Posted On by &filed under High Court, Punjab-Haryana High Court.


Punjab-Haryana High Court
Cit vs Oswal Woollen Mills Ltd. on 30 May, 2002
Equivalent citations: (2002) 175 CTR P H 184
Author: N Sud


JUDGMENT

N.K. Sud, J.

At the instance of the revenue, the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as ‘the Tribunal’) has referred the following questions of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), for the opinion of this court :

IT Ref. No. 113 of 1987

“Whether the facts and in the circumstances of the case, the Tribunal was right in law in allowing weighted deduction on bank interest on packing credit?”

IT Ref. No. 111 of 1987

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing extra shift allowance on electric installations/cooling tower in respect of Vanaspati Unit, fully-fashioned unit, export wing and Madras Refinery Unit?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing investment allowance of Rs. 26,957 in respect of electric installation in the head office?

3. Whether, on the fact and in the circumstances of the case, the Tribunal was right in law in allowing the assessee’s claim for deduction of the amount due on account leave with wages?”

IT Ref. No. 112 of 1987

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that Refinery Units at Ludhiana and Madras as Industrial undertakings for the purposes of investment allowance an deduction under section 80J with respect thereto?”

All the three references pertain to the assessment year 1979-80.

2. The assessee-company derives income from manufacture and sale of hosiery goods, refined edible oil, vanaspati ghee, etc. It filed its return of income on 6-6-1979 declaring a total income of Rs. 1,96,23,560. The assessment under section 143(3) of the Act was completed by the assessing officer on 29-9-1982, at a total income of Rs. 3,04,71,180 by making certain additions/disallowances. The assessee filed an appeal before the Commissioner (Appeals) who partially allowed the same vide his order, dated 6-11-1984. Both the assessee as well as the revenue preferred appeals before the Tribunal against the order of the Commissioner (Appeals). The assesse’s appeal was decided vide order, dated 20-4-1986; while that of the revenue was decided vide order, dated 8-5-1986. Since the Tribunal had failed to deal with the assesse’s claim about weighted deduction on interest on packing credit, the assessee filed a miscellaneous petition before the Tribunal. The same was disposed of by the Tribunal vide order, dated 24-7-1986, allowing the claim of the assessee. This is how three orders came to be passed by the Tribunal in respect of assessment year 1979-80. Hence the three references.

IT Ref. No. 113 of 1987

3. The issue raised in the only question referred to us had also come up for our consideration in the same assesse’s case for the assessment year 1978-79 in IT Ref. Nos. 100 and 101 of 1987. Vide our order, dated 29-4-2002, [reported as CIT v. Oswal Woollen Mills Ltd. & Anr. (2002) 175 CTR (P&H) 179Ed.], the question had been answered in favour of the revenue. Consequently, the question referred to us for this year also is answered in favour of the revenue and against the assessee.

IT Ref. No. 111 of 1987

Question No. 1 .

4. The assesse’s claim for extra shift allowance in respect of electrical installations/cooling tower in respect of Vanaspati Unit, Fully- fashioned Unit, Export Wing and Madras Refinery Unit has been dealt with by the Tribunal in para 13 of its order. The claim of the assessee has been allowed by the Tribunal on the ground that identical claim had been allowed by it in assessee’s own case in the immediately preceding year, i.e., assessment year 1978-79. The Tribunal further justified the allowance by observing that the electrical machinery had become part and parcel of the respective plants where it was installed as no plant can function without such electrification.

5. Mr. R.P. Swahney, learned counsel for the revenue, points out that the, finding of the Tribunal is factually incorrect. He stated that the claim of the assessee had in fact been disallowed by the assessing officer in assessment year 1978-79, The disallowance was uphold by the Commissioner (Appeals). The assessee did not challenge this finding in further appeal before the Tribunal although it did file such an appeal on other issues.

