TaxTMI 
TaxTMI 
2006 (6) TMI 157
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....rble blocks into slabs and tiles and also in trading of marble blocks and tiles in both indigenous and foreign market. The assessee-company also exported goods and earned foreign exchange and claimed deduction under s. 80HHC of the IT Act, 1961 (hereinafter referred to as 'the Act'). Apart from trading of marble, the assessee-company also derived income from job charges, receipts of sawing marbles of others. The assessee-company keeps computerized account books consisting of cash-book, ledger, general sales and purchase register along with bills and vouchers which have been examined and verified on test check basis. On examination of these account books, sales, purchases and expenses relating to manufacturing expenses i.e. sawing, polishing, freight, power and fuel and factory expenses have been found vouched and trading results declared by the assessee-company are better in comparison to the preceding year. However, during the course of scrutiny, the AO found that the deduction under s. 80-IA of the Act cannot be allowed to this assessee. 4. According to the AO, the prime condition for allowing deductions under these sections is that the industrial undertaking should ha....
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....the claim of deduction under s. 80-IA of the Act is available to it. The learned Authorised Representative has also taken us through various steps involved in the alleged production/manufacture activity under reference. He has relied on the various steps taken in the production of tiles and marble slabs by the assessee-company, and this fact could not be controverted by the learned Departmental Representative, Shri D.R. Zala. Various steps undertaken by the assessee-company in its activity are reproduced below: (i) Marble blocks excavated/extracted by the mine owners being in raw uneven shapes have to be properly sorted out and marked, (ii) Such blocks are then processed on single blade/wire saw machines using advanced technology to square them by separating waste material; (iii) squared up blocks are sawed for making slabs by using the gang-saw machine or single/multi-block cutter machine; (iv) The sawn slabs are further reinforced by way of filling cracks by epoxy resins and fiber netting; (v) The slabs are polished on polishing machine; the slabs are further edge cut into required dimensions/tiles as per market requirement in perfect ....
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....rble slabs/tiles is annexed herewith. (vi) The Chemicals and Allied Products Export Promotion Council, New Delhi, issued registration-cum-membership certificate for the manufacture of marble slabs. In relation to all these six points, the evidences which are placed at pp. 35 to 44 of paper book have been referred to and relied by the learned Authorised Representative to substantiate his contention. 11. On the other hand, the learned Departmental Representative has relied on the orders of the AO and the learned CIT(A) and has further relied on the decision of the Hon'ble Supreme Court in the case of Lucky Minmat on which the AO and the learned CIT(A) have also relied. 12. We have given careful thought to the facts, circumstances and evidence and all other relevant material available on record. So far as the process involved in the activities of the assessee is concerned, the Department has not denied or controverted; it has only disputed that even then the activity of the assessee-company cannot be taken to be a manufacturing or production activity. It is also not disputed by the Department that such a dispute never arose in the past, earlier to these assessmen....
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....her what is produced or processed as the end of product is commercially known as different product from the materials out of which it is so produced. Therefore, if the product has a different name and is identified by the buyers and sellers as a different product and is bought and sold as a distinct product from its raw materials, one can say that it is a manufactured product. CIT vs. R.C. Construction (1997) 137 CTR (Gau) 486 : (1996) 222 ITR 658 (Gau) Activity making chips out of big stones was held as manufacturing. CIT vs. Tata Locomotive & Engineering Company Ltd. (1968) 68 ITR 325 (Bom) Assembling of bus/trucks from imported parts amounts to manufacture [Ref. Indian IT Act, 1922 s. 15C(2) and s. 15C(6)). CIT vs. Hindustan Metal Refining Works (P) Ltd. (1981) 23 CTR (Cal) 252 : (1981) 128 ITR 472 (Cal) The production or manufacture of goods involves bringing into existence new goods or article known as such goods or article in the market. Ujagar Prints vs. Union of India & Ors. (1989) 75 CTR (SC) 1 : (1989) 179 ITR 317 (SC), Empire Industries Ltd. VS. Union of India AIR 1986 SC 662, 673d, South Bihar Sugar Mills Lt....
