Dr. Pramodchandra and ors. Vs. Ashwani Arora and ors. - Court Judgment

Excerpt:
- section 2(f): [dipak misra, k.k. lahoti & rajendra menon, jj] service tax - packaging and bottling of liquor whether amounts to manufacture within meaning of section 2(f) of central excise act 1944? finance act 932 of 1994), section 65 (76 b) (as amended on 16.6.2005) - held, the first limb of the inclusive definition of the manufacture under section 2(f) of central excise act has a very wide connotation. as the definition clause lays down an inclusive facet, the term manufacture has to be construed in a natural and plain manner and would include any process incidental or ancillary to the completion of a manufactured product. keeping in view the context in which the term manufacture has been used, it would take in its fold incidental and ancillary process in the manufacture or finishing of any manufactured product. it does not leave any room for doubt that an allied process should be integral and inextricable part of manufacture of completeness and presentability of the manufactured product. section 65(76b) of finance act used the words but it does not include. thus it is a definition which has the inclusive as well as exclusive facet. by virtue of the same it may include certain things and exclude others. it is well settled principle of law that a definition is not to be read in isolation and has to read in context of phrase which it defines, releasing that function of a definition is to give precision and certainty to the word or phrase which would otherwise be vague and uncertain. regard being had to the exclusionary fact in the finance act, though a limited one it would exclude the manufacturing process as defined under section 2(f) of the 1944 act. keeping in view the aforesaid dictionary clauses and circulars issued by the c.b.e.c. it is quite luminescent that would manufacture has to be understood in a broader sense and not to be confined or restricted to the excisable product in the act. it would include all processes which amount to manufacture whether or not the final product is an excisable product. in the process of manufacturing of country spirit, the over proof spirit which is not potable is reduced to issuable strength, which is potable. colouring and flavouring agents are added at the time of maturation. thereafter the liquor is supplied in sealed bottles to the retail contractors. this is the process of treatment given to over proof spirit in order to render it fit for human consumption in the form of country liquor. if the process is analysed there cannot be any scintilla of doubt that the process involves the manufacturing one under the provisions of section 2(f) of central excise act, 1944. as per the m.p. country spirits rules as well as clause 6 of the tender conditions it is mandatory for a distiller to supply country liquor in sealed bottles and not otherwise. therefore, packaging and bottling of liquor come within the ambit and sweep of manufacture within the meaning of clause (f) of section 2 central excise act, 1944 in view of the definition contained in section 65(76b) of the finance act especially keeping in view the exclusionary facet and further regard being had to the circular issued by central board of excise and customs. - the tribunal had rejected this contention holding that the insurer failed to prove its contention.r.v. raveendran, c.j.1. as these two appeals arise from the same judgment - one by the claimants (m.a. no. 947 of 2001) and other by the insurance company (m.a. no. 912 of 2001), they are heard together by consent and disposed of by this common judgment. as the ranks of the parties in the two appeals differ, the parties will be referred to by their ranks in the claim petitions.2. the claimants are the husband and two minor children of one dr. shobha shukla, who died in a motor accident on 20.3.1999 caused on account of negligence of the driver of truck bearing no. mp 09-d 7008 (of which respondent nos. 1, 2 and 3 are respectively the owner driver and insurer). deceased was 39 years old and was working as assistant professor in chemistry in government post graduate college, mhow. she was a postgraduate in science and held a doctorate in chemistry. her basic pay at the time of death was rs. 10,475 and with allowances, her total salary was rs. 13,827. the claimants filed the claim case no. 157 of 1999 claiming a compensation of rs. 50,00,000 before the motor accidents claims tribunal, mhow.3. after appreciating the evidence the tribunal by judgment and award dated 8.3.2001 allowed the claim petition in part. tribunal held the truck driver negligent. it awarded a compensation of rs. 5,10,295 with interest at the rate of 12 per cent per annum from the date of petition till date of payment. the tribunal deducted 30 per cent from the salary towards income tax, thereafter it deducted one-third for personal and living expenses of the deceased and again deducted another 50 per cent on the ground husband of the deceased who was employed as associate professor was having similar income.4. feeling aggrieved the claimants have filed m.a. no. 947 of 2001 for increasing the compensation. the insurance company has filed m.a. no. 910 of 2001 contending that the licence held by the driver of the truck was fake and, therefore, there was a breach of conditions of insurance policy and consequently it ought to have been exonerated. therefore, two points, arise for our consideration in this appeal:(i) whether the compensation awarded is low and requires to be increased?(ii) whether the insurer is to be exonerated from liability?re: point (i)5. we find that the tribunal committed several errors in calculating the loss of dependency and compensation. it did not take note of basic exemption when deciding upon the deduction for income tax. it had also not taken note of the fact that deceased would have earned yearly increments. it also committed a serious error in deducting 50 per cent after deducting one-third for personal and living expenses. we will, therefore, recalculate the compensation to which the claimants will be entitled.6. exh. p15 is the salary certificate which shows that the basic pay of the deceased was rs. 10,475 and total monthly salary was rs. 13,827. annual income of the deceased was, therefore, rs. 1,65,924. taking note of the fact that she would have earned increments in future and taking note of the income tax and profession tax payable, we deduct rs. 10,924 from the annual income (towards income tax and profession tax) leaving the net income as rs. 1,55,000.7. the family of the deceased consisted of herself, her husband and two minor children. in view of it, one-third will have to be deducted as standard deduction for the personal and living expenses of the deceased, to arrive at the contribution to the family per year. thus the annual loss of dependency would have been rs. 1,03,330. as the deceased was aged 39 years, proper multiplier would be 16. therefore, total loss of dependency will be rs. 16,53,280. to this we add a sum of rs. 11,720 under conventional heads, i.e., rs. 5,000 as loss of consortium, rs. 4,000 loss to estate and rs. 2,720 funeral expenses. thus, the total compensation to which the claimants will be entitled is determined as rs. 16,65,000.8. the tribunal has awarded interest at the rate of 12 per cent per annum with reference to the rate of interest prevailing at that time. having regard to the present rate of interest (on deposits with nationalised banks) we award interest at the rate of 6 per cent per annum on the enhanced amount.re : point (ii)9. the insurer contended that the driver had a fake licence. the tribunal had rejected this contention holding that the insurer failed to prove its contention.10. the matter is now covered by the decision of supreme court in national insurance co. ltd. v. swaran singh : air2004sc1531 , apart from the earlier decisions in new india assurance co. ltd. v. kamla : [2001]2scr797 ; united india insurance co. ltd. v. lehru : [2003]2scr495 . having regard to the principles laid down in the said decision the insurer cannot escape liability.11. accordingly the appeals are disposed of as follows:(i) m.a. no. 912 of 2001 is dismissed.(ii) m.a. no. 947 of 2001 is allowed in part and the compensation is increased from rs. 5,10,295 to rs. 16,65,000.(iii) while the amount awarded by the tribunal will carry interest at the rate of 12 per cent per annum, the increased compensation will carry interest only at the rate of 6 per cent per annum from the date of petition till date of payment.(iv) we apportion the compensation at the rate of 40 per cent each to the two children and 20 per cent to the husband.(v) in regard to deposits, the directions issued by the tribunal will apply.(vi) parties to bear their respective costs in both appeals.