1. The question now surviving for consideration before us against order dated 16-6-81 passed by the Central Board of Excise and Customs is whether the Aluminium bars manufactured by the appellants by continuous casting and rolling process are aluminium in crude form and are eligible for exemption under Notification No. 43/75-CE dated 1-3-1975.
2. The proceedings against the appellants are the outcome of visit dated 23-12-1977 by Superintendent, Central Excise, with Special checking squad to the appellants' factory. The officers observed that wire rod/bar not eligible for exemption under Notification No. 43/75, dated 1-3-1975 was being manufactured and cleared as crude aluminium bar without payment of duty as eligible for exemption under the said notification. The officers compared what the appellants were clearing as aluminium bars without payment of duty with wire rod manufactured by the appellants in the same factory and were of the view that a slight deviation in the roundness of the product was intentionally brought into disguise it as a bar solely for the purpose of incorrect classification and evasion of duty of excise. The product was manufactured by continuous casting and rolling process-the same process in which wire rods were manufactured in the same factory. Discreet enquiries revealed that the product cleared as aluminium bar by the appellants was intended for manufacture of wires and cables and was used for the same purpose by the recipients of the product. The quantity of such wire rods/bars manufactured during the period May 1977 to December 1977 was 143.442 MT and this was done without payment of duty under 'nil' duty gate passes. On this very allegation a quantity of 3.533 MT of aluminium wire rods/bars available in the stock was seized by the officers of the squad. It was alleged in the Show Cause Notice that in the annual report of the appellant firm for the year 1976-77 the product was referred to as wire rod but in all accounts maintained for Central Excise purposes it was referred to as aluminium bars. The Show Cause Notice charged the appellant with manufacturing wire rods/bars weighing 146.975 MT during May 1977 to December 1977 and declaring them as aluminium bars in Excise documents and clearing the removing a quantity of 143.442 MT without payment of duty. The appellants were called upon inter alia to show cause why duty be not demanded and penalty be not imposed for breach of various provisions and rules of the Central Excise Rules, 1944. The appellants denied the charges and resisted the demand on various grounds. After following the usual procedure the Collector of Central Excise by Order-in-Original datet. August 1980 found the revenue's case made out and found against the appelland The main reasoning of the Collector for finding against the appellant is that Notification No. 43/75 extends the exemption to only aluminium in crude form and castings. Tariff Item 27 distinguishes between the wire bars and wire rods and castings not otherwise specified even though they have been placed in the same sub-heading. He observed "Considering all the facts stated it is not important to determine whether the goods are bars or rods. What is to be determined is whether they are castings or whether they are aluminium in crude form. The exemption is available to the last two products. It is not available to wire bars and wire rods. The exemption extends to bars which can be described as aluminium in crude form. From the method of production adopted in this factory, the goods cannot qualify as exempted bars as they cannot be described as 'aluminium in crude form'.
It will be noted that the tariff item 27(a)(i) has a definite pattern.
The aluminium in crude form includes, ingots, bars, blocks, slabs, billets, shots and pellets. All these are crude aluminium on which there has been no working or processing. A bar of the type produced by M/s. Continuous Castings Ltd. which has undergone so much processing in a modern mill can by no stretch of imagination be described as 'a bar of aluminium in crude form". The Collector held that the appellants were not eligible for exemption under Notification No. 43/75 in respect of their bars and he demanded duty invoking five-year time limit. He also imposed a penalty of Rs. 15 lakhs under Rule 173-Q of Central Excise Rules, 1944. He further ordered confiscation of 3.533 MT of goods seized to be released on redemption fine of Rs. 10 lakhs. In appeal the Board, after referring to the ISI definition of 'wire bar' and the opinion of the Chief Chemist in para 31 of the order held that the goods had been correctly described as bars by the appellants. It, however, rejected the appellants' claim for exemption under notification on the grounds that the bars manufactured and cleared by the appellants had been manufactured by a continuous casting and rolling process and not by mere casting and the process of rolling took the goods out of the crude category. It upheld the finding of the Collector in rejecting the appellants' contention that bars manufactured by them retained their crude character and were eligible for exemption under Notification No. 43/75. It rejected the appellants' claim for time-bar. The demand of duty for the period and quantity set out above was confirmed. There was some allegation about wrong declaration of valuation in respect of which the Collector found against the appellants. This aspect of the matter was remanded to the Collector of Central Excise for de novo examination and the question is no more an issue before us. Confiscation of goods 3.544 MT and the redemption fine on the same was set aside. Penalty of Rs. 15 lakhs was reduced to Rs. 5 lakhs. Aggrieved, the appellants filed Revision Application against the Government of India which is now the appeal before us.
3. At the hearing of the appeal Shri S. Parvatha Rao, Advocate, represented the appellants and Shri H.L. Verma, SDR, the respondent.
Shri Parvatha Rao explained the processes in detail to which the appellants' products what they described as 'bars' were subjected to in the continuous casting process. As we propose to decide the appeal on purely legal considerations, it is not necessary to refer in detail to these processes. The question surviving for consideration before us is whether the appellants' product which the Board of Excise and Customs found to be aluminium bars and which were obtained through continuous casting and rolling process could merit exemption under Notification No. 43/75, dated 1-3-1975 or would be ineligible for the same because of the processes to which they had been subjected.
