# l 1 S.C.R. 780 MANGANESE ORE INDIA LTD v. STATE OF M.P. & ORS

- **Citation:** [2016] 11 S.C.R. 780
- **Court:** Supreme Court of India
- **Decided:** 2016
- **Case number:** Civil Appeal No. 2464 of 2016
- **Bench:** Dipak Misra, Shiva Kirti Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/l-1-s-c-r-780-manganese-ore-india-ltd-v-state-of-m-p-ors-31183
- **Pages:** 25

## Headnote

Madhya Pradesh Electricity Duty Act, 1949 - Explanation
(b) of Part B of Table of Rates of Duty to s. 3(1) -Interpretation of
term "processing" under the definition of "mine" - Grievance of
appellant pertains to definition of "mine" the effect of which is to
make processing a part of mining and prescription of higher rate of
duty for "mines" (i.e. a composite activity of mining and
processing) - Propriety of- Held: The word "processing" herein
would mean those processes with help of hands or machineries
connected and linked to mining activity- It would not include process
by which a new or differe.nt article other than one which has been
mined, is produced-The intent and purpose is certainly not to compel
and force a manufacturing unit set up at an acceptable distance
fi·om mine to pay electricity tariff at a higher rate - Pertinently, a
mamifacturing unit whether adjacent to the mine or not, would pay
a lower tariff - Thus, tariff has to be levied as meant for
mamifacturing unit- Electricity Tariff- Interpretation of statutes -
Maxim - Noscitur a sociis - Mines and Minerals.
Madhya Pradesh Electricity Duty Act, 1949 - Explanation
(b) of Part B of Table of Rates of Duty to s. 3(1) - Interpretation of
term "mineral" under the definition of "mine" - Plea of appellant
that manganese ore is a mineral but ferro manganese is not a mineral
because the said mineral is converted into "alloy" and ceases to be
mineral - However, the State contended that definition is an inclusive
one - Held: Appellant was using manganese ore as one of the raw
materials and consuming the same while manufacturing ferro
manganese alloy - The stage of crushing, treating, processing, etc.
of manganese ore was in Integrated Manganese Beneficiation Plant
(!MB Plant) stage, same cannot be applied in Ferro Manganese
780
MANGANESE ORE INDIA LTD v. STATE OF M.P. & ORS.
Plant Stage - Thus, Ferro Manganese Plant, being a unit involved
in manufacturing o,f ferro manganese alloy as opposed to a unit
involved in crushing, treating, processing, etc. of manganese ore,
cannot be treated within the extended definition of 'mine' - Mines
and Minerals.
Allowing the appeals, the Court
HELD: 1. The words 'crushing', 'treating' and 'transporting'
are words of narrower significance and the word 'processing' used
between these words should not be given a very wide meaning,
for the legislative intent is narrower. The word 'processing' would
take its meaning in the cognate sense. In other words, the general
word 'processing' will be restricted to the sense conveyed by the
words 'crushing', 'treating' and 'transporting'. The intent being
that electricity tariff payable in respect of mining activities would
include the mine itself, all machinery situated or located in the
mine or in a premises adjacent to the mine wherein crushing,
processing, treatment or transportation of the minerals as mined
is undertaken. The word 'processing' herein would mean those
processes with the help of hands or machineries connected and
linked to mining activity. It would not include process by which a
new or different article other than the one which has been mined,
is produced. It relates and signifies the composite activity of
mining and processing. The intent is not to include processes
which would lead to creation of a different commodity as known
in the commercial world for otherwise even manufacturing activity
would get covered, whereas manufacturing unit is liable to pay
electricity tariff at a lower rate. The intent and purpose is certainly
not to compel and force a manufacturing unit being set up at an
acceptable distance from the mine, for the manufacturing unit
adjacent to the mine would have to pay electricity tariff at a higher
rate. Pertinently, a manufacturing unit set up by another entity,
whether adjacent to the mine or not, would pay a lower tariff.
Such absurdity and irrationality has to be avoided. In the present
context, therefore, 'processing' would mean activities in order
to make

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[2016] l 1 S.C.R. 780
MANGANESE ORE INDIA LTD.
v.
STATE OF M.P. & ORS.
(Civil Appeal No. 2464 of 2016)
NOVEMBER 10,2016
[DIPAK MISRA AND SHIVA KIRTI SINGH, JJ.]
Madhya Pradesh Electricity Duty Act, 1949 - Explanation
(b) of Part B of Table of Rates of Duty to s. 3(1) -Interpretation of
term "processing" under the definition of "mine" - Grievance of
appellant pertains to definition of "mine" the effect of which is to
make processing a part of mining and prescription of higher rate of
duty for "mines" (i.e. a composite activity of mining and
processing) - Propriety of- Held: The word "processing" herein
would mean those processes with help of hands or machineries
connected and linked to mining activity- It would not include process
by which a new or differe.nt article other than one which has been
mined, is produced-The intent and purpose is certainly not to compel
and force a manufacturing unit set up at an acceptable distance
fi·om mine to pay electricity tariff at a higher rate - Pertinently, a
mamifacturing unit whether adjacent to the mine or not, would pay
a lower tariff - Thus, tariff has to be levied as meant for
mamifacturing unit- Electricity Tariff- Interpretation of statutes -
Maxim - Noscitur a sociis - Mines and Minerals.