6. Mr. Sanjay Bansal, learned counsel for the assessee, could not controvert the factual position as pointed out by Shri Sawhney. He, however, submitted that the Tribunal has also justified the claim by recording a finding that the electrical machinery had become a part and parcel of the plant in which it had been installed. No fault can be found with this finding. He, therefore, contended that even if the observation of the Tribunal about the claim being allowed for the preceding year was ignored, the claim was still admissible He cited the following decisions in support of his claim :

(i) Tribeni Tissues Ltd. v. CIT (1991) 190 ITR 487 (Cal);

(ii) CIT v. Mahalinga Setty & Co. (1992) 195 ITR 526 (Karn);

(iii) CIT v. Anglo India Jute Mills Co. Ltd. (1993) 202 ITR 104 (Cal);

(iv) CIT v. Tribeni Tissues Ltd. (1994) 206 ITR 92 (Cal); and

(v) CIT v. Tamil Nadu Magnesite Ltd. (1999) 151 CTR (Mad) 152.

7. After hearing the counsel for the parties and going through the orders, we find that the matter has not been decided in the right perspective. The rates of depreciation are prescribed in Appendix I of the Income Tax Rules, 1962. In para III, the rates of depreciation in respect of various categories of machinery have been prescribed. Against some of the items the letters N.E.S.A. have been mentioned which mean no extra shift allowance. Further, it also provides for the method of calculation extra shift allowance. Under this head, it is specifically provided as under :

“The extra shift allowance shall not be allowed in respect of any item of machinery or plant which has been specifically excepted by inscription of the letters “N.E.S.A.” (meaning “no extra shift allowance”) against it in sub-item (ii) above and also in respect of the following items of machinery and plant to which the general rate of depreciation of 15 per cent applies :

(1) xx 		xx 		xx 		xx  		xx
 

(2) xx 		xx 		xx 		xx  		xx
 

(3) xx 		xx 		xx 		xx  		xx
 

(4) xx 		xx 		xx 		xx  		xx
 

(5) Electrical machinery-switchgear and instruments, transformers and other stationary plant and wiring and fittings of electric light and fan installations.
 

(6) xx 		xx 		xx 		xx  		xx
 

(7) xx 		xx 		xx 		xx  		xx
 

From the above, it is absolutely clear that even where the machinery falls under the general category, certain item of electric machinery have been excluded for the purpose of grant of extra shift allowance. Thus, the claim of extra shift allowance could not have been allowed without examining the details of the electric machinery. It was necessary to record a finding that none of the items of electrical machinery of the assessee fell in exception No. (5) as reproduced above. No such details are available on the record nor has the Tribunal discussed the matter in the light of the above provision in Appendix I. The Tribunal has allowed the claim merely on the ground that the electrical machinery had become part and parcel of the plant to which it was attached. It was indeed not a relevant consideration. Accordingly, we set aside the findings of the Tribunal on this issue and remand the matter back to it for fresh adjudication in the light of observations made above.

8. From the statement of the case we notice that in this case the assessment had been framed by resorting to the provisions of section 144B of the Act. Neither the draft assessment order nor the objections filed by the assessee are a part of the paper book. However, a copy of the directions issued by the IAC (Central), Range-II, Ludhiana, dated 20-9-1982, are available at pp. 112 to 139 of the printed paper book. A perusal of the same shows that the assessee had not raised any objected against the disallowance of extra shift allowance on electric machinery made in the draft assessment order presumably because similar disallowance had been accepted by the assessee in earlier years. In such circumstances, could the assessee raise this issue in appeal at all, is another point which needs consideration. Mr. Bansal, learned counsel for the assessee, contends that the assessee could indeed raise this issue in appeal and its claim could not be rejected merely on the ground that it had failed to object to the disallowance in the objections filed against the draft assessment order. For this purpose, he relied on the following authorities :

(1) CIT v. K.N. Thankappan Pillai (1991) 191 ITR 300 (Ker);

(2) Nagpur Zilla Krushi Audyogik Sahakari Sangh Ltd. v. ITO (1994) 207 ITR 213 (Bom);

(3) CIT v. Satya Narain (1998) 229 ITR 477 (P&H); and

(4) Indian Aluminium Co. Ltd. v. CIT (1986) 162 ITR 788 (Cal).

However, since we have restored this matter to the Tribunal for fresh adjudication, we direct the Tribunal to deal with this aspect as well while deciding the matter afresh.

The question is, accordingly, answered in the above terms.

Question No. 2

9. In question No. 2, the revenue has challenged the action of the Tribunal in allowing investment allowance of Rs. 26,957 on electrical installations worth Rs. 1,07,823 in the Head officer. The Income Tax Officer had not dealt with this item specifically in the assessment order but had disallowed it in the depreciation chart. On appeal by the assessee, the Commissioner (Appeals) upheld that disallowance by observing as under :

“Regarding the disallowance of investment allowance on account of electrical installations, I hold that the disallowance made by the Income Tax Officer is in order and no interference in this regard is called for.”

