JUDGMENT
R. Jayasimha Babu J.
1. The question, which arises for our consideration in this appeal is as to whether the Tribunal was right in law in holding that the activity of heating raw bitumen to 300 degrees centigrade, without any addition or chemical change in order to obtain solid bitumen, constitutes “manufacturing activity”, entitling the assessee to claim deduction under Sections 80HHA and 80-I of the Income-tax Act, 1961.
2. The assessee is a small scale industrial undertaking, which makes blown bitumen. The process involved in making it as set out by the assessee is waste scrap bitumen is heated in a heating tank up to 225 degrees centigrade and is transferred into a reactor, and blown by air compressor, which raises the temperature up to 300 degrees centigrade. Thereafter, it is kept in a chamber for three to four hours, during which period the water and oil in the bitumen evaporates. As part of the oil that is so removed does not evaporate fully, a portion of it comes down as processed oil, which is used again as a fuel.
3. The assessee admittedly did not regard this process as resulting in a product which was different from the original. The assessee also did not possess any licence under the Central Excise Act for manufacture.
4. No new product emerges from the process employed by the assessee. What was bitumen continues to be bitumen, but with lesser quantity of oil and moisture. The purposes for which it can be used are only the purposes for which the use of bitumen is appropriate.
5. Learned counsel for the assessee contended that even if the bitumen cannot be regarded as a new product, nevertheless, having regard to the law laid down by the Supreme Court in the case of Aspinwall and Co. Ltd. v. CIT [2001] 251 ITR 323, the assessee should be regarded being engaged in manufacture.
6. In the case of Aspinwall [2001] 251 ITR 323, the Supreme Court dealt with coffee curing and held that curing of coffee results in manufacture of coffee. The Supreme Court noted (page 328) : “. . . the assessee, after plucking or receiving the raw coffee berries makes it undergo nine processes to give it the shape of coffee beans. The net product is absolutely different and separate from the input. The change made in the article results in a new and different article which is recognised in the trade as a new and distinct commodity. The coffee beans have an independent identity distinct from the raw material from which it was manufactured. A distinct change comes about in the finished product.” The court in that view, concluded that “Conversion of the raw berry into coffee beans would be a manufacturing activity.”
7. Heating of the scrap bitumen in order to obtain solid bitumen, by causing the moisture and oil in the scrap bitumen to evaporate or separate, cannot be compared to curing of coffee and the conversion of raw berry into coffee beans.
8. We may now make a rapid survey of cases where it has been held that no “manufacture” had taken place :
(i) Conversion of chicory root into chicory powder by roasting and powdering does not amount to manufacture, as held by the Supreme Court in the case of Sacs Eagles Chicory v. CIT [2002] 255 ITR 178.
(ii) Subjecting raw uncut diamonds to a process of cutting and polishing, which yields the polished diamond, has been held to be not amounting to manufacture, in the case of CIT v. Gem India Manufacturing Co. [2001] 249 ITR 307 by the Supreme Court.
(iii) Foodstuff prepared by cooking or by any other process from raw materials such as cereals, pulses, vegetables, meat or the like cannot be regarded as a commercially distinct commodity and it cannot be held that such foodstuff is “manufactured” or “produced”, as held by the Supreme Court, in the case of Indian Hotels Co. Ltd. v. ITO [2000] 245 ITR 538.
(iv) In the case of Union of India v. J. G. Glass Industries Ltd. the Supreme Court has held that printing on glass bottles does not amount to manufacture.
(v) Drilling, trimming and chamfering of brake lining blanks so as to make them usable by owners of motor vehicles and manufacturers of automobiles, does not amount to manufacture, as held by the Supreme Court in Brakes India Ltd. v. Superintendent of Central Excise [1997] 10 SCC 717.
(vi) In the case of Tata Engineering and Locomotive Co. Ltd. v. Union of India [1997] 89 ELT 463, it was held by the Bombay High Court that cutting, drilling, fastening of angles, plates, etc., to make columns, beams, etc., will not amount to “manufacture”.
(vii) Cutting industrial laminated sheets (paper based) and glass epoxy laminated sheets into requisite sizes and punching holes for making them capable of being fitted as insulators, does not amount to manufacture, as has been held by the Supreme Court in the case of CCE v. Bakelite Hylam Ltd. .
(viii) Recording of sound by jobber on magnetic cassette tapes or spool magnetic tapes supplied by customer does not amount to manufacture, as held by the Supreme Court in the case of Prabhat Sound Studios v. Addl. CCE .
(ix) Mining of limestone and marble and cutting and sizing the same before it was sold in the market cannot be considered as amounting to manufacture, as held by the Supreme Court in the case of Lucky Minmat Pvt. Ltd. v. CIT [2000] 245 ITR 830.
(x) The apex court has, in the case of CCE v. Wainganga Sahkari S. Karkhana Ltd. , held that making trusses, columns and purlins by conducting fabrication work at the site, does not amount to manufacture.
(xi) The Supreme Court in the case of Sterling Foods v. State of Karnataka held that shrimps, prawns and lobsters even after undergoing process of peeling, deveining, cleaning, freezing and packing, retain their original identity and do not become different commodities.
(xii) Blending of different quantities of iron ore in the process of loading through mechanical ore handling plant so as to produce ore of contractual specification, does not amount to manufacture, but amounts to processing as has been held by the Supreme Court in the case of Chowgule and Co. (P.) Ltd. v. Union of India .
(xiii) In the case of CST v. D.S. Bist and Sons , the apex court approved the decision of this court in the case of State of Madras v. R. Saravana Pillai [1956] 7 STC 541 wherein it was held that curing of arecanuts does not amount to manufacture,
(xiv) This court in the case of Computer Graphics Pvt. Ltd. v. Union of India [1991] 52 ELT 491 has held that cutting and slitting of graphic art films in jumbo rolls does not amount to manufacture.
(xv) Dehydration of milk to obtain condensed milk has been held by this court as not amounting to manufacture in the case of State of Tamil Nadu v. Indodan Milk Products [1980] 45 STC 498.
(xvi) This court has held that crushing of stone boulders to obtain blue metal jelly does not amount to manufacture, in the case of State of Tamil Nadu v. O.P. Aliyar [1992] 87 STC 339.
(xvii) This court has also held in the case of State of Tamil Nadu v. K.M. Natarajan [1981] 48 STC 315 that cleaning and scenting of white ash so as to form “sacred ash” does not amount to manufacture.
9. The Tribunal was in error in holding that heating of the scrap bitumen which only resulted in separation of oil and water from bitumen, amounts to a process of manufacturing.
10. The question referred to us, is therefore answered in favour of the Revenue and against the assessee.