Madhya Pradesh Electricity Duty Act, 1949 - Explanation
(b) of Part B of Table of Rates of Duty to s. 3(1) - Interpretation of
term "mineral" under the definition of "mine" - Plea of appellant
that manganese ore is a mineral but ferro manganese is not a mineral
because the said mineral is converted into "alloy" and ceases to be
mineral - However, the State contended that definition is an inclusive
one - Held: Appellant was using manganese ore as one of the raw
materials and consuming the same while manufacturing ferro
manganese alloy - The stage of crushing, treating, processing, etc.
of manganese ore was in Integrated Manganese Beneficiation Plant
(!MB Plant) stage, same cannot be applied in Ferro Manganese
780
MANGANESE ORE INDIA LTD v. STATE OF M.P. & ORS.
Plant Stage - Thus, Ferro Manganese Plant, being a unit involved
in manufacturing o,f ferro manganese alloy as opposed to a unit
involved in crushing, treating, processing, etc. of manganese ore,
cannot be treated within the extended definition of 'mine' - Mines
and Minerals.
Allowing the appeals, the Court
HELD: 1. The words 'crushing', 'treating' and 'transporting'
are words of narrower significance and the word 'processing' used
between these words should not be given a very wide meaning,
for the legislative intent is narrower. The word 'processing' would
take its meaning in the cognate sense. In other words, the general
word 'processing' will be restricted to the sense conveyed by the
words 'crushing', 'treating' and 'transporting'. The intent being
that electricity tariff payable in respect of mining activities would
include the mine itself, all machinery situated or located in the
mine or in a premises adjacent to the mine wherein crushing,
processing, treatment or transportation of the minerals as mined
is undertaken. The word 'processing' herein would mean those
processes with the help of hands or machineries connected and
linked to mining activity. It would not include process by which a
new or different article other than the one which has been mined,
is produced. It relates and signifies the composite activity of
mining and processing. The intent is not to include processes
which would lead to creation of a different commodity as known
in the commercial world for otherwise even manufacturing activity
would get covered, whereas manufacturing unit is liable to pay
electricity tariff at a lower rate. The intent and purpose is certainly
not to compel and force a manufacturing unit being set up at an
acceptable distance from the mine, for the manufacturing unit
adjacent to the mine would have to pay electricity tariff at a higher
rate. Pertinently, a manufacturing unit set up by another entity,
whether adjacent to the mine or not, would pay a lower tariff.
Such absurdity and irrationality has to be avoided. In the present
context, therefore, 'processing' would mean activities in order
to make the mineral mined marketable, saleable and
transportable, without substantially changing the identity of the
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SUPREME COURT REPORTS
(2016] 11 S.C.R.
mineral, as mined. When there is a substantial change at the
mineral mined and the process results in a different commodity
being produced or transforming and completely changing the
mineral, it would fall outside the scope of the word 'processing'.
The restricted construction will also be acceptable in view of the
use of the word 'mineral' in the end of the Explanation. The word
'mineral' in the Explanation is the product which was mined and
is put to 'crushing', 'processing', 'treatment' and 'transporting'
the mineral. In other words, mineral means mineral which was
mined and not a new product created by using or processing the
mineral mined. [Para 20] [796-G; 797-A-G]
Rohit Pulp and Paper Mills Ltd. v. Collector of Central
Excise 1990 (2) SCR 797 : 1990 (3) SCC 447;
Ahmedabad Pvt. Primary Teachers' Association v.
Administrative Officer & Ors.2004 (1) SCR 470 : 2004
(1) SCC 755; CIT v. Tara Agency 2007 (8) SCR 136 :
2007 (6) SCC 429; Orient Paper and Industries v.
State Qf MP. and Anr. 2006 (8) Suppl. SCR 790 : 2006
(12) SCC 468; and Aspinwall & Co. Ltd.
v.
Commissioner of Income Tax, Ernakulam 2001 (2)
Suppl. SCR 559 : 2001 (7) SCC 525- relied on.
2.1 Following is the seriatim in which the mining/
processing/manufacturing takes place: (a) First Stage : The
appellant mines manganese ore from its mines. There is a levy
of electricity duty on the appellant's consumption of electricity
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during mining at 40%, which the appellant is not disputing; (b)
Second Stage: Such mines manganese ore is processed by
removal of impurities in the appellant's Integrated Manganese
Beneficiation Plant (IMB Plant). During this process the cleaning
of mineral takes place by various methods to remove impurities
G and foreign contents for the enrichment of the manganese content
and during this process, the manganese mineral remains a mineral.
There is a levy of electricity duty on the appellant's consumption
of electricity of IMB Plant at 40%, which the appellant is not
disputing; (c) Third Stage: At the Ferro Manganese Plant, raw
materials like, processed manganese ore (for which 40%
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MANGANESE ORE INDJA LTD v. STATE OF M.P. & ORS.
electricity duty is already paid by IMB Plant), iron ore, coke,
dolomite, coal, carbon, etc., are by way of a manufacturing process.