This issue has been discussed by the Tribunal in paras 17 and 18 of its order. It appears that in the absence of any discussion in the assessment order or by the Commissioner (Appeals), a request was made by the revenue to remand the matter back to the assessing officer.. However, the Tribunal observed that the only objection raised by the revenue was that since the electrical machinery does not manufacture any article or thing by itself, it was not eligible for grant of investment allowance, The Tribunal was, therefore, of the view that since there was no controversy that the head office is a manufacturing unit, and the objection raised was purely legal, the issue could be disposed of at that stage itself.

The Tribunal, while allowing the claim of the assessee, held that for the purpose of allowance of investment allowance, the electric machinery installed in a manufacturing unit qualified for deduction under section 32A of the Act and that the claim could not be denied on the ground that such machinery was not actually involved in the process of manufacture of any article/thing. The Tribunal further observed that any independent machinery or a plant in any unit could not manufacture anything on its own and that it is the plant as a whole which is used for the manufacture of articles/things. The Tribunal was, therefore, of the view that the assessee was entitled to investment allowance under section 32A of the Act in respect of the additions in electrical installations in the head office.

10. Mr. Sawhney, learned counsel for the revenue, points out that as in the case of extra shift allowance, the assessee had not raised any objection before the Inspecting Assistant Commissioner in the objections raised under section 144B of the Act. He further contended that even otherwise the Tribunal could not have allowed the claim without examining the details of the additions to ensure that these did not fall under any of the exceptions mentioned in section 32A of the Act itself.

11. Mr. Sanjay Bansal fairly concedes that the disallowance had not been challenged in the objections filed against the draft assessment order and that the Tribunal did not have the details of the additions of electrical installation from which it could be held that the same were not hit by the exceptions provided under section 32A of the Act. He, however, contends that the disallowance had been made only on the ground that the electrical machinery was not involved in the manufacturing process. This, according to him, being a purely legal issue requiring no inquiry into the facts could have been disposed of at the appeal stage itself. On merits, he supported the findings of the Calcutta High Court in Tribeni Tissues Ltd. v. CIT (supra) and CIT v. Tribeni Tissues Ltd. (supra) and justified the claim of investment allowance on electrical installations.

12. We have heard the rival contentions and gone through the relevant authorities cited before us. Sub-section (1) of section 32A of the Act provides for allowance of investment allowance in respect of “a ship or an aircraft or machinery or plant specified in sub-section (2)”. The second proviso to this sub-section, however, excludes certain categories of machinery from the scope of section 32A. This proviso reads as under :

“Provided further that no deduction shall be allowed under this section in respect of :

(a) any machinery or plant installed in any office premises or any residential accommodation, including any accommodation in the nature of a guest house;

(b) any office appliances or road transport vehicles;

(c) any ship, machinery or plant in respect of which the deduction by way of development rebate is allowable under section 33; and

(d) any machinery of plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head of “Profits and gains of business or profession” of any one previous year.”

Clause (b) of sub-section (2) under which the claim of the assessee has to be examined reads as under :

“(2) The ship or aircraft or machinery or plant referred to sub-section (1) shall be the following, namely :

(a) xx 		xx 		xx 		xx  		xx
 

(b) any new machinery or plant installed after the 31-3-1976,
 

(i) for the purposes of business of generation or distribution of electricity or an other form of power; or
 

(ii) in a small-scale industrial undertaking for the purposes of business of manufacture or production of any article or thing; or
 

(iii) in any other industrial undertaking for the purpose of business of construction, manufacture or production of any article or thing, not being an article or thing specified in the list in the Eleventh Schedule."
 

