Higher development rebate denied for intermediary manufacturing activity that did not independently amount to manufacture.

Higher development rebate was not available for machinery used in producing steel castings and forgings where the activity formed only an intermediary stage in a larger industrial process. The Court applied the established test of manufacture and production, relying on Supreme Court principles and earlier precedent, and held that the mere existence of an intermediate product did not by itself satisfy the statutory basis for the higher rate. On that reasoning, the claim failed and the Revenue's position was upheld.

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Issues: Whether development rebate at the higher rate was admissible on machinery used for producing steel castings and forgings when the activity was only an intermediary stage in the industrial process.

Analysis: The claim for higher development rebate depended on whether the intermediate activity amounted to manufacture within the relevant statutory scheme. Applying the governing principles on manufacture and production laid down by the Supreme Court and followed by the Court in earlier precedent, the existence of an intermediate product in the course of a larger industrial operation did not by itself justify the higher rate of development rebate.

Conclusion: The answer was against the assessee and in favour of the Revenue; the assessee was not entitled to the higher rate of development rebate on the machinery in question.

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