A completely new product commercially known and sold in the
market as ferro manganese alloy which is a different product with
different chemistry and, through smelting in furnace. [Para 23]
[799-C-G]
2.2 To bring the Ferro Manganese Plant of the appellant
within the meaning of' mine', the State has argued that the Ferro
Manganese Plant is being "used for crushing, processing, treating
or transporting" the mineral, that is, manganese ore. This is
clearly unsustainable as the appellant is neither crushing or
processing or treating or transporting manganese ore but rather
using it as one of the raw materials and consuming the same while
manufacturing ferromanganese alloy. The state of crushing,
treating, processing, etc. of the manganese ore (mineral) was in
the IMB Plant (second stage), where the appellant is paying
electricity duty at 40%. The same rate cannot be applied in the
Ferro Manganese Plant (the third stage) as it cannot be taken to
be within the meaning of 'mine' for the aforesaid reason. [Para
24] [799-H; 800-A-C]
2.3 If a new substance is brought into existence or if a new
or different article having a distinctive name, character or use
results from particular processes, such process or processes
would amount to manufacture. [Para 25) [800-C-D]
Gramophone Co. of India Ltd. v. Collector of Customs,
Calcutta 2000 (1) SCC 549; Aspinwall & Co. Ltd. v.
Commissioner of Income Tax, Ernakulam 2001 (2)
Suppl. SCR 559 : 2001 (7) SCC 525; Servo-Med
Industries Pvt. Ltd. v. Commissioner of Central Excise
2015 (6) SCALE 137 - relied on.
2.4 The Ferromanganese Alloy so manufactured by the
appellant using the mineral Manganese at its Ferromanganese
plant is an entirely different product from its mineral raw material
both physically and even chemically. Moreover, unlike Manganese
ore a ferromanganese alloy can never be found in the natural state
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f20161 11 S.C.R.
A and it has to be manufactured from the manganese ore and other
minerals only. The same logic applies to copper concentrate as a
different and distinct product comes into existence. Thus
analyzed, in both the cases, the different products in commercial
parlance have emerged. Hence, the principle of 11oscitur a sociis
B has to be applied. As a logical corollary, tariff has to be levied as
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meant for manufacturing unit. [Paras 30, 31] [804-A-C]
State of MP v. Bir/a Jute Mfg. Co. Ltd. 199S (1)
Suppl. SCR 271: 199S ( 4) SCC 603; Hindustan Copper
Ltd. v. State of MP and others 2004 (12) SCC 408;
State of WB. v. Kesoram Industries Ltd. And others
2004 (1) SCR S64 : 2004 (10) SCC 201; Uranium
Corporation of India Ltd., Bihar v. Collector of
Central Excise, Patna 198S (19) ELT 609; V. P.
Pithupitchai and another v. Special Secretary to the
Govt. of TN. 2003 (3) SCR 104S : 2003 (9) SCC S34;
Stone Crusher Owners Association and other v. MP
Electricity Board and others MP No. 673/1993;
Minerals and Metals Trading Corporation of India Ltd.
v. Union of India and others 1973 (1) SCR 997: 1972
(2) SCC 620; East India Tobacco Co. v. State of Andhra
Pradesh 1962AIR1733 :1963 SCR 404; Elel Hotels
and Investments
Ltd.
v.
Union of India
1990 AIR 1664 : 1989 (2) SCR 880 : 1989 (3) sec
698 and Govt. of A.P v. P. Laxmi Devi 2008 (3)
SCR 330: 2008 (4) SCC 720;Tarlochan Dev Sharma
v. State of Punjab & Ors. 2001 (3) SCR 1146 : 2001
(6) SCC 260; Union of India v. Harjeet Singh
Sandhu 2001 (2) SCR 1127 : 2001 (5) SCC S93 -
referred to.
Principles of Statutory Interpretation - referred to.
Case Law Reference
199S (1) Suppl. SCR 271
2004 (12) sec 408
H 2004 (1) SCR S64
referred to
referred to
referred to
Paras
Paras
Para 10
MANGANESE ORE JNDIALTD v. STATE OF M.P. & ORS.
785
1985 (19) ELT 609
referred to
Para 10
A
2003 (3) SCR 1045
referred to
ParalO
1973 (1) SCR 997
referred to
Para 10
1963 SCR 404
referred to
Para 11
1989 (2) SCR 880
referred to
Para 11
B
2008 (3) SCR 330
referred to
Para 11
2001 (3) SCR 1146
referred to
Parall
2001 (2) SCR 1127
referred to
Para 11
1990 (2) SCR 797
relied on
Para 18
c
2004 (1) SCR 470
relied on
Para18
2007 (8) SCR 136
relied on
Para 19
2006 (8) Suppl. SCR 790
relied on
Para 19
2001 (2) Suppl. SCR 559
relied on
Para 19, 26
D
2000 (1) sec 549
relied on
Para24
2015 (6) SCALE 137
relied on
Para27
CJVJLAPPELLATE JURISDICTION : Civil Appeal No. 2464
of2016.