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....nufacture since a new commercial and identifiable article comes into existence. CIT vs. S.L. Agarwal & Co. (1992) 101 CTR (Ori) 222 : (1991) 197 ITR 239 (Ori), Breaking of huge iron ingots into small pieces amounts to manufacture, as smaller pieces were different and distinct commercial commodity. Aditya Mills Ltd. vs. Union of India 73 STC 195 (SC) Changing of raw material by application of some process amounts to manufacture and therefore doubling together of two plies of polyster spun yarn and one ply of rayon yarn and resulting into special PPRF yarn amounts to manufacture. Dy. CST vs. Pio Food Packers 46 STC 63 It is the change or a series of change, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article, then a manufacture can be said to take place. CIT vs. Sree Krishna Pulverising Mills (2000) 163 CTR (AP) 151 : (2000) 241 ITR 262 (AP) The barytes are distinct not only in form and name but also in use from barytes powder and barytes powder is a distinct and separate article produced from barytes and is used ....
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....CIT vs. Best Chem & Lime Stone Industries (P) Ltd. (1993) 113 CTR (Raj) 298 : (1994) 210 ITR 883 (Raj) "Manufacture involves the bringing into existence of a new product which may have a different physical or chemical composition and is understood differently in common and commercial parlance." It held that upon the conversion of the mineral into the form of Rodi and powder it does not retain the physical shape, which the raw material was and it understood as a different commercial commodity by the business community. In these circumstances, the Tribunal was justified in coming to the conclusion that conversion of limestone by crushing into Rodi or lime dust is a process of manufacture. It referred to earlier decision in CTO vs. Bikaner Gypsum Ltd. (1986) 61 STC 264 and distinguished that decision after holding that the conversion of the mineral in the form of Rodi and powder, it is evident that it does not retain the physical shape which the raw material has and is understood as a different commercial commodity by the business community. Union of India vs. Delhi Cloth & General Mills (1977) ELT (J) 199 Manufacture implies a change, but every change in ra....
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....e two commodities are commercially different and distinct. (iii) The resultant commodity emerging out of the process should have a distinct name, character or use. (iv) All the changes and mere change of size does not tantamount to manufacture and the change should be such as to bring into existence a new commodity having a different identity. 13. From various definitions and decisions, it finally emerges that if the following tests are satisfied by the assessee, then it can be said that there is a 'manufacture' or 'production'. These tests are that: (i) there is a change or transformation of one commodity into another; (ii) the two commodities are commercially different and distinct; (iii) the resultant commodity emerging out of the process should have a distinct name, character or use; (iv) all the changes and mere change of size does not tantamount to manufacture and the change should be such as to bring into existence a new commodity having a different identity. 14. When these tests are applied to the facts of the assessee's case, according to the learned Authorised Representative, the assessee is a....
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....e Stone Industries (P) Ltd. (1993) 113 CTR (Raj) 298 because there the assessee was engaged in the business of extracting limestone and its sale either as such or after converting it into lime and lime dust or concrete by stone crushers. Such, the High Court found, were not the facts in the case before us." 18. From the above, it is crystal clear that in Lucky Minmat's case, the assessee had business of "mining" and the blocks were only cut to size before selling the same in the market and there was no other activity involved. 19. The Hon'ble Supreme Court in Lucky Minmat's case was considering the claim of the manufacturing of assessee for the purpose of deduction under s. 80HH of the Act based on the undisputed facts that the said assessee had business of mining of marble blocks and limestones and thereafter cutting and sizing the same before being sold in the market. The Hon'ble Supreme Court distinguished the facts of Best Chem & Lime Stone Industries (P) Ltd. with the case decided by the High Court in CIT vs. Lucky Mineral (P) Ltd. (1996) 134 CTR (Raj) 541 : (1997) 226 ITR 245 (Raj) and held that conversion into lime and lime dust or concrete by stone cru....
