Concessional diesel for sugarcane transport upheld where movement to the factory was part of an integrated manufacturing process.

Transportation of sugarcane from the cane purchase centre to the factory gate was treated as an integral and incidental part of the inseparable manufacturing process of sugar. On that basis, the concessional diesel benefit under the notification dated 10.08.2017 was held applicable, because the notification contained no express exclusion for sugar manufacturing units. The later notification dated 07.12.2019, dealing with transportation of sugarcane, could not be used to defeat the independent entitlement under the earlier notification. The contrary view of the Commissioner and the Tribunal was found incorrect, and the revision was allowed.

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Issues: Whether the revisionist was entitled to the benefit of the notification dated 10.08.2017 for purchase of diesel at concessional rate of tax for transporting sugarcane from the cane purchase centre to the factory premises, and whether the benefit under the notification dated 07.12.2019 could be used to deny such entitlement.

Analysis: The dispute turned on whether transportation of sugarcane from the cane purchase centre to the factory gate formed part of the manufacturing process of sugar. The Court accepted that the crushing and production of sugar are part of an integrated process and that movement of sugarcane to the point of crushing is an integral and incidental component of manufacture. It also found that the benefit under the notification dated 07.12.2019, relating to transportation of sugarcane, could not be treated as a bar to the independent benefit under the notification dated 10.08.2017, particularly when that notification contained no restrictive clause excluding sugar manufacturing units.

Conclusion: The revisionist was entitled to the concessional diesel benefit under the notification dated 10.08.2017, and the contrary view of the Commissioner and the Tribunal was incorrect.

Final Conclusion: The impugned orders were set aside and the revision succeeded.

Ratio Decidendi: Where transportation of raw material from the statutory purchase point to the factory is an integral part of an inseparable manufacturing process, it falls within manufacture for the purpose of a beneficial concessional notification, and such benefit cannot be denied in the absence of an express exclusion.

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