E
From the Judgment and OrderdatedOl .12.2011 of the High Coutt
ofMadhya Pradesh Principal Seat atJabalpur in Writ Petition No. 9017
of2010
WITH
C.A. Nos. 2465-2467 of 2016.
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Mukul Rohatgi,AG, P. P. Rao, Sr.Adv., T. G Narayanan Nair,
Devashish Bharuka, K. N. Madhusoodhanan, Ravi Bharuka, R. K. Sanghi,
Ms. Nandini Sen, Deba Prasad Mukherjee, Advs. for the Appellant.
Amalpushp Shroti, B. S. Banthia, Mishra Saurabh,Amit Kumar
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Lal, Advs. for the Respondents.
The Judgment of the Court was delivered by
DIPAK MISRA, J. l. In this batch ofappeals, by special leave,
the appellants have assailed the legal tenability of separate orders dated
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[2016] II S.C.R.
A 01.12.2011 passed in Writ Petition No. 9017 of20 I 0 which relates to the
writ petition filed by Manganese Ore India Ltd. and M.P. No. 2821 of
1988, M.P. No. 3827of1993 and W.P. No. 3103of1994 preferred by
Hindustan Copper Limited.
B
2.
As the commonality of controversy centres around
interpretation of the terms "mineral" and "processing" under the definition
of"mine" as defined under Explanation (b) of Part-B of Madhya Pradesh
Electricity Duty Act, 1949 (for brevity, "the Act"), we shall enumerate
the scheme of the Act and the various litigations that have taken place
and thereafter advert to the facts in each case. For brevity and to avoid
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repetition, we have initially referred to the litigation and different orders
passed in the case of Hindustan Copper Limited.
3.
The erstwhile Central Provinces and Berar Legislative
Assembly had enacted the CP and Berar Electricity Duty Act, 1949
which was adopted in the State of Madhya Pradesh and has come to be
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known as the Madhya Pradesh Electricity Duty Act, 1949. The Preamble
to the Act as amended by the State Legislature provides that it is an Act
for the levy of duty on sale or consumption of electrical energy. Section
3(1) of the Act accordingly provides for levy of duty on sale or
consumption of electrical energy. It stipulates that subject to the exceptions
E specified in Section 3-A, every distributor of electrical energy and every
producer shall pay every month to the State Government at the prescribed
time and in the prescribed manner a duty calculated at the rates specified
in the table below on the units of electrical energy sold or supplied to a
consumer or consumed by himself for his own purposes or for purposes
F of his township or colony, during the preceding month. The table to
Section 3(1) prescribes different rates of duty depending for the purpose
for which the electrical energy is sold. Part-B of the table provides for
different rates of duty forthe electrical energy-sold, supplied or consumed
for the purposes therein. Item 3 to the said table reads as follows:-
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"3. Mines (other than captive
mines of cement industry)"
40
4. The numeral 40 comes under the heading 'rate of duty as
percentage of the electricity tariff per unit'. The Explanation (b) to
Section 3(1) defines "mine" as under:-
MANGANESE ORE INDIA LTD v. STATE OF M.P. & ORS.
[DIPAK MISRA, J.]
"Explanation .-(b) "Mine" means a mine to which the Mines
Act, 1952 (No. 35of1952) applies and includes the premises or
machinery situated in or adjacent to mine and used for crushing,
processing, treating or transporting the mineral."
5.
It is necessary to state here that Hindustan Copper Limited
had filed a Writ Petition to strike down the provision of Section 3 and the
Table Part-B Item 4 (which is now Item No. 3 after 1995 amendment)
and Explanation (b) which contains extended definition of mines as ultra
vires the Constitution. As the factual matrix would reveal, the High
Court dismissed the Writ Petition by placing reliance on State of M.P. v.
Bir/a Jute Mfg. Co. Ltd. 1• The matter travelled to this Court which
eventually formed the subject matter of Civil Appeal Nos. 3248-50 of
1998. A two-Judge Bench of this Court in Hi11dusta11 Copper Ltd. v.
State of M.P. and others1 taking note of certain facts opined that the
main controversy that was required to be examined by the High Court
was as to how the word "mines" is to be understood as contained in
clause (b) of the Explanation under Item 4 of the Table contained in
Section 3 of the Act. This Court took note of the contentions of the
appellant therein that the activities carried on by it do not fall within the
meaning of the word "adjacent" area and further the approach of the
respondents was selective and discriminatory. As the submissions raised
were not dealt with by the High Court but it proceeded to dispose of the
case without examining the facts in greater details in regard to either the
activities carried on at different places by the appellant or as to how in
the context of the facts of the case and having due regard to the provisions,
the word "adjacent" should be construed, the Court remitted the Writ
Petition to the High Court by stating so:-
"Under the circumstances, we consider it just and appropriate
that the High Court should examine afresh the contentions
advanced on behalf of the parties, having due regard to the materials
placed on record and in the context of the provisions of the Act
touching the controversy. Since we are taking a view to remit the
case to the High Court, we do not wish to express one way or the
other on the merits of the respective contentions urged by the
parties .... "
1 (1995)4 sec 603
2 (2004) 12 sec 4os
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6. After the remit, the High Court heard the Writ Petition and
dismissed the same. The order passed by the High Court was assailed in
appeal, !Jy special leave, in Civil Appeal No. 6725 of2008. In the second
round, the two-Judge Bench stated the facts in detail which are to the
effect that the appellant therein is engaged in extraction of copper ore,
by open cast mining process involving drilling and blasting the ore in the
open pit mine, the.ore in the form of boulders are transported to the
primary crusher (situated at a distance of2.53 km from the mine), where
it is crushed into pebbles/pieces and such crushed ore is then carried on
a conveyor to a secondary crusher (situated at about 5 km from the
mine) for further crushing into smaller pebbles. After the said stage,
small pieces/pebbks are then carried by a conveyor to the Concentrator
Plant (situated at 5.5 km from the mine).