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....te Minerals (1996) 136 CTR (Kar) 499 : (1997) 225 ITR 60 (Kar), mining for excavating iron ore were accepted as a manufacturing process with the result that new machinery and plant used in mining operations, was held to be eligible for investment allowance. In coming to the conclusion, it took the view that there is production of an article or a thing in such operations of extracting iron ore embedded in earth. It distinguished its earlier decision against the assessee in Hind Nippon Rural Industries (P) Ltd. vs. CIT (1993) 201 ITR 581 (Kar) by pointing out that in this case the assessee in Hind Nippon's case is the subject-matter of special leave granted to the assessee by Supreme Court as reported in (1992) 197 ITR (St) 2. The definition of manufacture in the case of Chowgule & Co. (P) Ltd. vs. Union of India (1981) 47 STC 124 (SC), and the decision of Gujarat High Court in CIT vs. Kutch Oil & Allied Industries (P) Ltd. (1986) 50 CTR (Guj) 37 : (1987) 163 ITR 237 (Guj), which accepted pulverization of bentonite as an industrial activity gave wider scope to the concept of manufacture where there is relocation resulting in substantial value addition. 25. So, on every type of....
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....order to make a change amount to 'manufacture' something more is necessary and that something more is such transformation of a production as brings into existence a new and different article having distinct name, character or use. The same view was expressed in the case of South Bihar Sugar Mills vs. Union of India (1978) ELT (J) 3, where it was observed that if a new substance known to the market emerges, this will amount to manufacture. In the case of Empire Industries Ltd. vs. Union of India (1986) 162 ITR 846 (SC), it was observed by the Supreme Court that to constitute manufacture, it is not necessary that one should absolutely make out a new thing because it is well-settled that one cannot absolutely make a thing by hand in the sense that nobody can create matter by hand. It is the transformation of one matter into something else which would amount to manufacture. It is a question of degree that something else is a different commercial commodity having its distinct character, use and name and commercially known as such. In other words, if by application of labour and skill the commodity is transformed to the extent that it is commercially known differently, it will su....
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....essee after purchasing blocks from mines to produce the end product of tiles/slabs are mentioned in our earlier part of the order. The Department has not at all contested these processes. The end result is a tile of different size, shape and name, there is no doubt about the same. The price is altogether different and market is altogether different. This product is known by a different name. So, the only test remains that if a new and distinct thing or article is produced in the process which is different from the raw material used by this assessee. 38. Our answer is, yes, a new and distinct thing has been produced. The distinct and new thing does not mean that there should be a physical or chemical change and then and only then it would be new and distinct thing or article. The Hon'ble Court in Lucky Mineral's case relied on the decision of Madras High Court in the case of CIT vs. M.R. Gopal (1965) 58 ITR 598 (Mad), the facts of the case were that the assessee converted boulders into small stones, i.e., chips of various sizes, with the aid of the machinery. This activity was held to be manufacturing activity. The Hon'ble Rajasthan High Court has not disputed or diss....
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....iced the fruit and sold in the market after filling into cans. 43. The Hon'ble Supreme Court held as under: "Sec. 5A(1)(a) of the Kerala General Sales-tax Act envisages the consumption of a commodity in the manufacture of another commodity. The goods purchased should be consumed, the consumption should be in the process of manufacture, and the result must be manufacture of other goods. There are several criteria for determining whether a commodity is consumed in the manufacture of another. Generally prevalent practice whether the article produced is regarded in this trade by those who deal in it as distinct in identity from the commodity involved in its manufacture. 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 from the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be rega....
