TaxTMI 
TaxTMI 
TaxTMI 
2006 (6) TMI 157
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....ding 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 have "manufactured" or "produced" any article or thi....
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....ble 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 angles by edge cutting machine and multi-disc cutter machines; (vi) Polished slabs and tile....
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....-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 assessment years which are under consideration. The assessee-company had been regarded as manufacturer/producer by Government Department/agencies in all the prec....
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.... 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 Ltd. vs. Union of India AIR 1968 SC 922, 968. Manufacturing implies a change and there must be transformation, a new and different article emerging with a distinctive name, character or use. Grey fabric, after undergoing various processes of bleaching, dyeing, sighing, printing, finishing, e....
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....terial 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 for different purposes and hence the industrial undertaking qualifies for deduction under ss. 80HH and 80-I of the Act. The phraseology of the said two sections is identical in this respect. Tatson Food Industries vs. State of Kerala (2000) 119 STC 265 (Ker) The turmeric and turmeric powder are distinct commodities. Turmeric gets consumed when it is powder and in its place new goods/commodities emerge. Turmeric powder....
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.... 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 raw material is not manufacture although every change of article is result of treatment, labour and manipulation. In order to make a change amount to manufacture something more is necessary and that something more is such transformation of a production is (to) bring into (existence) a new and different article having different name, character and use. CCE vs. Kutty Flush Doors & Furniture Co. (P) Ltd. (1988) 70 STC 314, 315-316 (SC) It is well settled that excise duty becomes chargeable only when a new....
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....ere 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 manufacturer/producer. For that purpose, he has relied on the chart placed at p. 18 of the paper book wherein he has tried to apply the above tests to the facts of this case and tried to explain the activities relating to marble business from the first point to the last. 15. This fact is not denied by the Revenue that the appellant company is registered with the Central Excise Department and the Department has been regularly charging excise duty on the manufacture of marble slabs and tiles by considering the same as falling within the scope of 'manufacture'. Page 41 of paper book contains the necessary evidence and....
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....g 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 crushers could legitimately be considered to be a manufacturing process while the mere mining of limestone and marble and cutting the same before it was sold in the market could not be so considered. So, the Hon'ble Supreme Court confirmed the view expressed by Hon'ble Rajasthan High Court in the case where the commodity retains substantial identity throughout the processing stage. It cannot be stated that it had been manufactured. 20. But the facts of these asses sees are that the 'marble' is found in the shape of bulky rocks and such rocks cannot be sold in that form and shape. Such rocks have to be cut and sized for transpor....
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.... 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 activities, there are divergent views expressed by different High Courts and/or by the same High Court even. Even the Hon'ble Supreme Court has taken different views on the same subject. But, these are specifically based on the facts of each and every case. The Courts have specifically mentioned in all such decisions that the decision is taken on the particular facts of that particular case. So, the fact remains, again, that there cannot be any 'straight-jacket' formula to define manufacture/production, it will depend on the facts and circumstances of a given case. 26. Before we deal with case laws relied by the learned Authorised Representative we would like to revert back....
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....ake 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 suffice to say that manufacture has taken place. The moment there is a transformation into a new commodity having its own character, use and name whether as a result of one process or several processes, 'manufacture' takes place." 30. The Hon'ble Court has heavily borrowed the language from Dy. CST vs. Pio Food Packer to arrive at the decision, as has been mentioned by the Hon'ble Judges themselves in the order. 31. To sum up, in a manufacturing activity, raw material transforms into a new commodity having its own character, use and name whether as a result of one process or several processes. 32. Every change in the raw material is not manufacture, although every change of an article is the result ....