7.
This Court further proceeded to state the facts adumbrated
as projected by the appellant before the High Court. It was asserted
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that:-
"4. In the Concentrator Plant, the ore is milled into powder in the
ball mills. Such powder mixed with water is carried in the form
of slurry to floatation cells. In the floatation cells, the slurry is
subjected to froth floatation process and the copper concentrate
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is removed and dried in vacuum driers and stored in concentrate
storage sheds. The tailing pumps are at a distance of8 km. A
large quantity of water is required for the Concentrator Plant for
being used in milling. Water is also required for the factory
township. The required water is pumped from the mines through
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pumps located at an intake well (situated at a distance of l 0 km
from the mine). From the intake well, water is pumped to water
treatment plant (situated at a distance of6 km from the mine).
5. According to the appellant, its activities consist of two distinct
parts. First is mining, that is, drilling, blasting and collecting of ore
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which is carried on at mine pit. This activity is carried on in the
mine area registered under the Mines Act, I 952. The second is
processing, which is carried on at the primary crusher, the
secondary crusher and the Concentrator Plant. The processing
(manufacturing) part of the activities are carried on in the factory
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area. The primary crusher, the secondary crusher, the ball mill,
MANGANESE ORE INDIA LTD v. STATE OF M.P. & ORS.
[DIPAK MISRA, J.]
the Concentrator Plant, the tailing pumps, the intake well and the
water treatment plant are situated away from the mine, at
distances varying from 2.5 km to I 0 km and are registered
separately as a "factory" under the provisions of the Factories
Act, 1948. The open pit mine (mining area) and the processing
plants/machineries (factmy area) are all situated in a large tract
ofland taken on mining lease from the State Government."
8.
The two-Judge Bench adverted to the chronology of the case
and noted that the principal grievance of the appellant therein pertains to
the definition of"mine" the effect of which is to make processing a part
of mining and the prescription ofa higher rate of duty for "mines" (that
is composite activity of mining and processing), while prescribing a lesser
rate for other categories of industries. That apart, the Court taking note
of the fact that classification of factories into two categories: (a) those
which are adjacent to a mine and used for crushing, processing, treating
and transporting the mineral; and (b) other factories is permissible. It
was urged on behalf of the appellant that the expression "adjacent to the
mines" is vague and ambiguous that leads to discriminatory treatment by ,
the authorities. Further, its processing plant, that is, the primary crusher,
the secondary crusher, the ball mill, the Concentrator Plant, the tailing
pumps, the intake well and the water treatment plant are not situated
"adjacent" to its mine and therefore could not be treated as "mine" for
the purpose oflevy of electricity duty. The Court also took note of the
issues framed by the High Court after the order ofremit on the earlier
occasion. The said issues read as follows:-
"(i) Whether prescribing different rates of tax for processing
plant and machinery adjacent to a mine ('factory' falling within
the extended definition of 'mine'), and other factories is
discriminatory and arbitrary and therefore violative of Articles
14 and 19 of the Constitution oflndia?
(ii) Whether definition of the word 'mine' in Explanation (b) in
the Table under Section 3 of the Act, gives unguided discretion to
authority under the Act to decide what is 'adjacent to a mine'
and therefore invalid.?
(iii) Whether use of the words 'adjacent to a mine' would mean
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SUPREME COURT REPORTS
[2016] 11 S.C.R.
only the premises or machinery abutting to or adjacent to the
mine, and not premises or the plant/machinery situated at a
distance of about 2.5 to 6 km?
(iv) Whether the State had applied different yardsticks in charging
duty to petitioner and in charging duty to Bhilai Steel, Balco,
Manganese Ore India Ltd. and thereby practised discrimination?"
9.
It is imperative to state here that a contention was advanced
by the appellant therein that the High Court had not considered the real
issues and the questions formulated for determination did not cover the
actual issues and disputes involved. The Cou11 proceeded to state the
controversy in followingterms:-
"21. The Act was amended by the M.P. Electricity Duty
(Amendment) Act, 1986 (in short "the Amendment Act").
Different rates of duty are provided in Pa11 B. In the said Part,
clause ( 4) relates to the mines other than the captive mines of
cement factory and the rate is 50 paise per unit of energy.
