2010 (1) TMI 1124

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....ich has been confirmed by the Tribunal that entire basmati rice manufactured by the applicant, for which recognition certificate was granted, have been sold in the course of export and rice so manufactured has not been sold otherwise, the Tribunal was not justified in confirming imposition of tax on the purchase of paddy alleged to have been used in obtaining broken rice during process of manufacture of rice sold within the State of U.P. in the course of inter-State sale? (2) Whether in view of the facts that entire rice manufactured out of paddy having admittedly been sold in the course of export, no tax can be legally imposed on the purchase merely because some waste product and by-products obtained during the process of manufacture of....

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....s per cent of the rice was not exported. The assessee was liable to pay tax on the raw material, i.e., paddy to the extent of the broken rice which emerged during the process of manufacture to a repeat in this case 4.75 per cent. Aggrieved by the assessment order dated February 8, 2005 the assessee filed an appeal under section 9 of the U.P. Trade Tax Act. The appeal of the assessee was dismissed on August 31, 2005 adopting the same view. Aggrieved by the order passed by the first appellate authority dated August 31, 2005 the assessee filed a second appeal under section 10 of the Act. The Tribunal by its order dated October 5, 2006 reiterated the view adopted by the first two authorities saying that the assessee was liable to pay taxe....

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....l on record as well as the notification dated February 12, 1999. From a perusal of the notification it appears that an exemption has been granted to notified goods on the purchase of raw materials. In the present case, the raw material purchased by the manufacturer was paddy, clearly the intent in the notification was to grant an exemption to raw materials used for manufacture of the notified goods and, therefore, it cannot be said that the paddy which was used during the manufacture of these notified goods was used separately for the broken rice which emerged during the process of manufacture. The learned counsel for the assessee is justified in saying that no raw material was ever purchased for the manufacture of any waste product o....