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....t 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 dissented from the ratio of the above decision of Madras High Court. It has only stated (that) the facts of the case of Lucky Minerals were entirely different. Meaning thereby, when a boulder is converted into small stones of various sizes, it is a manufacture. Thus, it does not mean that the constituent of the raw material should also change altogether. There should not be a chemical change. In a way the Hon'ble High Court has accepted the ratio of the Madras High Court. What happens in this case, big blocks are converted into tiles/slabs of different sizes by various treatments. It is not the simple case of conversion into small stones, rather various treatments including filling and chemical treatments in addition to polishing, et....
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....ugh 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 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 essential 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. Although it has undergone a degree of processing, it must be regarded as still retaining its original identity." 44. The facts of Lucky Minerals and of this case are entirely different but the ratio of this decision can be applied to present assessee's case for the same reasons, as we have mentioned while discussing Lucky Mineral's case in above paras. The tests laid down by this decision are fulfilled by this as....
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....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 extracting granite and cutting it into slabs of various sizes and polishing them was one of manufacturing and production and accordingly investment allowance under s. 32A was admissible on plant and machinery installed for the said purpose. SLP against the same was dismissed by the Hon'ble Supreme Court. Their Lordships of the Hon'ble Supreme Court dismissed the petition filed by the Revenue dt. 7th Dec., 2000 of the (against) Hon'ble Karnataka High Court (2001) 167 CTR (Kar) 11 : (2001) 250 ITR 730 (Kar) whereby the High Court had dismissed the Department's appeal holding that the assessee was entitled to investment allowance under s. 32A of the Act on the machinery, such as earth-moving equipment, crane oil engines, pumps and machinery foundations for gang-saws employed in the manufacture or production of article or thing and....
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....ti-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 of several articles; it is composed of stones, concrete, cement, steel and other manufactured articles like gates, sluices, etc. But to say that the end product, the dam, is an article is to be unfaithful to the normal, connotation of the word. A dam is constructed; it is not manufactured or produced. The expressions 'manufacture' and 'produce' are normally associated with movables-articles and goods, big and small-but they are never employed to denote the construction activity of the nature involved in the construction of a dam or for that matter a bridge, a road or building. The decisions of the Bombay High Court in CIT vs. N.U.C. (P) Ltd. (1980) 126 ITR 377 (Bom) and in CIT vs. Shah Construction Co. Ltd. (1982) 30 CTR (Bom) 245 : (1983) 142 ITR 696 (Bom), relied upon by Sri Murthy, are no doubt not decisions rendered under s. 80HH or under....
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....e 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, helps the case of the assessee which we have mentioned above. Further, the decision of the Hon'ble Karnataka High Court in the case of CIT vs. Mysore Minerals Ltd. helps the assessee and the Revenue's SLP stands dismissed by the Hon'ble Supreme Court vide its order dt. 18th Jan., 2002 reported at (2002) 254 ITR (St) 278. Thus, we have no hesitation in holding that the production process employed by the assessee involves manufacturing activity. Accordingly, it is entitled to deduction under s. 80-IA of the Act as per law. We are also satisfied that the word 'produced' even wider in meaning and, therefore, even on that count, the assessee's claim under s. 80-IA deserves to be allowed. The AO is accordingly directed to allow the claim of the assessee under s. 80-IA of the Act in both the years under consideration. In the result, the appeals of ....
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....aja & 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 have observed as under at pp. 415 of 204 ITR: "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. The expressions 'manufacture' and 'produce' are normally associated with movable-articles and goods, big and small, but they are never employed to denote construction activity of the nature involved in construction of a dam or a building. The word 'article' is not defined in the IT Act or the Rules. I....
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.... 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 article having distinct name. 3. Now the case of the assessee requires to be decided in the light (of) tests laid down by the Hon'ble Supreme Court in the above cases. In this case, the Revenue has relied on the judgment of the Hon'ble Supreme Court in the case of Lucky Minmat (P) Ltd. vs. CIT (2000) 162 CTR (SC) 404 : (2000) 245 ITR 830 (SC) where the Hon'ble Supreme Court upheld the judgment of the Hon'ble Rajasthan High Court in the case of CIT vs. Lucky Mineral (P) Ltd. (1996) 134 CTR (Raj) 541 : (1997) 226 ITR 245 (Raj). It would, therefore, be in the fitness of things to first refer to the judgment of the Hon'ble Rajasthan High Court in the above-mentioned case. The facts of the case before the Hon'ble High Court were that the assessee was a mine owner. The assessee extracted limestones and marble boulders and cut them into marble slabs. The issue raised before the Hon'ble High Court was whether the business activity ....