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....ble tiles and marble slabs which are different and entirely distinct in terms of name, character, use, and the market value and appearance. So, the activity of the assessee is a manufacture/production activity. We heavily draw support from Mysore Mineral Ltd. decision of the Hon'ble Karnataka High Court as well as the Hon'ble Supreme Court, which is a later decision and which we have discussed in earlier part of our order. We also draw support from the fact that the appellant-company is being consistently regarded as a manufacturer/producer by various Government Departments and agencies. The evidences are placed on record, in this regard, which we have discussed each and every such evidence, in earlier part of our order along with page numbers. These facts have not been controverted by the Department. So, the facts of this case and the Lucky Minerals and others relied by the Department are entirely different. But the ratio of these decisions, when applied, it speaks in the favour of this assessee. 48. We agree with the learned Authorised Representative that the case of Karnataka High Court in Dy. CIT vs. Mysore Minerals Ltd. wherein it has been held that the process of e....
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....considered is 'articles', occurring in the said clause. What does it mean? The word is not defined in the Act or the Rules. It must, therefore, be understood in its normal connotation-the sense in which it is understood in the commercial world. It is equally well to keep in mind the context since a word takes its colour from the context. The word 'articles' is preceded by the words 'it has begun or begins to manufacture or produce.' Can we say that the word 'articles' in the said clause comprehends and takes within its ambit a dam, a bridge, a building, a road, a canal and so on ? We find it difficult to say so. Would any person who has constructed a dam say that he has manufactured an article or that he has produced an article? Obviously not. If a dam is an article, so would be a bridge, a road, an underground canal and a multi-storied building. To say that all of them fall within the meaning of the word 'articles' is to overstrain the language beyond its normal and ordinary meaning. It is equally difficult to say that the process of constructing a dam is a process of manufacture or a process of production. It is true that a dam is composed ....
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....have also reproduced in our earlier part of the order, clearly reveals that in the Hon'ble Supreme Court's case, it was dealing with the case of mine owner who was doing the cutting work mainly for the purpose of taking the same to the market for selling the same. The case of a mine owner cannot be equated with the case of a factory owner, who is involved in comprehensive/production process. The present case is not that of a mine owner, but of a factory owner who is engaged in the activity of manufacturing which undergoes several stages through different technical procedures with the help of the set up exhaustive plant and machinery in the factory. The raw material of the assessee is marble blocks purchased from mine owners and the assessee transforms this raw material into an entirely different finished goods in the form of marble slabs/marble tiles. The raw material and finished goods of this assessee are entirely different and distinct in terms of their names, characteristics, uses, identity, form, appearance, value as well as the market in which they are been dealt with. In our opinion the ratio of Lucky Minmat's case is of no help to the Revenue, but in a way, help....
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....er edge cut into required dimensions/tiles as per market requirement in perfect angles by edge cutting machine and multi-disc cutter machines; (vi) Polished slabs and tiles are buffed by shiner. Now, the main question that requires to be decided is whether the above activities/processes undertaken by the assessee for converting the marble blocks into marble slabs and tiles amount to manufacturing of goods and articles. There is no dispute about the fact that the assessee would be entitled to deduction under s. 80-IA only if it is found to be engaged in the manufacturing or production of article. The expression "manufacturing of articles" has not been defined in the Act. Therefore, one has to necessarily draw an assistance from the ratio of various decisions as to what amounts to manufacturing activity. This issue came to be considered by the Hon'ble Supreme Court in the case of CIT vs. N.C. Budharaja & Co. (1993) 114 CTR (SC) 420 : (1993) 204 ITR 412 (SC) where the Hon'ble Supreme Court has considered the issue as to whether a process of constructing a dam is a process of manufacture or a process of production. Their Lordships of the Hon'ble Supreme Court ha....
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....commodity involved in its manufacture. No doubt such commodity undergoes several processes from the initial stage to the final stage and undergoes a change, but it is only when the change or series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. Where there is no difference in identity between the original commodity and the processed article, it is not possible to say that one commodity has been consumed in the manufacture of another. It would still be regarded retaining its original identity. 2B. This issue was again considered by the Hon'ble Supreme Court in the case of Union of India vs. Delhi Cloth & General Mills (1977) ELT (J) 199 where it was observed that manufacture implies a change, but every change in the raw material is not manufacture although every change of an article is the result of treatment, labour or manipulation. In order to make a change amount to "manufacture" something more is necessary and that something more is such transformation as it brings into existence a new and different....