13. From a bare perusal of the aforesaid provisions, it is clear that no fault can be found with the findings of the Tribunal that it is not necessary that each individual machine should manufacture or produce any article or thing. The expression “for the purpose of business of manufacture or production” is much wider is scope than the expression “for the purpose of manufacture”. Thus, every new machinery installed in a business of manufacture or production of any article or thing qualifies for deduction under section 32A unless it falls in any of the exceptions mentioned therein. A machinery or equipment can be used directly for a manufacturing process, yet for running such a machinery, certain accessories may be required. Thus, it would be the entire machinery including the accessories and other equipments which can be said to have been installed for the purpose of business of manufacture of an article or thing. This view finds support from the decision of the Calcutta High Court in CIT v. Tribeni Tissues Ltd. (supra) wherein it was held that all machinery and equipment that is necessary to make the assessee’s manufacturing unit in the state of operational integration pertain to its manufacturing process because there could not be any manufacture unless this operational integration was achieved after installation of the plant and the plant goes operational. It was further held that any machinery or plant having a link, however minor, in the total process of the operational integration should be taken as machinery or plant pertaining to the manufacturing process. It was, therefore, held that the assessee in that case was entitled to investment allowance on motors, electrical installations, underground cables, overhead cables and air-conditioning equipment. On the same analogy in Tribeni Tissues Ltd. v. CIT (supra) tube-well and weighing machines in a unit manufacturing paper were held to be entitled to investment allowance under section 32A.

14. The fallacy in the argument advanced on behalf of the revenue is also apparent from the exceptions provided in the second proviso to section 32A(1), which has already been reproduced above. A perusal of the item mentioned therein shows that items like machinery and plant installed in office premises or any residential premises, office appliance, road transport vehicles, have been excluded for the purpose of allowance of investment allowance. This itself shows that but for the exceptions, these items are included in the machinery and plant for the purposes of business of manufacture or production of any article or thing as envisaged under sub-section (2) of section 32A.

15. However, we find that no details of the electrical installations are available on record nor has the Tribunal referred to any such details in its order. Section 32A does contain some exceptions even in respect of machinery or plant installed for the purpose of business of manufacture or production of any article or thing. In the absence of such details, the Tribunal could not possibly have examined the matter from this angle. It was necessary for the Tribunal to record a finding that these items were not hit by the exceptions provided under section 32A of the Act. The other issue raised by the learned counsel for the revenue that in the absence of any challenge to the disallowance in the objections filed before the Inspecting Assistant Commissioner under section 144B of the Act also deserves consideration.

In this view of the matter, we set aside the findings of the Tribunal on this ‘issue and remand the matter to it for a fresh adjudication in the light of the observations made by us. The question is, therefore, answered in the above terms.

16. In question No. 3, the revenue has challenged the decision of the Tribunal in allowing the assessee’s claim for deduction of the amount due on account of leave with wages. Mr. Sawhney has very fairly stated that the answer. to this question is concluded against the revenue by the decision of this court in CIT v. Oswal Woollen Mills Ltd. (2002) 254 ITR 666 (P&H).

In view of the admitted position, this question is answered against the revenue.

IT Ref. No. 112 of 1987

17. The assessee’s claims for investment allowance and deduction under section 80J of the Act in respect of refinery units at Ludhiana and Madras had been disallowed by the assessing officer on the ground that the assessee was not manufacturing any article or thing. The assessee in these two units converts crude oil into refined oil. The crude oil is degumed, neutralised, bleached and deodorised through mechanical process and the end product is marketed as refined oil for the purpose of cooking. The assessing officer was of the view that the conversion of crude oil into refined oil involves certain processes which could not be interpreted to mean a manufacturing process ressting resulting into production of a new commodity. According to him, it was palm oil earlier in its crude form and remained palm oil even after being refined. No new goods were manufactured or produced. The assessing officer relied on the decision of the Calcutta High Court in CIT v. Hindustan Metal Refining Works. (P) Ltd. (1981) 128 ITR 472 (Cal) and that of the Supreme Court in Chowgule & Co. (P) Ltd. & Anr. v. Union of India & Ors. AIR 1981 SC 1014.

