1982 (2) TMI 291

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....g the vegetable ghee. Vegetable ghee or vegetable oil was a notified product. Under the recognition certificate the assessee purchased oil-seeds worth Rs. 2,97,93,000. It is not disputed that the assessee also purchased oil-seeds worth Rs. 28,95,000 without form III-B. Such purchases appears to have been made from outside the State. The assessee produced vegetable oil worth Rs. 6,65,73,925. Out of these, the sales within the State of Uttar Pradesh or in the course of inter-State trade were worth Rs. 6,43,04,910, leaving a balance of Rs. 22,69,015 which admittedly were transferred to the assessee's depots at Patna and Jaipur and were sold from those depots. The assessing authority estimated that the vegetable oil worth Rs. 22,69,015 could....

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.... be said that the entire production of oil from oil-seeds purchased under form III-B was sold within the State of Uttar Pradesh or in the course of inter-State trade. The assessee, however, did not maintain separate accounts of oil produced from the two different sources of oil-seeds. On this aspect, the previous decision of this Court in Chittarmal Ram Dayal [1983] 52 STC 18; 1980 UPTC 274 becomes important. In that case, the learned judge examined the provisions of section 4-B of the Act and observed: "The requirement under sub-section (2) (of section 4-B) of the U.P. Act is that a dealer who requires any goods mentioned in sub-section (1) for use as raw material for the purpose of manufacturing notified goods may apply for a recogn....

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....fied goods whether it is manufactured by an assessee out of oil-seed obtained against the recognition certificate or otherwise. The penalty under sub-section (6) of loss of concessional rate of tax is to be considered in respect of only such oil as is manufactured out of oilseed purchased under sub-section (2) and not to oil produced out of oil-seed obtained from other source. So long as oil manufactured out of oil-seed obtained on concessional rate was sold in the State or in inter-State trade or commerce, the assessee was entitled to benefit under the law. The objective of section 4-B is to encourage manufacture of notified goods and not to restrict it. It does not prohibit the assessee from manufacturing goods apart from raw material obt....