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....utioned by the Supreme Court, every change is not 'manufacture' although every change in the article is the result of treatment, labour and manipulation. To bring about the change qualifying as manufacture something more is necessary and that something is transformation i.e. a new and different article, having a distinct name, character or use, must emerge. This view of ours, we think, is in conformity with the views expressed by the Court in the case of Polar Marmo Agglomerates Ltd. 1994 (73) ELT 536 (Raj). In that case the question involved was whether conversion of agglomerated marble block into agglomerated marble slabs/tiles amounted to "manufacture" or not. The Court considered the question in great detail and finally, making reference to a number of decisions of this Court in different cases, held as under in para 16 of the decision: '16. It has been held in the following decisions of the Court that conversion of marble blocks into marble slabs/tiles by sawing does not involve manufacturing process: 1. Amrutsheele vs. Union of India, Civil Writ Petn. No. 1654 of 1982, decided on 22nd July, 1987, 2. Jain Marbles vs. Union of India, Civil....
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.... amount to manufacture or production of articles. According to the learned counsel for the assessee, the facts of the present case are distinguishable from the facts of the case of CIT vs. Lucky Mineral (P) Ltd. The learned counsel has contended that the facts in the case of Lucky Minmat (P) Ltd. were that the assessee was mine owner and extracted marble boulders and cut them into slabs. But in this case, the assessee is not a mine owner. The assessee purchased marble blocks from mine owners and then converted them into marble slabs/tiles. Thus, according to the assessee, the various processes carried on by the assessee for converting them into marble slabs/tiles amounted to manufacture and production of goods. However, I do not agree with this view for the reason that even if the facts of the case before the High Court related to extraction of marble boulders and cutting them into marble slabs, yet the cases relied on by the Hon'ble High Court and as discussed above also related to subsequent process of cutting marble blocks into marble slabs/tiles. Here also the activities of the assessee are the same. The assessee is buying marble blocks and converting them into marble slabs....
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....ies undertaken by the assessee were the same as that of the assessee. Therefore, in my view the judgment of the Hon'ble Rajasthan High Court and the Hon'ble Supreme Court in the aforesaid cases are fully applicable to the facts of the present case. Now the nature of activities undertaken by the assessee does not result into a new item which could be categorized different from the original commodity. The item made by the assessee is known as marble tiles or marble slabs. Mere suffixing of blocks and slabs does not change the identity, character and nature of article. Still the end product is known as marble. Therefore, the same cannot be considered as a new item different from the original commodity. Hence, the activities carried on by the assessee cannot be regarded as manufacture or production. 5. The expression "manufacture" was also considered by the Tribunal, Calcutta Bench in the case of Jai Mica Supply Co. (P) Ltd. vs. Asstt. CIT (2003) 79 TTJ (Kol)(TM) 953 : (2003) 86 ITD 93 (Kol)(TM). In that case the assessee had claimed deduction under s. 80HHC in respect of export of fabricated mica products. The question was whether the items manufactured by the assessee cont....
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....ranite from quarry, converting it into slabs, cutting and polishing them amount to manufacturing activity. The claim of the assessee is that this judgment is applicable to the facts of the present case. I am unable to subscribe to such view. The reasons for the same are as under: (i) In the case of Mysore Minerals Ltd., the activity involved is extracting of granite stone from quarry and then further converting it into slabs, cutting and polishing them. Thus original commodity found in the mines was different i.e. stones from the final end product. All these operations were carried on by the assessee itself. But in this case, the assessee is not extracting marble from mines. The assessee is purchasing only marble block from the mine owners. Moreover, the operations involved in converting granite into granite slabs are far more sophisticated as compared to converting marble blocks into marble slabs/tiles. These processes have been explained by the Hon'ble Madras High Court in the case of CIT vs. Pooshya Exports (P) Ltd. (2003) 179 CTR (Mad) 557 : (2003) 127 Taxman 369 (Mad) which are as under: "2. The assessee is a company doing business of mining and quarrying....