Explanation (b) defines ;;mine" as follows:
"(b) ;mine' means amine to which the Mines Act, 1952 (
35of1952) applies and includes the premises or machinery
situated in or adjacent to a mine and used for crushing,
processing, treating or transporting the mineral."
22. It was submitted that the entry relating to mines refers to
processing, treating or transporting the mineral. According to the
learned Solicitor General the stress is on the expression "mineral".
It was pointed out that the appellant is manufacturing "copper
concentrate" which is not a mineral and it is not doing "mining"
so far as it is covered by clause (7) forother industries not covered
under the above categories where the rate is 5 paise per unit of
energy. Essentially the submission is that the Explanation only
relates to mining or minerals. What is excisable is "copper
concentrate" because there is a process of manufacturing
involved. It is seen that Points (iii) and (iv) formulated by the
High Court for determination are really relevant. But the points
have not been correctly formulated to cover the actual essence
of the dispute. The correct question would be as follows:
MANGANESE ORE INDIA LTD v. STATE OF M.P. & ORS.
[DIPAK MISRA, J.]
"Whether copper concentrate is a mineral and whether
Explanation to Part B of the Act applies even though
manufacturing process is involved to bring it into existence?""
In view of the aforesaid, this Court set aside the impugned judgment
and remanded the matter to the High Court for fresh consideration of
the question framed permitting the parties to place material in support of
their respective stands.
I 0. After the remand, before the High Court it was contended
that mineral is something which grows in the mine and is capable of
being won or extracted so as to be subjected to the better or precious
use. It was further contended that copper ore is extracted at the mine
pit and then it is subjected to processing whereafter copper ore becomes
copper concentrate which is a different commodity which is an excisable
product. On that basis, it was urged that copper concentrate is not a
"mineral" and consequently, Explanation (b) to Part-B of Section 3 of
the Act will notapply. Reliance was placed on State ofW.B. y. Kesoram
Industries Ltd. and others3 and Uranium Corporation of India Ltd.,
Bihar v. Collector of Central Excise, Patna4• On behalf of the State,
it was urged that copper concentrate is a "mineral" regard being had to
the definition contained in Section 2(jj) of the Mines Act, 1952 (for short,
"the 1952 Act") as well as Schedules I and II appended to the Mines and
Minerals (Development and Regulation) Act, 1957. The Division Bench
was commended to the authority in V.P. Pithupitchai and another v.
Special Secretary to the Govt. of T.N. 5 and the decision of the Division
Bench of the High Court in Stone Crusher Owners Association and
other v. M.P. Electricity Board and others6• On behalf of the
respondents, the competent authority of the M.P. Electricity Board
contended that the copper ore does not cease to be a "mineral" merely
because it is subjected to the stated processing and therefore the copper
concentrate does not lose its identity as a mineral. It was further submitted
that even though the copper ore is subjected to processing yet its chemical
structure does not change by placing reliance on the decision in Minerals
'(2004) 10 SCC201
' 1985 (19) ELT 609
'(2003) 9 sec 534
6 MP No. 673/1993
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and Metals Trading C01poratio11 of India Ltd. v. Union ofI11dia and
others7•
B
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11. The High Cou1t considering the rivalised submissions at the
Bar, came to hold that the State has the authority to pick and choose
districts, objects, persons, methods and even rates for taxation ifit does
so reasonably and for the said purpose placed reliance on East India
Tobacco Co. v. State of Andhra Pradesh 8• It further opined that while
latitude is available to the legislature in the matters of classification of
objects, persons and things for purposes of taxation and it has to be so
havingregard to the complexities involved in the formulation of taxation
policy. To express the said opinion, the High Court placed reliance on
El el Hotels am! Investments Ltd. 11. Union of lndia9 and Govt. of A.P.
v. P. Laxmi Devi 10 • Thereafter it referred to subject-and-object rule
and in that regard reproduced a passage from Principles of Statutory
Interpretation 11 and commended itself to the authorities in Tarloclum
D Dev Sharma v. State of Punjab & Ors. 11 and Union of India v. llarjeet
Singh Sandhu 13 • After stating the legal proposition in the aforesaid
manner, the High Court ruled that the 1949 Act is an enactment meant to
provide for levy of duty on sale or consumption of electrical energy and
the Act has been enacted in exercise of power under item 48 (b) List II
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of the Government oflndiaAct, 1953 which corresponds to Entry 53 of
List II of the Vllth Schedule of the Constitution oflndia, namely, tax on
consumption or sale of electricity. It referred to Section 3 of the Act and
the definition of the term 'mine' and deduced that electricity duty under
the Act is a tax which is levied on sale of consumption of electricity and
fu1ther proceeded to state that if the table appended to Section 3 of the
Act is seen, the classification for the purpose oflevy of electricity duty is
based on the purpose for which the electrical energy is sold or consumed
and the classification table for the purpose oflevy of duty. Dealing with
the facet of classification, the High Court observed that:-
"The classification made under Section 3 of the Act has a clear
1 (1972) 2 sec 620
8 AIR 1962 SC 1733
9 (1989) 3 sec 698 =AIR 1990 SC 1664
10 (2008) 4 sec 120
11 Justice GP. Singh, 12th Edn .. Page 349-350
12 (2001 l 6 sec 260
" (2001) 5 sec 593
MANGANESE ORE.INDIA LTD v. STATE OF M.P. & ORS.
