TaxTMI 
TaxTMI 
2009 (2) TMI 751
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.... Does the mixing of the asphalt, jelly and sand involve a manufacturing process resulting in the production of a product different from the ingredients used?" While considering the matter, the revisional authority set aside the order passed by the appellate authority and restored the order of the assessing authority dated December 6, 2004. Against the said order, this appeal has been preferred. The appeal has been admitted on the following substantial question of law: "Whether the appellant is entitled to purchase superior kerosene oil at concessional rate of tax under section 5A of the KST Act against form 37 for use in the manufacture of bitumen mixture for sale in the course of executing works contract of laying of roads?" The facts material for deciding this case are mentioned hereinbelow. The appellant is a proprietory concern and is a duly registered dealer under the provisions of the Act. The appellant is engaged as a contractor in execution of contracts of laying of roads and construction of buildings. Roads laid by the appellant are macadamized by use of bitumen mixture. According to him, bitumen, jelly, chemicals and superior kerosene oil (SKO) are the inputs used in ....
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....rums containing the asphalt mix. Thus, from the impugned order, it appears that there was some doubt with regard to the use of SKO by the appellant. However, the appellate order passed by the Joint Commissioner, makes everything crystal clear, and has held as under: "(4) The bitumen mixture/asphalt is manufactured by using required quantity of bitumen, chemicals, jelly, etc., as per technical specifications for laying of roads, and this bitumen mixture is manufactured at one place where the contract for laying of roads is awarded, and then the bitumen mixture so manufactured is transported by lorries and thereafter, the road is asphalted. (5) The manufacturing process involves melting of bitumen and proper mixing of the other ingredients as per specialized technical specifications and for this purpose of manufacture superior kerosene oil is used. The said superior kerosene oil acts as a catalyst for melting the bitumen to specified thickness and thereafter when the bitumen assumes a semi-liquid form, the other ingredients are mixed while the process is in heating by using superior kerosene oil, and thereafter, the bitumen mixture emerges. (6) In the course of such manufacture, ....
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....distinctive name or character must emerge. The true test for determining whether a manufacture has taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity but is recognised in the trade as a new and distinct commodity. The difference between 'processing' and 'manufacture' is by now well understood and well recognised. 'Processing' means subjecting a commodity to a process or treatment so as to develop it or make it fit for market. With each process, the original commodity undergoes a change. But it is only when the change takes the commodity to a point where it can be no longer regarded as the original commodity but is recognised in the trade as a new and distinct commodity that a manufacture can be said to take place. Where the commodity retains a continuing substantial identity through a processing stage, it cannot be said that there has been a manufacture." Reliance has also been placed on a judgment of the Supreme Court in the case of Commercial Taxation Officer, Udaipur v. Rajasthan Taxchem Ltd. reported in [2007] 5 VST 529 (SC), wherein, in paragraph 33, it has been held ....
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....finishing, etc., with reference to cotton fabrics and man-made fabrics, the court considered what constituted 'manufacture'. In that connection the court observed: 'The taxable event under the excise law is "manufacture". 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 processes, "manufacture" takes place and liability to duty is attracted.' The court referred to various earlier decisions dealing with the expression 'manufacture'. We are unable to appreciate as to how the ruling helps the Revenue in the present case. We have already pointed out that the printing on the bottles does not bring into existence a new commercial commodity which is distinct and separate in its character, use and name from the original commodity. Hence, we are unable to accept the contention of the Revenue in this case that printing on bottles involves a process of 'manufacture'." Useful reference can also be made to a decision of the High Court of Kerala in the case of Namputhiris Pickle Industries v. State of Kerala r....