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....be binding on the authorities outside the jurisdiction of the Hon'ble High Court. (iii) Further, the judgment of the Hon'ble Supreme Court in the case of Lucky Minmat (P) Ltd. vs. CIT was not brought to the notice of the Hon'ble Supreme Court in the case of Mysore Minerals Ltd. The judgment of the Rajasthan High Court which was also upheld by the Hon'ble Supreme Court was also not quoted before the Hon'ble Karnataka High Court. The counsel has not drawn our attention to any judgment of the Hon'ble Supreme Court overruling the judgment of the Hon'ble Rajasthan High Court. (iv) Moreover, the judgment of Hon'ble Karnataka High Court is with reference to deduction under s. 32A whereas the judgment in the case of Lucky Minmat (P) Ltd. is with reference to deduction under s. 80HH i.e. where conditions are the same as involved in the present case. (v) While deciding the case of CIT vs. Lucky Mineral (P) Ltd., the Hon'ble High Court has considered various judgments on the issue whether conversion of marble blocks into marble slabs/tiles amounts to manufacture or production of articles. However, the Hon'ble High Court decide....
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....and the same was allowed to the assessee in respect of unit No. 1 and unit No. 2. The assessee had set up 3rd and 4th units subsequently. Deduction in respect of the 3rd unit was also allowed to the assessee in earlier years. So, however, deduction was denied to the assessee for the asst. yrs. 2000-01 and 2001-02 on the ground that it was not engaged in the business of production or manufacture of any article or thing. The CIT(A) has confirmed the disallowance of the deduction. On appeal, whereas the learned JM held that assessee was entitled to deduction under s. 80- IA, the learned AM relying upon the decision of the Supreme Court in the case of Lucky Minmat (P) Ltd. vs. CIT (2000) 162 CTR (SC) 404 : (2000) 245 ITR 830 (SC), held that the assessee was not entitled to such deduction. 4. Before me, the learned counsel for the assessee contended that assessee was engaged in the production or manufacture of article or thing within the meaning of s. 80-IA. It was pointed out that whereas the mine owner excavates the marble blocks from the mines after necessary cuttings, sells the same to various manufacturers for varied uses, the assessee purchases the marble blocks from the miners....
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....004) 271 ITR 331 (SC), has confirmed the decision of Karnataka High Court in the case of Dy. CIT vs. Mysore Minerals Ltd. and accordingly the said decision is applicable in respect of marble as well. It was pointed out that the Hon'ble Supreme Court has held the process of extracting, cutting and polishing amount to production of article or thing. 5. Reliance was also placed on the decision of Calcutta High Court in the case of Andaman & Nicobar Islands Forest & Plantation Development Corporation Ltd. vs. CIT (2005) 198 CTR (Cal) 76 : (2006) 280 ITR 118 (Cal) in support of the contention that sawing of timber into planks, etc. amounts to production of article or thing. Reliance was also placed on the decision of Allahabad High Court in the case of CIT vs. Shiv Oil & Dall Mill (2006) 281 ITR 221 (All), wherein oil refining has been held to amount to manufacture. Reliance was also placed on the decision of the Supreme Court in the case of Kores India Ltd. 2004 (174) ELT 7 (SC), wherein the cutting of ribbon from big rolls into small rolls and selling the same after winding on pullies has been held to amount to production of article or thing. According to the learned counsel, t....
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....d., has been affirmed by the Supreme Court. It was pointed out that in the case of Mysore Minerals Ltd., the Karnataka High Court has held that cutting of granite blocks into slabs and tiles and selling the same after polishing amounts to production and manufacture of article and thing. It was accordingly pleaded that the view taken by the learned JM may be adopted in preference to the view expressed by the learned AM and assessee be held to be entitled to deduction under s. 80-IA. 9. I have given my careful consideration to the rival contentions. The issue involved in this appeal, as pointed out earlier, is as to whether the assessee is engaged in the business of manufacture or production of article or thing. The assessee purchases marble blocks from the mine owners. The deduction claimed by the assessee is under s. 80-IA falling under Chapter VI-A. The said section as applicable for the relevant assessment year provided for deduction out of gross total income to the extent of 25 per cent of profits derived from industrial undertaking engaged in the manufacture or production of article or thing. Whether conversion of marble blocks by sawing into slabs, tiles and polishing amoun....