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....abs/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 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. Similar view has been taken in CCE vs. Fine Marbles & Minerals (P) Ltd. 1985 (22) ELT 128, Sangmermer India (P) Ltd. vs. CCE 1989 (42) ELT 725 (Trib) and Associated Stone Industries (Kota) Ltd. vs. CCE 1992 (60) ELT 639. It is mentioned in Associated Stone Industries (Kota) Ltd. vs. CCE, para 3, that the Revenue filed appeal against the order given in CCE vs. Fine Marbles and the Supreme Court dismissed it. Similar will be the position for the conversion of agglomerated marble blocks into agglomerated marble slabs/tiles." Following and borrowing the language from Dy. CST vs. Pio Food Packers, we conclude that although at some point processing and manufacturing will merge, but where the commodity retains a continuing subs....
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....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/tiles through sawing operations including polishing of the same. These operations are essentially cutting operations. These are not crushing operations. Therefore, the original commodity i.e. marble blocks retain the same identity but known as marble slabs/tiles. Thus, in my opinion the above judgment of the Rajasthan High Court is squarely applicable to the facts of the present case. 4. This judgment was the subject-matter of appeal before the Hon'ble Supreme Court where the question raised before the Hon'ble Supreme Court was as under: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that business activity of the assessee is clearly in the nature of manufacturing or production and, therefore, it is entitled for relief under s. 80HH of the IT Act, 1961?" During the course of hearing before the Hon'ble Supreme Court, the assessee relied on the judgment of Hon'ble Rajasthan High Court in the case of CIT vs. Best Chem & Limestone Industries ....
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....ssessee had claimed deduction under s. 80HHC in respect of export of fabricated mica products. The question was whether the items manufactured by the assessee continued to retain the character of minerals i.e. items prohibited under the IT Act for allowing deduction or it was altogether a new and distinct item. The case of the assessee was that the various activities undertaken by the assessee resulted into bringing into existence a commodity which was commercially different and distinct. Therefore, it was contended that the assessee was entitled to deduction under s. 80HHC. The Tribunal observed that mica blocks were processed and out of the same, items like fabricated mica, silvered mica, plates were made. However, the Tribunal held that such items continued to retain the character of minerals and were not the items distinct and different from original commodity. The Tribunal also illustrated the point with example of pure gold. It noted that pure gold could be converted into gold biscuits, gold coins, gold bars, gold sheets, gold threads and gold dust, etc. Though all these items were made of gold and were having a different commercial name, yet most of these items are recognise....
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..... (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 of granite stones and exporting them as finished goods to various countries. Before exporting these granites stones as per the specification of the customers, the stones undergoes various types of manual and machinery processes, such as, removal of overburden of the quarry by manual process, location and drilling of the boulders, eschewing of waste, drilling of holes, lifting these granite logs either manually or with the help of cranes, dressing, shaping, sizing, colouring and giving uniform grains to these stones, etc. and the process also involved removing of certain natural flaws such as air-pores, veins, crakes, etc. in order to ensure quality of the product. Certain chemical impurities are also required to be removed in special manufacturing process which requires special machines/ equipments, etc. like jet burners, block cutters, vertical and horizontal drilling machines, etc." It may be seen therefrom that such processes involve, inter alia, removal of chemical impurities through special manufacturing processes which require sp....
