TaxTMI 
TaxTMI 
2010 (4) TMI 535
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....uthority; after having bought the goods at the concessional rate of tax, he must use them for the manufacture of goods for sale. If he misuses them or disposes them off in any other manner, the concession will not be available to him. Thirdly, the buying dealer must maintain a separate stock for the goods purchased by availing the concession. According to them, to convert wet blue leather into finished leather, several processes and manufacturing activities take place, which include splitting, shaving, neutralizing, bleaching, dyeing, fat-liquoring, stuffing, setting out, samming, drying, staking and finishing and therefore, they fully complied with the provisions of Section 3(3) of the Act. 3. The Original Authority was not inclined to accept it. On appeal, the Appellate Authority found that the leather industry is of three types. One is the industry of tanning raw skins and manufacturing finished leather, which is called the full-fledged unit; the next kind is wet unit or wet skin unit by which, the raw skins are turned into semi tanned leather i.e wet blue; and the third unit, by which, the wet blue leather is converted into finished leather. The Appellate Authority, therefor....
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....rocessing takes place, they are no longer liable to putrefaction. It is only a question of stages of refinement and it is not as if a different or distinct commodity comes into existence. Learned Special Government Pleader also referred to the decisions of the Supreme Court to support his case. 7. It is also relevant to note that at the instance of the All India Skin and Hide Tanners and Merchants Association, a clarificatory note was issued by the Principal Commissioner and Commissioner of Commercial Taxes, who declared that when a dealer purchases semi finished skin and converts into finished hides, both the semi finished and finished hides are to be treated as the same commodity and Form XVII cannot be used for the purchase of chemicals. This appears to have loomed large in the minds of the Members of the Tribunal for arriving at their decision. 8. The various stages the wet blue leather undergo transformation from raw hides and skins to finished leather were explained to us, which are as follows : "Raw Hides/Skins -> Trimming, Sorting, Desalting (raw material storage yard) -> Soaking -> Liming unhairing -> Fleshing -> Washing -> Deliming/Batting -> Washing -> Degreasin....
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....process and the fiber is extracted. The Supreme Court held as follows : "The word 'manufacture' has not been defined under the Act, and therefore, we have to look into the meaning known in commercial parlance. In Black's Law Dictionary, Fifth Edition, the word 'manufacture' has been defined as, 'the process or operation of making goods or any material produced by hand, by machinery or by other agency; anything made from raw materials by hand, by machinery, or by art. The production of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, whether by hand, labour or machine'. Thus, by process of manufacture, something is produced and brought into the existence, which is different from that, out of which, it is made, in the sense that the thing produced is by itself a commercial commodity capable of being sold or supplied. The material from which the thing or product is manufactured may necessarily lose its identity or may become transformed into the basic or essential properties. The Constitution Bench of this court in Ujagar Prints v. Union of India (1989) 74 STC 401 : (1989) 3 SCC 48....
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....offee berries undergo nine processes to become coffee beans, there is a manufacturing activity. The Supreme Court took note of the factual observation of the Tribunal regarding nine processes involved in curing of coffee and then, they held that the conclusion of the Tribunal that a manufacturing activity takes place is correct, it was further held as follows : "Adverting to the facts of the present case, the assessee after plucking or receiving the raw coffee berries makes it undergo nine processes to give it the shape of coffee beans. The net product is absolutely different and separate from the input. The change made in the article results in a new and different article which is recognized in the trade as a new and distinct commodity. The coffee beans have an independent identity distinct from the raw material from which it was manufactured. A distinct change comes about in the finished product." 12. In the case of M/s. India Cine Agencies v. Commissioner of Income Tax, Madras reported in 2009 (233) E.L.T. 8 (S.C.) = (2009) 308 ITR 98, the question was as to whether the activity undertaken was manufactured or produced in the conversion of jumbo rolls of photographic films ....
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.... v. Haryana State Board and Others (1992 (1) SCC 418). The prevalent and generally accepted test to ascertain that there is 'manufacture' is whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognized as a distinct and new article that has emerged as a result of the process. There might be borderline cases where either conclusion with equal justification can be reached. Insistence on any sharp or intrinsic distinction between 'processing' and 'manufacture', results in an oversimplification of both and tends to blur their interdependence. (See Ujagar Prints v. Union of India (1989 (3) SCC 488). To put it differently, the test to determine whether a particular activity amounts to 'manufacture' or not is Does a new and different good emerge having distinctive name, use and character. The moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several p....
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.... and indeed there may be several stages of processing and perhaps a different kind of processing at each stage. With each process suffered, 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.' The word 'production' and 'produce' when used in juxtaposition with the word 'manufacture' takes in bringing into existence new goods by a process which may or 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." 14. In the present case, it is very clear from the facts before us that if a person placed an order for finished leather, wet blue leather will not be supplied to them. The same observations are made by the Supreme Court in the decision reported in 1991 (53) E.L.T. 515 (S.C.) = (1991) 80 STC 249) (cited supra). It is clear that after the 12 processes, which have been described in the ear....