External processing of non-saleable intermediate goods does not defeat registration benefit where manufacture occurs in Delhi.

Goods sent outside Delhi for mixing and processing did not lose eligibility for retention in column 3(a) of the registration certificate where the processed compound was not a saleable commodity, the materials were brought back to Delhi, and the rubber goods were manufactured in Delhi. The legal effect of the amended provision was confined to goods intended for resale or for use as raw materials in manufacture in Delhi. External processing alone was treated as processing, not manufacture, and did not justify deletion of the entire registration entry, though the statute could permit inclusion of goods in taxable turnover if used for another purpose.

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Issues: Whether raw materials sent outside Delhi for processing of a compound by mixing raw rubber with china-clay and burada disentitled the assessee from retaining the items in column 3(a) of the registration certificate for manufacture purposes.

Analysis: The relevant provision, as amended, confined the benefit to goods intended for resale or for use as raw materials in manufacture in Delhi. The facts found were that only a part of the materials was sent outside Delhi for mixing, the compound so processed was not a saleable commodity, and the entire processed stock was brought back to Delhi, where the rubber goods were admittedly manufactured. On those findings, the activity outside Delhi was only processing and not manufacture. The provision also permitted inclusion of goods in taxable turnover if they were used for another purpose, but did not authorise deletion of the entire entry in column 3(a) of the registration certificate merely because some processing occurred outside Delhi.

Conclusion: The question was answered in the negative and the assessee's right to retain the registration entry was upheld.

Final Conclusion: The reference was decided against the revenue, holding that external processing alone did not amount to manufacture outside Delhi so as to justify deletion of the registration entry.

Ratio Decidendi: Where the manufacturing activity is carried on in Delhi and the work done outside Delhi is only processing of a non-saleable intermediate product, the assessee cannot be denied the registration benefit; at most, the statute permits inclusion of the goods in taxable turnover if they are otherwise used for a different purpose.

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