hindustan Copper Ltd. in the copper mines are eligible for exemption under Notification No. 191/87 as amended by Notification No. 63/91. The respondent's claim was that the explosives in question were used in mines to extract copper ore by blasting. The ore so obtained is converted into copper concentrates and from the concentrates, copper is manufactured.
2. The notification granted exemption to goods falling within Chapters 28, 29, 36 and 38 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) "and used in the manufacture of copper or zinc or lead concentrates". Explosives in question are covered by Chapter 36. The exemption was denied by the Assistant Collector stating that the explosives in question were not being used in the manufacture of copper concentrate. The respondent took up the matter in appeal and the Collector in the impugned order-in-appeal allowed the respondent's claim and held as under :- "I have considered the submissions made by the appellants in their written appeal as well as during hearing. During the personal hearing the consultant had submitted photocopies of their representation to the Finance Ministry, for including copper concentrates in Notification No. 191/87. They had also forwarded the recommendation of Deptt. of Mines, Govt. of India for consideration by Finance Ministry. On perusal of these documents I find that appellants have elaborately explained the use of explosives in the process of making copper concentrates. It will therefore be reasonable to hold that subsequent amendment of Notification No. 191/87 by Notification No. 63/91 by including copper concentrates it was intended to make Hindustan Copper Ltd. eligible to obtain materials specified in the notification under Chapter X procedures.
Further there is sufficient force in appellant's contention that explosives is the only item under Chapter 36 which are used in the process of making copper concentrate in the manner explained earlier. While obtaining copper ore in the mines is a mining operation quite distinct from ' manufacturing process denial of benefit of exemption to the appellant for use of explosives would make the amendment redundant and inoperative. It is a settled point of law that no interpretation should be given which defeats the legislative intent manifest from the scheme & wordings of the notification. In these circumstances I hold that appellants are eligible for L-6 licence under the aforesaid notification. I accordingly set aside Asstt. Collector's order and allow the appeal." 3. The Revenue has come up in appeal aggrieved by this order. Their submission is that the explosives are used for blasting of mines and to excavate copper ore and are not used in the manufacture of copper. They have submitted that copper ore and copper are two different items and the exemption under Notification No. 191/87 as amended is limited to only copper and hence, cannot be extended to mean to include copper ore also. It has also been stated that the explosives do not find any use in the copper concentration plant and the benefit of the notification cannot be extended to the assessee till such time copper ore is also included in the notification. The appeal also submits that it is settled law that in taxing statute, there is no room for any intentment and that the entire matter is to be governed by the language of the notification [Hemraj Gordhandas v. H.H. Dave, Assistant Collector Central Excise, Surat 4. The order of the Assistant Collector [which was in appeal before the Collector (Appeals)] gave no reason for holding that the respondent was not eligible for the exemption and merely stated as under :- "Please refer to your letter No. Accts/GENL/200/92, dated 6-5-92 on the above subject.
This is to inform you that L-6 licence can't be issued for explosives because it is not being used in the manufacture of copper concentrate and therefore, your request for issue of L-6 licence for explosives is hereby rejected by the undersigned." As against the non-speaking order passed by the Assistant Collector, the Collector has passed a detailed order holding that explosives are used in the manufacture of copper concentrates. This conclusion has been reached by the Collector on the ground that the goods covered by Chapter 36 are one of the goods covered by the notification and are used in the process of making cop-per concentrates and that the denial of the notification would make the notification redundant and inoperative. The Collector has also followed the view that no interpretation should be given which defeats the legislative intent manifest from the scheme and wording of the notification. The present appeal faults the order of the Collector for having interpreted the notification based on purported legislative intent.
5. The notification grants exemption, inter alia, to explosives "used in the manufacture of copper..... concentrates". In metallurgy, 'concentration' is the process of obtaining a mass of high metal content from the ore or other raw materials. Thus, the exemption is for goods used in the manufacture of copper concentrates. The Revenue's contention is that manufacture of concentrates from copper ore is a distinctly different activity from obtaining of basic ore. They contend that an exemption to goods used in the manufacture of ore concentrates, does not include goods used in obtaining of ore itself. It is settled law that notifications should not be interpreted so as to make them unworkable. A notification has to be interpreted to give true import and meaning and not to make it purposeless and nugatory. The Supreme Court laid down the rule on this in Collector of Customs, Bombay v.United Electrical Industries Ltd. [1999 (108) E.L.T. 609 (S.C.)] with regard to construction of notifications as under :- "7. We find the Tribunal gave good reasons for rejecting the interpretation given by the department. Having considered the submissions for the parties we find in case interpretation given by the department is to be accepted, no assessee could get exemption unless all the machines are imported as one composite machine reference of each separate machines with (') would have no meaning.