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....of India, Civil Writ Petn. No. 869 of 1992, decided on 26th May, 1988. 3. Kasat Enterprises vs. Union of India, Civil Writ Petn. No. 133 of 1983, decided on 7th Nov., 1990, and 4. J.S. Marbles vs. Union of India, Civil Writ Petn. No. 479 of 1985, decided on 19th July, 1990. In the above cases also it was held by the Rajasthan High Court that conversion of marble blocks into marble slabs/tiles by sawing does not involve manufacturing process. Thus, the mere fact that the decision in the case of Lucky Minmat (P) Ltd., is in respect of the mine owner does not help the assessee in regard to the ratio laid down by the Hon'ble High Court that cutting of the marble blocks into marble slabs/tiles does not amount to manufacture. As pointed out earlier, even otherwise, the Hon'ble Supreme Court in the case of Aman Marble Industries (P) Ltd. has also laid down the principle of law that cutting of marble blocks into slabs and tiles and polishing does not amount to manufacture and, therefore, there is no escape from the same. Even in the case of Lucky Minmat, their Lordships of the Supreme Court held, "Conversion into lime and lime dust or concrete by stone crushers....
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....decision in the case of CIT vs. N.C. Budharaja & Co., to hold that the word 'production' is much wider than the word 'manufacture'. The following passage from the judgment in the case of N.C. Budharaja & Co. was reproduced: "The word 'production' has a wider connotation than the word 'manufacture'. While every manufacture can be characterized as production, every production need not amount to manufacture.... The word 'production' or 'produce' when used in juxtaposition with the word 'manufacture' takes in bringing into existence new goods by a process which mayor may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods." At p. 235, their Lordships of the Supreme Court held as under: "We are, therefore, of the opinion that extraction and processing of iron ore amounts to 'production' within the meaning of the word in s. 32A(2)(b) (iii) of the Act and, consequently, the assessee is entitled to the benefit of s. 32A(1) of the Act. The question whether the High Court was correct in holdin....
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.... excavating iron are and sequestering the same from other materials involved a very big process and there was complete transformation of the material from one form to another and that this amounted to a manufacturing activity and consequently, the assessee would be entitled to investment allowance on the screening plant and electrical installations used in mining. In the case of Hind Nippon Rural Industries vs. CIT (1993) 201 ITR 588 (Kar), the Hon'ble Karnataka High Court held that the assessee purchasing granite blocks made on specifications stated by the assessee and no quarrying was done by the assessee, the assessee mainly engaged in the export of stones was not engaged in the manufacturing process of goods. In the case of Dy. CST vs. Pio Foods Packers 46 STC 63 (SC), their Lordships of the Supreme Court held as under: "When pineapple fruit is processed into pineapple slices for the purpose of being sold in sealed cans, there is no consumption of original pineapple fruit for the purpose of manufacture and the case does not fall within s. 5A(1)(a) of the Kerala General Sales-tax Act, 1963. Although a degree of processing is involved in preparing pineapple slices fr....
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....e involved in the process of mining. Mere cutting of marble blocks into slabs will not amount to any manufacture or production of article or thing. On the other hand, extraction of marble blocks, cutting the same into slabs/tiles and selling the same after polishing would amount to production of article or thing (integrated activities). It will be pertinent to mention that mere cutting of granite blocks and selling the same would not amount to production of article or thing insofar as no new article emerges on cutting of granite blocks. The reasoning given by the Bombay High Court in the case of CIT vs. Sesa Goa Ltd. (2004) 188 CTR (Bom) 120: (2004) 266 ITR 126 (Bom), and later affirmed by the Hon'ble Supreme Court in CIT vs. Sesa Goa Ltd. would be relevant to appreciate the distinction as under: "The ore has to be extracted or raised from the earth in which it is embedded and has to be brought to the surface, as an article or thing. If that be the case, winning or extracting of ore would fall within the expression 'production'. Once it falls within the expression 'production', the assessee would be entitled to the benefit under s. 32A of the said Act. ....