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.... into marble slabs/tiles amounts to manufacture or production of articles. However, the Hon'ble High Court decided the issue against the assessee and in favour of the Revenue. This judgment has been upheld by the Hon'ble Supreme Court. Therefore, the facts of the present case are identical to the facts of the case relied upon by the Hon'ble Rajasthan High Court in the aforesaid cases and are directly applicable to this case. Therefore, the judgment of the Hon'ble Rajasthan High Court is binding on all the authorities including Tribunal covered in its jurisdiction. 7. Thus, in the light of these facts and circumstances of the case, I am of the considered opinion that the activities undertaken by the assessee for converting the marble blocks into marble slabs and tiles do not amount to 'manufacture' or 'production' in view of the judgment of the Hon'ble Rajasthan High Court in the case of CIT vs. Lucky Mineral (P) Ltd. and of Hon'ble Supreme Court in the case of Lucky Minmat (P) Ltd. Therefore, the assessee is not entitled to deduction under s. 80-IA. Accordingly, the order of CIT(A) does not merit any interference and all the grounds of appea....
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....o various manufacturers for varied uses, the assessee purchases the marble blocks from the miners and by a mechanized process cuts the blocks into slabs and tiles and after buffing and polishing sells the same in the market. According to the learned counsel, the marble blocks are transformed into marble slabs and tiles and therefore, a different commodity emerges after the process of cutting, buffing and polishing. The learned counsel further pointed out that assessee is registered as a small-scale unit with the Department of Industries. The Government of Rajasthan has also found it eligible for incentive which is granted for encouraging the industrial development in the State. The excise duty is also paid on the products manufactured by the assessee. Sales-tax incentive is also granted to the assessee for the purpose of encouraging the industrial development in the State. Learned counsel further pointed out that in respect of unit No. 3, deduction was allowed to the assessee in earlier years. So, however, in 2000-01, the deduction has been denied by taking a different view without change in facts or circumstances of the case. It was further contended that the decisions cited on be....
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.... has been held to amount to production of article or thing. According to the learned counsel, the learned JM has rightly held the activities carried on by the assessee amount to at least production of article or thing. The learned AM has not dealt with this issue at all, contended the learned counsel for the assessee. Since assessee would be entitled to deduction even if it is engaged in the production of article or thing, which may not amount to manufacture, deduction is permissible to the assessee, it was pleaded before me. 6. The learned standing counsel for the Department, on the other hand, heavily relied upon the decision of Supreme Court in the case of Lucky Minmat (P) Ltd. vs. CIT. Reliance was also placed on the decision of Rajasthan High Court in the case of CIT vs. Lucky Mineral (P) Ltd. (1996) 134 CTR (Raj) 541 : (1997) 226 ITR 245 (Raj), to support the contention that assessee is not engaged in the production or manufacture of article or thing. The learned standing counsel has also relied upon the written submissions and according to him, the decision of the Supreme Court in the case of CIT vs. Sesa Goa Ltd., is inapplicable to the fa9J;s of this case insofar as the a....
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....ng. Whether conversion of marble blocks by sawing into slabs, tiles and polishing amounts to manufacture of article or thing is, in my view, covered against the assessee by the decision of Hon'ble Supreme Court in the case of Aman Marble Industries (P) Ltd. vs. CCE 2003 (157) ELT 393 (SC). In the said case, their Lordships of the Supreme Court held that cutting of marble blocks into slabs and polishing does not amount to manufacture of article or thing. Their Lordships of the Rajasthan High Court, which in this case is the jurisdictional High Court, in the case of CIT vs. Lucky Mineral (P) Ltd., had also occasion to consider the issue as to whether an assessee who was in the business of mining of limestones and marble blocks and thereafter cutting and sizing the same before being sold in the market was entitled to deduction under s. 80HH of the IT Act. In that case, it was held that the assessee was not entitled to deduction under s. 80HH as cutting and sizing of the marble blocks into marble slabs and polishing did not amount to manufacture and production of article or thing. As pointed out earlier, the learned counsel for the assessee has vehemently argued that the said decis....