4. For ease of reference, relevant part of Item 27-Aluminium-is extracted below :(i) In any crude form (including ingots, 30% ad valorem plus bars, blocks, slabs, billets, shots and Rs. 2,000/- per metric pellets) tonne.(ii)Wire bars, wire rods and castings, not -do- otherwise specified.
Notification No. 43/75-CE, dated 1-3-1975 granted exemption to aluminium of the description specified in column 3 of the Table appended to the Notification and falling under sub-items specified in corresponding entry of Col. 2 of the said Table of Item No. 27 of the Ist Schedule to the Central Excises and Salt Act, 1944, as was in excess of the duty specified and subject to the conditions laid down in the corresponding Entries in Columns 4 and 5 of the Table :2(a)Aluminium in any crude If manufactured from any form (including ingots, bars, of the following materials blocks, slabs, billets, shots, or a combination thereof, pellets) and castings.
namely:- There is no dispute that the appellants' product which the Board found to be bars be held to be aluminium in any crude form, it fulfils the conditions set out in Col. 5 of the Table annexed to the notification.
5. It would be seen that the words 'in any crude form' are followed by the word 'including'. Thereafter there is a list of products after the word 'including'. The Notification No. 43/75 Serial No. 2A Col. 3 is similarly worded. The Item and the notification thus employ an inclusive definition. The meaning and effect of using the word 'includes' or 'including' has been subject matter of a number of judicial decisions and commentary. Maxwell on the Interpretation of Statutes, 12th Edition, relying on Ditworth v. Commissioner of Stamps-(1899) AC 99 about use of the word'include'says as follows : "Sometimes, however, the word 'include' is used 'in order to enlarge the meaning of words or phrases occurring in the body of the statute ; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include." G.P. Singh in his Principles of Statutory Interpretation 3rd Edition at pages 138 and 139 observes "where the word defined is declared to 'include' such and such, the definition is prima facie extensive". For this observation under Footnote 98 besides the Dilworth case he relies on the following decisions :State of Bombay v. Hospital Mazdoor Sabha, AIRArdeshir H. Bhiwandiwala v. State of Bombay, AIRSant Ram v. Labh Singh, AIR 1965 SC 314, p. 316 ; C1T, AP v. Taj Mahal Hotel, Secunderabad, AIR 1972 SC 168, p. 170 ; Inland Revenue Commissioner v. Joiner, supra.
6. From the Tariffs and the Notification it would be seen that the two- Tariff and the Notification-after the phrase 'in any crude form' use the word 'including' which is further followed by products like ingots, bars, blocks and the like. The appellants' products according to the Board of Excise and Customs were bars. From the precedents cited and referred to above, it would be seen that the word 'include' is a word of enlargement. It is generally used in definitions and interpretation of clauses in order to enlarge the meaning of the words and phrases occurring in the body of the Statute and when it is so used, the words or phrases must be construed as apprehending not only things as they signify according to the natural import but also those things which the interpretation clause declares that they shall include. Having regard to this interpretation of inclusive definition, a product which by the use of the term 'including' is included to mean aluminium in crude form could not cease to be aluminium in crude form because in fact it has been obtained through the process of continuous casting and rolling. A product mentioned in the Item after the words 'aluminium in crude form including' even though in fact not aluminium in crude form but having been mentioned therein after the word 'including' would still qualify for the description 'aluminium in crude form'. Thus viewed, the appellants' product which the Board unquestionably found to be aluminium bars must be held to qualify for exemption under Notification No. 43/75, dated 1-3-1975. Once it is so held, the appellants cannot be held guilty of misdeclaration or suppression merely because the appellant after having mentioned in the classification list in the Notification that their products were bars meriting exemption under the notification failed to or did not state that they were obtained through continuous casting and rolling process.
7. Apart from the foregoing we cannot overlook the fact that the case of the Revenue against the appellants has not been consistent throughout. According to the show cause notice, dated 14-6-1978 between the period May 1977 to December 1977 the appellants incorrectly declared their product as aluminium bars when in fact they were wire rods/wire bars. The Collector of Central Excise in his Order-in-Original for finding against the appellants and denying them the exemption under Notification No. 43/75, dated 1-3-1975 adopted a different reasoning. He held that it was not important to determine whether the goods are bars or rods and what had to be determined was whether they are castings or whether they are aluminium in crude form.
He added that the exemption was available to these two products and was not available to wire bars and wire rods. The main reasoning was that exemption was available to bars which can be described as aluminium in crude form and from the method of production adopted in the factory, the goods cannot qualify as exempted bars as they cannot be described as aluminium in crude form. As against the specific allegation in the show cause notice that the products were not bars, the Board found that they were bars but not entitled to exemption in view of the continuous casting process through which they were obtained and could not, therefore, be called aluminium in crude form.
8. In view of the legal interpretation about inclusive definition above, the appellants' product 'bars' must be held to be aluminium in crude form and entitled to exemption under the notification. The demand of duty in respect of bars made from the appellants, and penalty imposed, are, therefore, set aside. So much of the matter which has been remanded by the Board of Excise and Customs to the Collector of Central Excise would be decided by him taking into consideration this order and in accordance with law. The appeal is disposed of in these terms.