TaxTMI 
TaxTMI 
2010 (10) TMI 658
X X X X Extracts X X X X
X X X X Extracts X X X X
.... titanium dioxide ; cathodic protection of cross countries oil/gas pipe lines ; other miscellaneous uses for chemical industry ; and anodes for dry cell batteries. A large part of the CPC manufactured by the appellant is exported. The appellant claimed deduction in respect of the profit arising out of the export of the CPC. The Assessing Officer allowed to the appellant deduction of the export profit under section 80HHC of the Income-tax Act, 1961 (for short "the Act"). However, the Commissioner of Income-tax (for short the "CIT") exercising jurisdiction under section 263 of the Act set aside the assessment order in so far as it related to the deduction under section 80HHC. The Commissioner of Income-tax was of the view that the CPC was a mineral coke, that is to say, a residue obtained on refining petroleum crude by subjecting it to a process of calcination and, therefore, it was a processed mineral which was not specified in the Twelfth Schedule to the Act. Aggrieved by the decision of the Commissioner of Income-tax, the appellant filed an appeal before the Income-tax Appellate Tribunal hereinafter referred to as the "ITAT"). The Income-tax Appellate Tribunal held that the CPC wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tha, kerosene, stove distillate, tractor and diesel oil, gas oil, light motor oil, medium motor oil, heavy motor oil, extra-heavy motor oil, paraffin wax, steam cylinder stock, petroleum wax, greases and solvents, fuel oil, asphalt and tar, and bituminous materials. These petroleum products are in liquid state other than LPG which is in gaseous state and is compressed to liquid form and sold in LPG cylinders. The aforesaid various products are obtained by vacuum distillations and fractionation, catalytic cracking and reforming, thermal cracking and reforming, dewaxing and solvent extraction, filtering and finally blending. These operations are carried out at various temperatures and the products are manufactured and then stored and distributed to the consumers through petrol pumps/sales depots and other commercial outlets. These operations are carried out by companies like BPCL, HPCL, IOC and IBP and now Reliance Industries by setting up refineries at mega investments. The products known as asphalt, tar and bituminous materials are obtained as bottom products of atmospheric and vacuum distillation when petroleum crude oil is distilled at high temperature to produce various products....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... In respect of the profit earned by the appellant out of the export of the CPC, the appellant claimed exemption under section 80HHC of the Act. 6. Section 80HHC of the Act provides for a deduction in respect of the profit earned from the export business. The section, so far as it is relevant for the purpose of our decision, reads as follows : "80HHC. Deduction in respect of profits retained for export business.-(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by the assessee from the export of such goods or merchandise : . . . (2)(a) This section applies to all goods or merchandise, other than those specified in clause (b), if the sale proceeds of such goods or merchandise exported out of India are received in, or brought into, India by the assessee (other than the supporting manufacturer) in convertible foreign exchange within a period of six months ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd development of the country. The price required to be paid for such imports is met out of the convertible foreign exchange it earns by exports. Where the price of the imports exceeds the price of the exports made by a country, the difference is called a trade deficit. Bulging trade deficit affects the economy of a country and even its ability to import in future. The trade deficit in India is growing and in order to narrow the gap between the imports and exports steps were required to be taken for promoting exports. After giving several incentives like cheaper rates of interest on borrowings made for exports and other export packages to further promote exports, the Legislature thought it fit to give a concession in the shape of deduction of export profits while computing liability for income-tax. section 80HHC was introduced to promote exports by giving a tax concession. Sub-section (1) of section 80HHC (as substituted by the Finance Act of 1985) provides for a deduction to be granted in respect of a profit earned by a company or a resident of India from a business of export out of India of any goods or merchandise. At the same time, while granting the export incentives, the Legi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a "word or phrase" is not defined under the Act, a normal meaning of that word should be taken, which is understood in common parlance. In CIT v. Madgul Udyog [1994] 208 ITR 541 (Cal), relied on and cited by Mr. Inamdar appearing for the appellant, a Division Bench of the Calcutta High Court held that the words which are not applied to any particular science or art are to be construed as they are understood in common parlance. The obvious and popular meaning of the language should be followed. If a statute contains language which is capable of being construed in a popular sense, such statute is not to be construed according to the strict technical meaning of the language contained in it, but it is to be construed in its popular sense that the people conversant with the subject-matter with which the statute is dealing could attribute to it. In CIT v. Teritex Knitting Industries P. Ltd. [1978] 114 ITR 634, a Division Bench of this court has held that while interpreting words used in a statute, in case of difficulty or ambiguity a reference to a dictionary is permissible. In our view, from the above cited decisions, the following principle can be derived. When interpreting a word use....
X X X X Extracts X X X X
X X X X Extracts X X X X
....soil. It then says that the word is not a definite term and is susceptible of limitations or extensions according to the intention with which it is used. In its ordinary and common meaning it is a comprehensive term including every description of stone and rock deposit whether containing metallic or non-metallic substances. Stroud's Judicial Dictionary, 5th Edition, Volume 3 says the word "minerals" to means primarily all substances-other than the agricultural surface of the ground-which may be got for manufacturing or mercantile purposes, whether from a mine, as the word would seem to signify, or such as stone or clay, which are got by open working. From the meaning given in the Judicial Dictionary, it is clear that the expression "minerals" is used primarily for substances found on the earth or below the land and does not denote a product manufactured from the minerals found on the land or below the land. In Stonecraft Enterprises v. CIT [1999] 237 ITR 131 ; AIR 1999 SC 1638, the Supreme Court held that granite exported by the appellant therein, without subjecting it to any process, was a mineral and the appellant was not entitled to the benefit of deduction of export profits in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....actually decides. The ratio decidendi of a case is binding. The obiter dicta (except of the Supreme Court) only has a persuasive value. A casual observation in a decision has no precedential value. We would therefore examine the decision in the case of Burmah Shell Refineries Ltd. [1966] 61 ITR 493 (Bom) to find out its ratio. There, the Burmah Shell Refineries Ltd. (hereinafter referred to as the company) was carrying on business of refining crude oil. It filed a return of income for the assessment year 1964-65, corresponding to the calendar year 1963 ending on December 31, 1963. The Assessing Officer made a provisional assessment under section 141 of the Act by granting to the company rebate of 30 per cent. and thereafter charged surtax at the rate of 25 per cent. The company by its letter dated October 21, 1966 requested the Assessing Officer to rectify the rebate at the rate of 35 per cent. and not 30 per cent. on the basis that the petitioner was a company engaged in the business of manufacture and production of mineral oil. Since no reply was given to the letter of the company, it filed a writ petition praying for mandamus directing the Assessing Officer to rectify the provis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alkylation and dehydrogenation in delayed cokers, the raw petroleum coke (RPC) or green coke is produced. This raw petroleum coke is a hard material or raw material used for the production of the CPC. The CPC is produced by calcination process carried out in specified high temperature up to 12001350 degree centigrade or higher. This process changes the crystalline structure of raw petroleum coke/green coke and converts it into the calcined petroleum coke (the CPC). A different product known by the specific name "calcined petroleum coke" in the commercial world comes into existence by the calcination process. Physical properties like electrical conductivity, real density and oxidation characteristics are altered by subjecting the raw petroleum coke or the green coke to a calcination process. It brings into existence a different product which is sold in the market by a different name having different characteristics. 17. The learned counsel for the Revenue however submitted that the cal-cination process cannot be regarded as a manufacturing process as it is a simple process of applying heat, may be by specialised methods, and mere heat treatment cannot be regarded as a manufacturing....