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....n into lime and lime dust or concrete by stone crushers could legitimately be considered to be a manufacturing process while the mere mining of limestone and marble and cutting the same before being sold in the market does not amount to manufacturing of any article or thing". 11. The learned counsel for the assessee has heavily relied upon the decision of Supreme Court in the case of CIT vs. Sesa Goa Ltd., where extracting and processing of ore has been held to fall within the ambit of the word 'production'. It has also been pointed out that the Hon'ble Supreme Court in the said case has also affirmed the decision of the Karnataka High Court in the case of Dy. CIT vs. Mysore Minerals Ltd. According to the learned counsel, the Karnataka High Court in the case of Mysore Minerals Ltd. held that extracting granites from quarry, converting the same into slabs/tiles, polishing and cutting before effecting the sale of the same amounts to production or an article or thing. Further, the said decision of the Karnataka High Court having been affirmed by the Hon'ble Supreme Court squarely covers the issue involved in the present case, it was contended before me. 12. In the ca....
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.... Court was correct in holding that the activity did not amount to 'manufacture' is left open." Affirming the decision of Karnataka High Court in the case of CIT vs. Mysore Minerals Ltd., their Lordships of the Supreme Court held as under: "The provision required to be construed in this appeal is s. 80-I of the IT Act, 1961, the relevant extract of which are substantially identical to the provisions of s. 32A(2)(b)(iii) of the IT Act, 1961, which have been construed by us in the order delivered by us today in CIT vs. Sesa Goa Ltd. (Civil Appeal No. 7456 of 2004). Following the decision in Sesa Goa Ltd., the civil appeal is dismissed." The facts in the case of Mysore Minerals Ltd. are that the assessee was a mine owner extracting granite from quarry, cutting and polishing the same. The Hon'ble Karnataka High Court held that extracting granite from quarry and cutting it to various sizes and polishing was manufacturing or production of any article or thing and assessee was entitled to deduction under s. 80-I. The Hon'ble Supreme Court has affirmed the decision of the Hon'ble Karnataka High Court to the extent that the activities of extraction of granite and sell....
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....lices from the original fruit, the commodity continues to possess its original identity notwithstanding the removal of inedible portions, the slicing and thereafter canning it or adding sugar to preserve it." Their Lordships further held, "It is the change or series of change taking the commodity to the point where commercially it can no longer be regarded as the original commodity but instead it is recognized as a new and distinct article, then the manufacturing can be said to take place". 14. In the case of Union of India vs. Delhi Cloth & General Mills Ltd. 1977 (ELT) 199 (SC), it was held that manufacture implies a change but every change in raw. material is not manufacture although every change of article is a result of treatment, labour and manipulation. In order to make a change, 'manufacture' something more is necessary and that something more is such transformation of a production in bringing into (existence) a new and different article having different name, character or use. 15. In the case of Polar Marmo Agglomerates Ltd. vs. Union of India, it was held that agglomerated marble slabs/tiles made from crushed lumps/chips of naturally excavated marble and pigme....
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....he case, it would not be possible to interfere with the view taken by the Tribunal in all the three appeals." While affirming the decision of the Bombay High Court, their Lordships of the Hon'ble Supreme Court also pointed out that what is embedded in the earth is something different than what is sold by the assessee. 17. At this stage, it may be relevant to point out that there is a distinction between mineral and ore. The term 'mineral' though frequently applied to substances containing metals, in its proper sense includes all fossil bodies or matters dug out of mines. In its enlarged sense it comprises all the substances which formed or have formed a solid body of the earth. There is difference in common and scientific parlance between mineral and ore, ore being a compound of metal and some other substance. Ore is the compound of a metal and some other substance as oxygen, sulphur or arsenic called its mineralizer by which its properties are disguised or lost. As per Oxford Dictionary a mineral is a natural body destitute of organization or life. The word is evidently derived from mine as being that which is usually obtained from a mine but mineral bodies occur in ....