18. In appeal before the Commissioner (Appeals), the assessee relied on the decision of the Supreme Court in Union of India & Anr. v. Delhi Cloth & General Mills Co. Ltd. AIR 1963 SC 791, in support of his claim that conversion of crude oil into refined oil by deguming, neutralising, bleaching and deodorising resulted in production of a new marketable commodity called refined oil which was having different properties than the crude oil and was fit for human consumption. The claim for investment allowance as well as for deduction under section 80J of the Act was, accordingly, allowed by the Commissioner (Appeals). On further appeal by the revenue, the Tribunal affirmed the findings of the Commissioner (Appeals) by relying on the decision of the Supreme Court in the case of Delhi Cloth & General Mills Co. Ltd. (supra). The findings of the Tribunal are recorded in para 23 of its order, which are reproduced for ready reference :

“23. After taking into consideration the rival contentions and looking to the fact that even in the past, the revenue itself had allowed the assessee’s claim in respect of these very units, for the reasons given by the Commissioner (Appeals), we are unable to interfere in his finding. The Supreme Court decision in AIR 1963 SC 791 in which Delhi Cloth Mill, Genesh Floor Mills and Modi Sugar Mills were directed to pay Central Excise Duty an alleged production of refined oil which they manufactured as intermediate commodity before conversion of the same into vegetable ghee. This will be. very relevant because here also the dispute is whether the refined oil is a separate commodity than crude oil. In the said case, the issue was held in favour of the mill and against the excise revenue saying that the oil which was neutralised and bleached but which was not deodorised could not be considered as refined oil on which excise duty could be levied. The Central Excise being not satisfied with the said decision took it to the Supreme Court where it lost. The Supreme Court at page 795 of the report in para 14 held that manufacture implies a change where a new article emerged having a distinct name, character or views. It was also held that articles and things must be something which can ordinarily come to the market to be brought or sold before they can be called ‘goods’. Since in the case before the Supreme Court, alleged refined oil was gone through the process of neutralisation and bleaching only but had not been deodorised therefore, it was held that the said oil was not refined oil which could be taken to the market and, therefore, such oil was not goods which could be liable to excise duty. In the instant case, the assessee in both the units is manufacturing refined oil which are degumed, neutralised, bleached and deodorised and the same is marketed as refined oil and was used as cooking oil. This commodity is entirely different from raw oil and vegetable ghee. We cannot ignore the illustration given by the learned counsel for the assessee in the course of arguments that crude petroleum oil was quite different from petrol, diesel, kerosene, etc. Each one was a different commodity from the other. Therefore, following the Supreme Court decision and confirming the reasoning given by the Commissioner (Appeals) in his order, we confirm his finding given on this issue regarding both investment allowance and section 80J relief. To summarise, we hold that the assessee in manufacturing marketable commodity which is sold as cooking oil and which involved process of manufacturing and the assessee is found to have manufactured different commodity from raw oil. Holding. that the refinery units are manufacturing articles and things which are differently known and marketed and sold as such, the action of the Commissioner (Appeals) is hereby confirmed.”

19. Mr. Sawhney, learned counsel for the revenue, has reiterated the stand of the assessing officer that conversion of crude oil into refined oil only involves certain processes which could not be termed as manufacturing as no new commodity comes into being. He placed strong reliance on the decision of the Supreme Court in the case of Chowgule & Co. (P) Ltd. (supra) as also on the decision of the Calcutta High Court in Hindustan Metal Refining Works (P) Ltd. (supra).

20. Mr. Bansal, learned counsel for the assessee, on the other hand, supported the findings of the Tribunal. According to him, the matter was concluded by the decision of the Supreme Court in the case of Delhi Cloth & General Mills Co. Ltd. (supra), in which it has clearly been held that the refined oil was a distinct marketable commodity different from the crude oil. He contended that the crude oil was subjected to various processes to make it fit for human consumption and the end product is known as refined oil which was a distinct commodity than crude oil. He further placed reliance on the following authorities in support of his contention :

(1) Aspinwall & Co. Ltd. v. CIT (2001) 251 ITR 323 (SC);

(2) CIT v. Tamil Nadu Heat Treatment & Fetting Services (P) Ltd. (1999) 238 ITR 529 (Mad);

(3) The State of Madras v. Bell Mark Tobacco Co. (1967) 19 STC 129 (SC);

(4) CIT v. Sovrin Knit Works (1993) 199 ITR 679 (P&H); and

(5) Edible Products (India) (P) Ltd. v. CTO & Ors. (1991) 83 STC 317.

21. The only question for consideration isWhether conversion of crude oil into refined oil by deguming, neutralising, bleaching and deodorising amounts to manufacturing or not?