[DIPAK MISRA, J.]
nexus with the object sought to be achieved, namely, raising
revenue by grouping different types ofindustries and prescribing
different rates of duty depending upon the nature of the industry.
The highest rate of electricity duty is prescribed by the legislature
in its wisdom for the mining industry. The object of prescribing
the highest rate of electricity duty appears to tax the person/
industry exploiting the nature wealth which is non-renewable.
The exploiter has been required to contribute more, so that such
contribution is, hopefully, utilized forthe welfare of the people to
whim such natural wealth belongs".
12. After so stating, it adverted to the anatomy of the definition
of the term 'mine' and observed that the expression creates a legal fiction
and, therefore, the definition will embrace only what is comprised within
the ordinary meaning of'mine' part, together with what is mentioned in
the inclusive part of the definition and, therefore, as per well settled rules
of statutory interpretation has to be read with regard to subject and object
of the Act. The Court proceeded to state that the object of the Act is to
raise revenue by prescribing rate of duty and the highest rate of duty is
prescribed for mining industries as it is exploiting the natural wealth which
is non-renewable, therefore, it must pay higher rate of duty which can be
utilized for meeting the essential expenditures by the State Government.
Thereafter, the High Court held:-
"Taking into account the fact that the expression 'mine' creates
a legal fiction and ifthe word 'mineral' is read subject to the
context and object of the Act, it is graphically clear that wide
meaning has to be given to expression 'mineral'. If the copper
ore is converted to copper concentrate by processing, it only
enriches content of copper in the copper concentrate and it does
not cease to be 'mineral' merely on its conversion from copper
to copper concentrate.
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In view of the preceding analysis, in our considered opinion
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copper concentrate is a mineral as defined in explanation (b) to
Part B of Section 3 of the Act and, therefore, the explanation (b)
to Part B of Section 3 of the Act applies to it.
Besides "copper concentrate: is the end product. What is
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'crushed, processed, treated or transported' is not copper
concentrate' but the ore. The electricity in question is being
consumed for such "crushing, processing, treating or
transportation"."
13. Dwelling upon the word "adjacent" and the argument raised
pertaining to discrimination between industries located in close proximity
of the mine and other industries carrying on the same activity, namely,
'crushing, processing, treating or transportation', which are not located
in such close proximity of the mine, the Division Bench opined that:-
"The word 'adjacent' does not mean 'adjoining' or 'abutting',
but has a wider connotation, and would include close proximity
such being in the same locality. This proposition is not disputed,
and therefore, it is not necessary to refer to the case law cited
for the meaning of the word 'adjacent'. fn reply the learned
Additional Advocate General submits that this differentiation is
justified because the increased overheads such as transportation
costs have been considered for not subjecting the far away
industries to higher tax".
14. When the matter was listed for hearing, Mr. Mukul Rohtagi,
learned Attorney General appearing for the Manganese Ore India Ltd.
and Mr. P.P. Rao, learned senior counsel appearing for Hindustan Copper
Ltd. urged that the High Court has fallen into grave error by imposing
the electricity duty on the basis of the definition engrafted under
Explanation (b) to Section 3(1) of the 1949 Act. It was contended by
Mr. Rohtagi that manganese ore is a mineral under the Mines Act, 1952
but ferro manganese is not a mineral because the said mineral is converted
into "alloy" and ceases to be a mineral. Mr. P.P. Rao, learned senior
counsel submitted that copper is a mineral but copper concentrate does
not contain any character of a mineral and, therefore, the duty has to be
charged at the rate of 8% and not at the rate of 40%.
15. Mr. Saurabh, learned counsel for the State, per contra,
contended that the definition is an inclusive one and hence, when the
mineral is processed for the purpose of conversion to alloy, duty at the
rate of 40% is leviable. Learned counsel for the State would submitthat
the view expressed by the High Court is absolutely defensible.
MANGANESE ORE INDIA LTD v. STATE OF M.P. & ORS.
795
[DIPAK MISRA, J.]
16. The thrust of the matter is whether the aforesaid activity
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after the mineral i.e. ore has been mined would be covered by the word
'processing' used in the Explanation B to Item 3( I) which defines the
term 'mine'. Mine as per the said explanation means a mine as to which
the Mines Act, 1952 applies. The word "mine" as defined in the Mines
Act, 1952 reads as follows:-
B
"U) "mine" means any excavation where any operation for the
purpose of searching for or obtaining minerals has been carried
on, and includes
(i-iv) .....
(v)
all conveyors or aerial ropeways provided for the bringing
into or removal from a mine of minerals or other articles or for
the removal of refuse therefrom;
(vi) all adits, levels, machinery, railways, tramways and sidings
in or adjacent to and belonging to a mine;
(vii)
all protective works being carried on in or adjacent to
the mine;"
17. The word 'minerals' as defined in the Mines Act, 1952 reads
as follows:
"(ii)"minerals" mean all substances which can be obtained from
the earth by mining, digging, drilling, dredging, hydraulicking,
quarrying or by any other operation and includes mineral oils
(which in tum include natural gas and petroleum)".