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....cision of the Hon'ble Supreme Court in the case of Aman Marble Industries (P) Ltd. vs. CCE, in which the decision of the Central Excise Tribunal was reversed by the Hon'ble Supreme Court. When the matter came up before the Tribunal in the case of Aman Marble Industries (P) Ltd., one of the Members had relied upon earlier decisions to hold that the cutting of blocks and slabs into tiles was not a process of manufacture or production of article or thing. However, a contrary view was taken by one of the Members of the Tribunal and after reference to the Third Member, the matter was remanded back to the Central Excise authorities for fresh examination in the light of the majority decision. On appeal to the Hon'ble Supreme Court, the view expressed by the learned JM of the CEGAT was upheld. The Hon'ble Supreme Court held that it was not possible to accept that excavation of stones and thereafter cutting and polishing them into slabs resulted in any manufacture of goods. The contention advanced on behalf of the assessee that the decisions to the effect that the activities carried on by the assessee do not amount to manufacture of article or thing would not come in the way....
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....set out above, whether the respondents have manufactured a product liable for duty. The process of cutting marble block into marble slabs has been set out in the earlier para. The marble slabs that are merely sawn from the marble blocks cannot be called a distinct commodity. The end product which would come into existence after the activity is completed, would still be called 'marble'. Thus, the original identity continues despite the several processes undergone. In the trade circles, marble slabs or the marble tiles that are manufactured after cutting the edges, trimming, polishing and other processes, continue to be known as marble. Unless it is proved that by virtue of the sawing process, a different or distinct commodity comes into existence, the process cannot be equated to manufacture. It is wrong to say that by the application of one or more processes, if the raw material indicates a change, that change would necessarily amount to manufacture. In order to fall within the ambit of 'excisable goods', the process applied should result in "goods" which could originally come to the market to be brought and sold. The intermediate state, as distinguished from the fi....
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.... in Item 26A(2), (iii) 1980 ELT 735. But those were instances where the article or product was covered under a specific Tariff entry. As rightly pointed out by the learned counsel for the respondents, the product now in question, before and after the said process of sawing, are not so different and distinct that it could be said that, in commercial parlance, commodity was converted into another commercially distinct and different commodity." The above decision in the case of Fine Marble & Minerals (P) Ltd. is referred to in the order of the Tribunal in the case of Aman Marble Industries (P) Ltd. vs. CCE, and has been relied upon by the learned JM of CEGAT whose decision has ultimately been upheld by the Hon'ble Supreme Court. It is evident from the above decision of the Central Excise Tribunal that the activities carried on by the assessee do not also fall within the ambit of production of article or thing and, therefore, the assessee is not entitled to deduction under s. 80-IA. 20. Before winding up, it will be necessary to consider the contention advanced on behalf of the assessee that the excise duty is paid on the activities carried on by the assessee which supports the c....
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....he word 'manufacture' is not defined. Therefore, one will have to depend on the interpretation of the word 'manufacture' as per settled precedents laid down by the Hon'ble Supreme Court or the High Courts. The decision of the Supreme Court has got to be read in the context in which it has been rendered. The decision of the Supreme Court in the case of Aman Marble Industries (P) Ltd. is before the amendment in the Central Excise Act, 1944 and, therefore, is applicable to the present case. Subsequent decision in the case of Kores India Ltd. is not applicable as it has been rendered in the light of amended law. 21. Similarly, the assessee being registered as an industrial unit does not necessarily make them as manufacturer or producer of any article or thing. The learned counsel for the assessee had pointed out before us that the Sales-tax Department had also classified the marble blocks and marble slabs separately and imposed tax at different rates. In my considered view, the mere fact that the Sales-tax Department has provided different rates for sale of marble in different shapes does not advance the case of the assessee that a different commodity is transforme....