This will make this notification unworkable, hence Tribunal rightly rejected Revenue interpretation. The notification has to be interpreted to give true import and meaning, not to make it purposeless and nugatory. It is well settled which is also provided in Section 13 of the General Clauses Act, 1897 of the Central Acts that unless there is anything repugnant to the subject or context the word singular shall include plural and vice versa. The Tribunal interpreted the word 'machine' to be 'machines' and, in our opinion, rightly so. It seems by this restrictive interpretation the very purpose of this notification since completely diluted which led into clarification/modification by the Government through the aforesaid letter." 6. In the instant case, the only use that explosives would find in the manufacture of concentrates of ores is in the excavation of ore from the mines. Therefore, the exemption would serve its purpose only if exemption is made available to the relevant concerned industry for use of the explosives in excavation of ore. The contrary interpretation drawing a water tight distinction between mining and concentration of ores would render the issue of the notification purposeless and nugatory. The true import and meaning of the notification in the present case was undoubtedly to grant exemption to explosives used in the mining. The Collector (Appeals) has construed the notification in a manner as to achieve the purpose of the notification. This interpretation is in conformity with the rule contained in the aforesaid judgment of the Supreme Court. The true meaning of the notification has been construed by the Collector from the words of the notification themselves. In the circumstances, the observations of the Supreme Court contained in the judgement of Hemraj Gordhandas (supra) have no application to the present case.
7. In view of what has been stated above, we find no merit in the appeal of the Revenue. The same is, accordingly, rejected and the order of the Collector (Appeals) confirmed.
8. I have gone through the order proposed by my Id. brother Shri C.N.B.Nair. With due respects to the Hon'ble Member (Technical) my views and order for the matter are as follows :- 9. The dispute involved in the present appeal is as regards the availability of Notification No. 191/87 to the respondents. The said notification exempts goods falling under Chapters 28, 29, 36 and 38 of the Schedule to the CETA, 1985 when used in the manufacture of copper or zinc or lead concentrates, from the whole of duty of excise leviable thereof. The respondents had claimed exemption in respect of explosives used in the copper mines for extraction of ore from the mines. As such the short question which arises is as to whether such as use of explosives can be considered as use of explosives in the manufacture of copper concentrates.
10. Vide his order, the Asstt. Commissioner did not issue L-6 licence to the respondents for procuring the explosives free of duty on the ground that the explosives are not being used in the manufacture of cooper concentrates. I find that an identical question arose in the case of IDL Industries Ltd. in Appeal Nos. 302/95 and 38/96 [2001 (136) E.L.T. 425]. It is seen that IDL Industries in that case claimed the benefit of Notification No. 191/87 based upon CT-2 certificates issued to HCL by their jurisdic-tional Central Excise authorities. The detailed use of the explosives was considered in that decision and it was observed by Member (Judicial) (myself) that these explosives are used by HCL for blasting in their mines to extract copper. Then the ores are crusted/grounded in their Bale Mill and later subjected to flotation or screening process to obtain the concentrates. These processes are called ore beneficiation methods and ore concentrates are manufactured in this way. By considering the above process it was observed that the use of explosives for mining purposes cannot be held as use of the same in the manufacture of copper concentrates. Reference was also made to the decision of the Tribunal in the case of Associated Cement Co. Ltd. v. CCE -1990 (50) E.L.T. 295 (T) wherein it was held that the goods used for quarrying and mining of lime stone kiln lining was held as not being used in or in relation to the manufacture of cement and as such not eligible for benefit of Modvat credit. It was observed that the expression used in the Modvat provisions is - 'in or in relation to the manufacture' of final product. The phrase 'in relation to' is a wider expression than used 'in the manufacture.' As such as also by taking note of the Supreme Court's decision in the case of Indian Copper Corpn, Ltd. - 1965 (16) STC 259 (S.C.) it was held that the explosives used for blasting or mining operations for extracts of ores cannot be extended the benefit of the notification in question.
