AI Drafter 
TaxTMI 
TaxTMI 
1984 (1) TMI 13
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....roidering designs on cloth purchased from other mills and the assessee was, therefore, not manufacturing or producing textiles as envisaged by s. 33(1)(b)(B)(i) read with item 32 of V Schedule to the Act. On appeal by the assessee, the AAC was of the view that the operations carried on by the assessee in merely embroidering or stitching designs on to textiles purchased by it from others was neither manufacture nor production by the assessee of textiles. In that view, the AAC dismissed the appeal. On further appeal to the Tribunal, it looked at the operations of the assessee differential in that assessee started with the cloth manufactured by others and purchased from others, yet the end-product was textiles otherwise processed. In doing so, the Tribunal relied upon the dictionary meaning of the word " process ". In the result, the assessee was held entitled to a higher rate of development rebate at 35% as claimed. Aggrieved by the order of the Tribunal, the Revenue has obtained reference on the following two questions A " 1. Whether, on the facts and in the circumstances of the case, it has been rightly held by the Tribunal that the assessee was entitled to the higher rate of....
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....th was also dyed. Still, the question remains whether these would constitute " manufacture or production " of " textiles ". The operations carried on by the assessee on the cloth purchased by it are not in the nature of either manufacturing or production operations, nor do such operations relate to the manufacture or production of textiles. The cloth, which would be covered by the expression " textile ", had already been manufactured or produced by someone else, but merely purchased by the assessee. That cloth, even after being embroidered and dyed, is not transformed into any other different or distinct commercial article or product, but essentially retains its basic character and structure and is identifiable as cloth manufactured or produced by another and purchased by the assessee. There is, therefore, no production or manufacture of textiles by the assessee, inasmuch as the assessee has not brought into being or existence textiles by employing the processes and dyeing. The learned counsel for the assessee emphasised that the product in this case has resulted from the application of some processes and dyeing by the assessee and contended it would fall within item 32 of Schedule....
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....that the cloth purchased by the assessee was bleached and dyed and thereafter cut into pieces, printed and washed and calendered and again cut into smaller pieces and then calendered again to give a good finish and then made into bed-spreads, scarves and handicraft goods. Some garments were also stitched. It was in that context the court pointed out that as a result of undergoing these different processes, the end-product was different from the feed-in material and, therefore, the undertaking would be one engaged in the manufacture or processing of goods within the Explanation appended to clause (xxi) which would apply to clause (xxxii) also. Even assuming that the test is that the end-product should be different from the feed-in-material, that was satisfied in that case. The feed-in-material was only cloth, but as a result of the processes to which that cloth was subjected, bed-spreads, scarves, handicrafts and garments were brought into existence. In the manufacture of garments, for instance, though the feed-in-material is cloth, what comes out at the end of the line is finished garment, which are different and distinct commercial articles, though falling under " textiles ". In t....
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....oloured yarn, was exempt from payment of purchase tax, as no manufacturing process was involved. The Board of Revenue accepted the stand of the assessee; but the Madhya Pradesh High Court pointed out, considering the definition of the word " manufacture " in s. 2(j) of the Madhya Pradesh General Sales Tax Act of 1958, that the word is very wide and includes any process and that the use of the end-product, dyed cotton yarn, was different from that of the uncoloured yarn and, therefore, it would involve a process of manufacture. That decision turned on the definition of " manufacture " which included any process or manner of producing or making any goods and on that definition, it was held that dyed cotton yarn would be goods made by a manufacturing process. No similar definition of the word I, manufacture " or " produce " in the Act has been brought to our notice and, therefore, those considerations would be inapplicable to this case. We may now refer to CST v. Harbilas Rai and Sons [1968] 21 STC 17 (SC). In that case, the assessee purchased pig bristles and got them cleaned with soap and other chemicals and thereafter they were sorted out according to their sizes and colours and....