This issue had come up for consideration by the Supreme Court in the case of Delhi Cloth & General Mills Co. Ltd. (supra). The petitioners therein were manufacturing Vanaspati from raw groundnut and till oil. The process involved therein was described as under :

“The manufacture of vegetable product consists in hydrogenating oils using a catalyst. The catalyst is a sensitive material and is liable to be poisoned and made ineffective if certain impurities like mucilaginous matter, free exidised fatty acid and moisture are present. In order therefore, to successfully manufacture vegetable product the hydrogenation has to be done on a refined vegetable non-essential oil. The refined vegetable, non-essential oil (an oil free from major impurities mention in para 2 above) is the penultimate raw material for the manufacture of vegetable product.”

The stand of the revenue was that in this process, the petitioners “bring into existence at one stage, after carrying out some processes with the aid of power, what is known to the market as “refined oil”. It is, therefore, clear that the revenue claimed that the refined oil was a distinct product known to the market and is ‘manufactured’ out of crude oil. Thus, it was liable to excise duty. This contention was negatived by the Supreme Court. The Supreme Court referred to the processes involved in the manufacture of refined oil from groundnut as well as from cotton seed and held that the product known as refined oil in the market can be produced only after the crude oil has undergone all the three processes; namely, neutralising, bleaching and deodorising. In that case, it was found as a fact that the crude oil used by the petitioners had not been deodorised. In the absence of this process,. it was held that it could not be held that a new product called refined oil had come into existence. It is, therefore, evident that even according to the Supreme Court in case the crude oil had also been put to the process of deodorising, a new produced known to the market as refined oil would have come into being. In the present case, it is undisputed that the crude oil had undergone the processes of neutralising, bleaching and deodorising.

The Supreme Court also held that the word “manufacture” is generally understood to mean as “bringing into existence” a new substance and does not mean merely to produce some change in a substance” however minor in consequence the change may be. The Supreme Court relied on the definition of the expression “manufacture” from a passage quoted in Permanent Edition of Words and Phrases, Volume 26, from an American judgment, which reads as under :

” Manufacture’ implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use.”

22. In the present case, it is not in dispute that crude oil had undergone the processes of deguming, neutralising, bleaching and deodorising and, therefore, as per the test applied by the Supreme Court, a distinct commodity known to the market as refined oil had come into being and, thus, it could be said that the conversion of crude oil into refined oil tantamounts to manufacture of an article or a thing.

23. The Supreme Court in the case of Aspinwall & Co. Ltd. (supra) has again reiterated this position and held the process of obtaining coffee beans from raw coffee berries tantamounted to manufacturing as the final product was absolutely different and separate from the input. The change made in the article resulted in a new and different article which was recognised in the trade as a new and distinct commodity.

24. The decision of the Supreme Court in the case of Chowgule & Co. (P) Ltd. (supra) does not advance the case of the revenue. In fact, the same test was applied by their Lordships to determine whether any manufacturing had been done or not. The issue in that case waswhether blending of iron ore while loading it in the ship by means of Mechanical Ore Handling Plant constituted manufacture or processing of ore or not? Their Lordships referred to the following observations of the Apex Court in an earlier case in Dy. CST v. Pio Food Packers AIR 1980 SC 1227 :

“Commonly manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the changes, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct article that a manufacture can be said to take place.”

Thereafter, their Lordships held as under :

“the test that is required to be applies is; does the processing of the original commodity bring into existence a commercially different and distinct commodity? On an application of this test, it is clear that the blending of different quantities of ore possessing differing chemical and physical composition so as to produce ore of the contractual specifications cannot be said to involve the process of manufacture, since the ore that is produced cannot be regarded as a commercially new and distinct commodity from the ore of different, specifications blended together. What is produced as a result of blending is commercially the same article, namely, ore, though with different specifications that the ore which is blended and hence it cannot be said that any process of manufacture is involved in blending of ore.”

25. In view of the law laid down by the Supreme Court, it is not necessary for us to refer to various other authorities relied upon by the parties. The courts have applied the same test to the facts of each case to determine whether any manufacturing had been done or not. We are, therefore, of the considered opinion that the view taken by the Tribunal is in conformity with the law laid down by the Apex Court and does not require any interference. Accordingly, the question is answered in favour of the assessee and against the revenue.

The petitions are, accordingly, disposed of in the above terms. However, in the circumstances of the case, the parties are left to bear their own costs.

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