2000 (2) TMI 830 - SC - Indian Laws

Supreme Court: Manufacturing Biscuits Not Processing Animal/Vegetable Products

BRITANNIA INDUSTRIES LTD. Versus T.N. POLLUTION CONTROL BOARD AND ANOTHER,

The Supreme Court ruled in favor of the appellant in a case concerning the assessment of cess under the Water (Prevention and Control of Pollution) Cess ... - Issues:Assessment of cess under the Water (Prevention and Control of Pollution) Cess Act, 1977 based on the classification of the appellant as a specified industry under Entry 15 of Schedule I - Interpretation of the term 'Processing of animal or vegetable products industry' - Determination of whether the appellant processes animal or vegetable products for the purpose of the said Entry.Analysis:The appellant, engaged in the manufacture of biscuits, bread, and cake, was assessed to cess under the Water (Prevention and Control of Pollution) Cess Act, 1977, categorized under Entry 15 of Schedule I as a specified industry. The appellant challenged the order dismissing its writ petition, which contended that wheat flour, milk powder, sugar, and vanaspati used in its production process were animal or vegetable products falling under the said Entry. The Appellate Committee deemed wheat flour, sugar, and hydrogenated vegetable oils as vegetable products, and milk powder as an animal product, which, when processed by the appellant, resulted in the manufacture of biscuits and bread. The High Court concurred, emphasizing that the appellant's activities fell within the scope of Entry 15 as it processed agricultural products, thereby supporting the cess assessment.Upon analysis, the Supreme Court scrutinized the interpretation of Entry 15, focusing on whether the appellant indeed processed animal or vegetable products. Referring to the distinction between manufacturing and processing, the Court emphasized that processing involves effectuating a change in form or composition without necessarily creating a new commercial commodity. It clarified that wheat flour, despite being used in the appellant's products, cannot be classified as a vegetable product in common parlance. Similarly, milk powder, derived from milk, does not qualify as an animal product. The Court highlighted that the appellant's utilization of these ingredients in biscuit and bread production did not constitute processing of wheat flour or milk powder but rather manufacturing distinct products, thereby refuting the classification under Entry 15.The Court referenced previous judgments to reinforce its stance, notably distinguishing between processing and manufacturing. It emphasized that the appellant's production of biscuits, bread, and cake through a series of processes involving wheat flour and milk powder constituted manufacturing, not processing of animal or vegetable products. Consequently, the Court allowed the civil appeals, setting aside the order under appeal and ruling in favor of the appellant, with no costs imposed.