The above views of Member (Judicial) was differed with by the then Hon'ble Vice President Shri S.K. Bhatna-gar. As such there was difference of opinion which was placed before the third Member. The third Member after considering and appreciating the various aspects of the case concluded that the benefit of the notification cannot be extended to the explosives used for the purpose of extraction of ore at mining site inasmuch as it cannot be said to have been used in the manufacture of concentrates. Accordingly as per the majority decision the appeals filed by IDL Industries in that case were rejected.
11. As the issue involved in the present matter is identical to the one in the case of IDL Industries, which stands resolved by the majority decision of the Tribunal vide Order Nos. A-1521, 1522/Cal/2000, dated.
14-9-2000 [2001 (136) E.L.T. 425] by respectfully following the majority decision, I am of the view that the benefit of the notification will not be available to the respondents.
12. It is further noted that five Member Bench of the Tribunal in the case of Japee Rewa Cement v. CCE, Raipur - 2000 (119) E.L.T. 552 (Tri.-LB) = 2000 (38) RLT 1111 (CEGAT-LB) has held that explosives used for quarring lime stone in mines situated away from the cement factory cannot be considered to be goods used 'in or in relation to the manufacture' of cement and as such has held that the same are not eligible inputs for the purposes of Modvat credit under Rule 57A of the Central Excise Rules, 1944. The above decision has been given by the Larger Bench after considering and appreciating the various decisions on the issue. Inasmuch as the expression used in Rule 57A is definitely wider in scope than the expression used in the present notification, which grants benefit only in case of use of goods in the manufacture of copper (emphasis provided), the benefit of the notification, in my views cannot he extended.
13. I further find that my Id. brother Shri Nair has observed that in case the benefit is not granted, the notification will become redundant and as such the interpretation which renders the notification purposeless and nugatory has to be avoided. He has further observed that the true meaning of the notification was to grant exemption to explosives used in the mining and this can be construed from the words of the notification itself. It is seen that the notification in question is not directly granting the exemption to explosives used for mining operations. From the wordings of the notification it is clear that the exemption has been given to the goods falling under Chapters 28, 29, 36 and 38 of the Schedule to the Tariff. Chapter 36 under which the explosives fall also covers a number of other items. As such the wordings of the notification does not clearly bring out the intention of the legislation to grant exemption to the explosives, when used in mining operations. There is nothing else on record to reflect upon such an intention of the Govt. As per the notification any goods which may fall under any of the specified chapters will earn exemption when used in the manufacture of copper concentrates. As such the denial of the benefit of the notification to the explosives used for extraction of ore will definitely not render the said notification a meaningless notification.
14. In view of the foregoing I allow the appeal filed by the Collector and set aside the impugned order.
15. In view of the difference of opinion between the Member (Technical) Shri C.N.B. Nair and Member (Judicial) Smt. Archana Wadhwa the matter is referred to the Hon'ble President to refer to a third Member on the following point.
"Whether in view of the observation of the Hon'ble Member (Technical) the appeal is required to be rejected or in view of the observations and findings given by Member (Judicial), the appeal is required to be accepted".
Sd/- Sd/- (C.N.B. Nair) (Archana Wadhwa) Member (Technical) Member (Judicial) Dated : 15-9-200 16. The issue involved in this appeal at the instanced of the Revenue is whether the explosives used by the respondent Hindustan Copper Ltd. in the copper mines are eligible for exemption under Notification No.191/87 as amended by Notification No. 63/91.
17. The notification granted exemption to goods falling within Chapters 28, 29, 36 and 38 of the Schedule to the Central Excise Tariff Act, 1985 and used in the manufacture of "copper or zinc or lead concentrates". Explosives in question are covered by Chapter 36.
Respondent claimed that the explosives which are used in the mines to extract copper ore, by blasting, are used in the manufacture of copper concentrates and copper. The Assistant Collector rejected the claim holding that the explosives in question were not being used in the manufacture of copper concentrates. On appeal, the Collector (Appeals) accepted the contention of the respondent herein. Aggrieved by the above. Revenue has come up in appeal.
18. The contention raised by the Revenue that explosives are used for blasting of mines and to excavate copper ore and are not used in the manufacture of copper, was not accepted by learned Member (T). It was held that the notification has to be interpreted to give true import and meaning and not to make it purposeless and nugatory. The learned Member (T) made reference to the fact that it was on the representation of the respondent herein that by Notification No. 63/91 the earlier Notification No. 191/87 was amended by including 'copper concentrates' in it so as to enable the respondents also to take the benefit of the Notification No. 191/87.