18. Mining would comprehend every activity by which the mineral
is extracted or obtained from earth irrespective of whether such activity
is carried on at the surface or in the bowel, but it must be an activity for
winning a mineral. For the purpose ofltem 3 'mine' to which electrical
energy is sold, supplied or consumed, it would include machinery or
premises situated in the adjacent to the mine, provided the electricity is
used for crushing, processing, treating or transporting the minerals. The
word 'mineral' used in the aforesaid Explanation under the Act would
have reference to the mineral which is mined and is then crushed,
processed, treated or transported. The word 'processing' used in the
Explanation has to be interpreted in the context and for the purpose of
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the said item. Process can be given either a wide or a narrow meaning.
In the context in which it is used in the Explanation, we are disposed to
think that it must be given a meaning which emerges when we apply the
rule of noscitur a sociis which means that the meaning of the word is to
be judged by the company it keeps. [See: Ro/tit Pulp alld Paper Mills
Ltd. v. Collector of Celltral Excise'•]. The rule of noscitur a sociis
has been applied and accepted in Altmedabad Pvt. Primary Teachers'
Associatio11 v. Admillistrative O.ffecer & Ors. 15 We would prefer to
construe the said word in the Explanation with reference to the words
before and after for the word 'processing' used therein. The word
'processing' herein, we think, should be interpreted and understood with
the associated words 'crushing' and 'treating'. The word 'processing'
is susceptible of the meaning keeping in view the word 'crushing' and
'treatment' used before and afterwards.
19. We are absolutely conscious that noscitur a sociis rule is
not applied when the language is clear and there is no ambiguity, which
according to us does exist and perceptible in the Explanation in question.
A very broad and a wide definition of the term 'processing' ifapplied,
would include manufacture ofa new or distinct product. Manufacture
normally involves a series of processes either by hand or machine. [fa
restricted construction is not applied it would create and give rise to
unacceptable consequences. It is not the intent to treat and regard
manufacturing activities as processing. Manufacturing, as is understood,
means a series of processes through different stages in which the raw
material is subjected to change by different operations. [For different
between process and manufacturing see C/Tv. TaraAgellcy 16, Oriellt
Paper alld Industries v. State of M.P. a11d Anr. 17 and Aspinwall &
Co. Ltd. v. Commissioner of Income Tax, Emakulam 18.]
20. The words' crushing', 'treating' and 'transporting' are words
of narrower significance and the word' processing' used between these
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words should not be given a very wide meaning, for the legislative intent,
according to us, is narrower. The word. 'processing' would take its
"(1990) 3 sec 447
"(2004) 1 sec 755
" (2007) 6 sec 429
11 (2006) 12 sec 468
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"(2001) 1sec525
MANGANESE ORE INDIA LTD v. STATE OF M.P. & ORS.
[DIPAK MISRA, J.]
meaning in the cognate sense. In other words, the general word
'processing' will be restricted to the sense conveyed by the words
'crushing', 'treating' and 'transporting'. The intent being that electricity
tariff payable in respect of mining activities would include the mine itself,
all machinery situated or located in the mine or in a premises adjacent to
the mine wherein crushing, processing, treatment or transportation of
the minerals as mined is undertaken. The word 'processing' herein would
mean those processes with the help of hands or machineries connected
and linked to mining activity. It would not include process by which a
new or different article other than the one which has been mined, is
produced. It relates and signifies the composite activity of mining and
processing. The intent is not to include processes which would lead to
creation of a different commodity as known in the commercial world for
otherwise even manufacturing activity would get covered, whereas
manufacturing unit is liable to pay electricity tariff at a lower rate. The
intent and purpose is certainly not to compel and force a manufacturing
unit being set up at an acceptable distance from the mine, for the
manufacturing unit adjacent to the mine would have to pay electricity
tariff at a higher rate. Pertinently, a manufacturing unit set up by another
entity, whether adjacent to the mine or not, would pay a lower tariff.
Such absurdity and irrationality has to be avoided. In the present context,
we would, therefore, hold 'processing' would mean activities in order to
make the mineral mined marketable, saleable and transportable, without
substantially changing the identity of the mineral, as mined. When there
is a substantial change at the mineral mined and the process results in a
different commodity being produced or transforming and completely
changing the mineral, it would fall outside the scope of the word
'processing'. The restricted construction will also be acceptable in view
of the use of the word 'mineral' in the end of the Explanation. The word
'mineral' in the Explanation is the product which was mined and is put to
'crushing', 'processing', 'treatment' and 'transporting' the mineral. In
other words, mineral means mineral which was mined and not a new
product created by using or processing the mineral mined.
2 I. Be it noted, learned counsel forthe appellants would submit
that the metals and minerals available in the earth are rarely found in the
pure forms and degree of purity that the ultimate users demand. They
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are intimately mixed, physically or chemically and often both, with other
substances. For use, the good must be separated from the worthless
substances.