TaxTMI 
TaxTMI 
TaxTMI 
1991 (9) TMI 104
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....in so far as it was prejudicial to the interest of the Revenue, the learned Commissioner of Income-tax (in short 'CIT') initiated action under section 263 of the Income-tax Act, 1961. 4. In response to the notice it was contended by the assessee before the CIT that their activity of refining of waste lubricating oil amounted to manufacture of a new marketable product, which was different than mere processing. Explaining, it was submitted that the waste raw material was called "black oil", which had lost its quality of serving as an affecting lubricant. It had absorbed in it certain impurities. This raw material by the process of dehydration, treatment with acids, distillation and filtration was converted into an efficient lubricant again.....
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....e does not bring about the transaction required to constitute manufacture. " 6. Before us challenging the view taken by the CIT, the learned authorised representative for the assessee in the first instance invited our attention to the details of the work done by the assessee in making the lubricant oil usable once again. The first of these is a process chart, available at page 6 of the paper book which gives the details of the various stages, before the waste oil becomes efficient and workable oil i.e., in a finished form. These stages are as under:---- Feed Stock Settling and Decantation Dehydration Acid Treatment and Neutralisation Clay Treatment Filtration Additive Blending Finished Oil 7. Page 7 gives the list of various machi....
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....tmental representative that the process undergone by the assessee in making the waste oil usable again did not amount to manufacturing. It was only a "process", which did not amount either to manufacturing or production of an article. In this connection reference was invited to a decision of the Allahabad High Court in Singh Engg. Works (P.) Ltd. v. CIT [1978] CTR (All.) p. 201, 204 wherein their Lordships, drawing a distinction between manufacture and processing held as under:------ " The broad distinction between 'manufacture' and 'processing' is that manufacture involves bringing into existence of a new product: a product which is of a different chemical composition or whose integral structure is different from the raw materials. Proces....
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....s differernt inasmuch as the controversy was as to whether refining crude oil amounted to manufacture or production of mineral oil or not. Crude oil is in a very different situation as it requires extensive processing to make it a normal usable oil. In the case in hand even as per the assessee's own version they were mainly taking out the impurities absorbed in the waste oil to render it as an efficient oil once again. As far as the process of dehydration and use of acids is concerned it is a part of that process but it cannot be said that it amounted to manufacturing a new identifiable goods known in the market coming into being, as held by the Supreme Court in the case of Jayant Oil Mills (P.) Ltd. 13. As held by the Allahabad High Court....