19. On the other hand, the learned Member (J) placing reliance on an earlier order passed by the Tribunal to which she was also a party in IDL Industries Ltd. v. Commissioner of Central Excise, BBSR, Appeal Nos. 302/95 and 38/96, dated 26-2-99 [2001 (136) E.L.T. 425 (Tribunal)] took the view that the mining operation and manufacture of copper concentrates are two different processes and therefore, the claim put forward by the respondent herein for the benefit of Notification No.191/87 in respect of the explosives used for the mining operation, cannot be accepted. Reliance was also placed by the learned Member (J) on another decision of the Tribunal in Associated Cement Co. Ltd. v.CCE - 1990 (50) E.L.T. 295. It was observed therein that the decision of the Supreme Court in Indian Copper Corporation Ltd. v. Commissioner of Commercial Taxes, Bihar and Others - AIR 1965 Supreme Court 891 has to be distinguished since in the Modvat provisions the expression used is 'in or in relation to the manufacture' of the final product is wider than the expression 'in the manufacture' used in the relevant notification. Reliance was also placed on a Larger Bench decision of the Tribunal in Japee Rewa Cement v. CCE, Raipur, 2000 (119) E.L.T. 552 (Tri.-LB) = 2000 (38) RLT 1111 (CEGAT-LB) wherein it was held that the explosives used for the manufacture of intermediate product, namely, limestone which in turn was used for the manufacture of cement, cannot be considered to be goods used in or in relation to the manufacture of cement.
20. The learned Member (J) was, therefore, inclined to set aside the , impugned order.
21. In the light of the difference of opinion between the two Members the following issue has been referred for being considered by a third Member :- "Whether in view of the observation of the Hon'ble Member (Technical) the appeal is required to be rejected or in view of the observations and findings given by Member (Judicial), the appeal is required to be rejected." 22. The facts are not in dispute. Explosives in question are used in the mines by the respondent to extract copper ore by blasting. The ore so obtained is being converted into copper concentrates. The only dispute is whether the view taken by the Collector (Appeals) that the explosives used in the copper mines are eligible for exemption under Notification No. 191/87 as amended by Notification No. 63/91 is correct or not. Before I enter upon a discussion on the contentions raised by both sides I may point out that the decision of the Tribunal in IDL Industries Ltd. has been taken in appeal and it is pending before the Supreme Court. The Larger Bench decision of the Tribunal in Jaypee Rewa Cement v. CCE case was reversed by the Apex Court in Jaypee Reiva Cement v. CCE - 2001 (133) E.L.T. 3 (S.C.). In the above case the appellant company contended that the explosives used in the mining operation must be regarded as inputs and in respect of which notification had been issued by the Central Government and credit should be allowed in terms of Rule 57A of the Central Excise Rules. The Supreme Court took the view that in respect of inputs used in the manufacture of intermediate product which product is then used for the manufacture of final product the manufacturer would be allowed credit on the duty paid in respect of the input. On the explosives the duty had been paid, the appellant would be entitled to claim credit because explosive was used for the manufacture of intermediate product, namely, lime stone which in turn was used for the manufacture of cement.
According to the learned Departmental Representative since the above decision was rendered under the provisions of Rule 57A where the expression used is in or 'in relation to the manufacture' of final products, the dictum therein cannot have any application in the present case. He placed reliance on Associated Cement Co. Ltd. In the above case, it was held that goods used for quarrying and mining of limestone kiln lining or maintenance of mining machinery or equipment or for transport cannot be treated as goods used in or in relation to the manufacture of cement and therefore, not eligible for the benefit of Modvat credit. But it is to be noted that the very same Bench of the Tribunal has in Associated Cement Co. Ltd. v. CCE - 1991 (55) E.L.T.415 (Tribunal) has taken the view that the explosive used for blasting in the quarrying are eligible for Modvat credit if they are used by the party in their own mine, namely, that if they are engaged in mining operations along with manufacturing operation for production of cement.