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....h Court in the case of Andaman & Nicobar Islands Forest & Plantation Development Corporation Ltd. From these decisions also it clearly emerges that mere sawing of logs and planks by itself would not amount to production. So, however, the process of cutting of trees and then converting the same into logs and planks either manually or mechanically would amount to production of article or thing insofar as the standing trees are different than the logs and planks. On the other hand, mere cutting and polishing does not amount to production or manufacture of article or thing, as in the case of CIT vs. Gem India Manufacturing Co. (2002) 172 CTR (SC) 615: (2001) 249 ITR 307 (SC). In the said case, their Lordships of the Supreme Court held that cutting and polishing of uncut diamonds does not amount to production or manufacture of article or thing. 19. On the analysis of the above decisions, it would be necessary to consider as to whether the sawing of marble blocks into marble slabs and tiles with or without polishing amounts to production of article or thing. I have earlier pointed out that the aforesaid activities do not amount to manufacture of article or thing. A reference has been ....
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....ss they are 'goods' produced or manufactured in India. The term 'manufacture' itself as defined in s. 2(f) is an inclusive definition. Excise duty is imposed when the manufacture of goods occurs. The concept of "manufacture" has been considered in several cases cited on both the sides. The principles that evolve out of these decisions are that (i) mere change is insufficient and a new product should emerge. In the assessee decision in the case of Union of India vs. Delhi Cloth Mills, the Supreme Court has observed, relying on passage from an American judgment, the word '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". (ii) a new substance known to the market must emerge. (iii) there should be loss of original identity. The fact that the product has undergone a degree of processing would be irrelevant if the original commodity continues to possess its original identity. ....
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....ufacture is the end result of one or more processes through which the original commodity is made a pass. In that case the question arose whether pineapple fruit converted into pineapple slices for sale in sealed cans would amount to manufacture under s. 5A(1)(a) of the Kerala General Sales-tax Act. The primary test is the continuation of the identity of the commodity involved in the manufacture or otherwise. Shri Laxmi Kumaran, pointed out that pineapple would continue to be pineapple whether taken in slices or as a whole fruit, and Shri Ravinder Narain countered by saying that so would marble continue to be marble whether in the form of block, slab or tile. Be that it may, we have to consider whether the slicing of pineapple would amount to manufacture. Applying the ratio of that decision, it is seen that cutting marble slabs from marble blocks would not produce a commercially distinct and marketable article. 10. From the decision cited by the senior Departmental Representative, we find that in certain cases certain processes involved have been treated as 'manufacture'. For example 1982 ELT 253 (Teleprinter in sub-item (ii) Tariff Item 17 is a distinct entry) 1987....
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....ection or Chapter notes of the Schedule to the Central Excise Tariff Act, 1985 as amounting to manufacture, and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on the own account;' The definition of excisable goods had also been amended to mean "goods specified in the Schedule to Central Excise Tariff Act, 1985 as being subject to duty of excise". Before this amendment, the Hon'ble Supreme Court in the case of Aman Marble Industries (P) Ltd. vs. CCE, had laid down the law that the activity of cutting, trimming, polishing of marble does not amount to production or manufacture of article or thing. It is by virtue of the inclusive definition of 'manufacture' under the Central Excise Act, 1944, which enables the levy of excise duty in respect of marble slabs and marble tiles. It is well-settled principle of law that in interpreting a statute with reference to other statutes, it is necessary to keep in mind the relevant provisions of a statute. Definition of a particular statut....