23. In CCE, Jaipur v. Hindustan Zinc Ltd. - 2001 (127) E.L.T. 438 where a similar question arose regarding the eligibility for exemption under Notification No. 191/87 as amended by Notification No. 63/91, the Tribunal has taken the view that explosive used for blasting ore in the mines which are then processed in the factory of the assessee to make copper, zinc or lead concentrates, would be entitled to claim exemption under the notification. It is held that the activity of mining is integrally linked with the manufacture of final product from the ore generated as a result of mining and the two processes are inter-dependent. Therefore, the explosives used for blasting mines in order to remove the ores which are the raw material for the manufacture of zinc oxide etc. are to be considered as used in the manufacture of the concentrates. In coming to the above conclusion, the Tribunal placed reliance on the decisions of the Supreme Court in Indian Farmers Fertilizers Cooperative Ltd. v. CCE - 1996 (86) E.L.T. 177 and Indian Copper Corporation v. Commissioner of Commercial Taxes - AIR 1965 Supreme Court 891. In Indian Farmers Fertilizer Cooperative Ltd. case question came up for consideration was whether raw naphtha used to produce ammonia which in turn was used in off-site plants such as water treatment plant, steam generating plant and effluent treatment plant is also eligible for exemption under Notification No. 187/61. The above notification granted exemption in respect of raw naphtha used in the manufacture of ammonia provided such ammonia is used elsewhere in the manufacture of fertilizer. It was held that the ammonia used in the water treatment, steam generation and inert gas generation plants, which are a necessary part of the process of manufacturing urea, must, therefore, be held to be used in the manufacture of ammonia. It was also held that the raw naphtha used to produce ammonia which is used in the effluent treatment plant is also to be treated as used in the process of manufacture of urea and therefore, is entitled to exemption.
In Indian Copper Corporation Ltd. the Su- preme Court considered the question that the locomotives and other vehicles which were used by the Corporation for transporting the ores from the mining site to the manufacturing unit can be taken as goods intended for use in the manufacture or processing of goods for sale as contemplated under Rule 13 of the Central Sales Tax (Registration and Turnover) Rules, 1957- After detailed discussion it was held as follows :- "We are also of the opinion that in a case where a dealer is engaged both in mining operations and in the manufacturing process - the two processes being inter-dependent - it would be impossible to exclude vehicles which are used for removing from the place where the mining operations are concluded to the factory where the manufacturing process starts. It appears that the process of mining ore and manufacture with the aid of ore copper goods is an integrated process and there would be no ground for exclusion from the vehicles those which are used for removing goods to the factory after the mining operations are concluded." In the same decision the Apex Court further held that cane baskets which are required for carrying ores and other material used in the mining are also goods intended for use in the process of manufacturing or mining operations. This decision of the Supreme Court was sought to be distinguished in IDL Industries Ltd. by the learned Member (J) by observing that the process of mining and manufacturing are two different processes and therefore, cannot be considered as a continuous one. On the other hand, what has been observed by the Supreme Court is that the process of mining of copper ore and manufacturing of copper goods with the aid of such copper ore is an integrated process. The above decision cannot be brushed aside for the reason that it was rendered under the provisions of Sales Tax Act. This decision had been followed in Chowgule & Co. Pvt. Ltd. v. Union of India -1993 (67) E.L.T. 34 (S.C.). The relevant portion of the judgment is quoted below :- "The assessee submitted that mining of ore and processing it for purpose of sale by carrying out blending through the mechanical ore-handling plant constitute one integrated process and carrying the ore from the mining site to the river side to the Marmagoa harbour where the processing is being done, is part of this integrated process and hence the items of goods purchased for use in this latter operation are eligible for inclusion in the Certificate of Registration. We think there is great force in this submission of the Assessee. Where a dealer is engaged both in mining operation as also in processing the mined ore for sale, the two processes being inter-dependent, it would be essential for carrying on the operation of processing that the ore should be carried from the mining site where the mining operation comes to end to the place where the processing is carried on and that would clearly be an integral part of the operation of processing and if any machinery, vehicles, barges and other items of goods are used for carrying the ore from the mining site to the place of processing, they would clearly be goods used in processing of ore for sale." Therefore, I am inclined to agree with the view taken in CCE, Jaipur v.Hindustan Zinc Ltd. that the goods used for mining operation has to be treated as goods used in the manufacturing process.
24. It is submitted at the Bar that no appeal has been filed by the Revenue from the judgment of the Tribunal in CCE, Jaipur v. Hindustan Zinc Ltd. 25. In the light of the above discussion, I am of the view that there is no merit in the appeal filed by the Revenue and the appeal is only to be rejected.
In view of the majority opinion, the appeal filed by the Revenue is rejected.
Sd/- Sd/- (C.N.B. Nair) (Archana Wadhwa) Member (Technical) Member (Judicial) Dated : 19-4-200