TMI Blog2006 (6) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... result, the appeals of the assessee are allowed. A.M. - HELD THAT:- The activities undertaken by the assessee for converting the marble blocks into marble slabs and tiles do not amount to 'manufacture' or 'production' in view of the judgment of the Hon'ble Rajasthan High Court in the case of CIT vs. Lucky Mineral (P) Ltd.[ 1996 (2) TMI 26 - RAJASTHAN HIGH COURT] and of Hon'ble Supreme Court in the case of Lucky Minmat (P) Ltd. [ 2000 (8) TMI 6 - SUPREME COURT] . Therefore, the assessee is not entitled to deduction u/s 80-IA. Accordingly, the order of CIT(A) does not merit any interference and all the grounds of appeal of the assessee for both the assessment years are rejected. In the result, the appeals of the assessee are dismissed. Third Member - HELD THAT:- Assessee has purchased marble blocks and the same have been cut to various sizes, part of which has been exported and part sold in India. It is also pertinent to mention that the assessee is also engaged in doing the job work of cutting the marble blocks into marble slabs on payment of job charges. The assessee also makes marble tiles by cutting the marble slabs and polishing and buffing the same. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Thus, the cutting of marble blocks into marble slabs and tiles and selling the same after polishing does not amount to either production or manufacture of any article or thing. I, therefore, concur with the view expressed by the learned AM. In conformity of the opinion of the majority of the Members of the Tribunal who have heard these cases, for the reasons cited in the orders, we adjudicate the issue apropos of the point of difference against the assessee. In the result, both the appeals stand dismissed. - HON'BLE M.A. BAKSHI, VICE PRESIDENT, HARI OM MARATHA, J.M. AND JOGINDER PALL, A.M. For the Appellant : Sanjay Jhanwar and M.S. Jhanwar, Advs. For the Respondent : D.R. Zala and K.K. Bissa, Advs. ORDER HARIOM MARATHA, J.M. 1. Both these appeals filed by the assessee against two separate orders of the CIT(A) dt. 1st Jan., 2004 and 5 th Jan., 2004 pertaining to Asst. Yrs. 2000-01 and 2001-02 involve identical questions of fact and law. So these are being disposed of by this common order for the sake of convenience. 2. At the time of hearing, Shri Sanjay Jhanwar and Shri M.S. Jhanwar were present on behalf of the assessee and filed written submissions and Shri D.R. Zala wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against this finding of the AO for both the years and the learned CIT(A), in turn, confirmed the orders of the AO and hence the assessee is in appeal before us. 6. We have heard the rival submissions and have perused the evidence on record. We have also considered the long paper books tiled before us and have also carefully treaded through the provision of the Act and the precedent relied by both the parties. We have also given our thoughtful consideration to all facts, evidence and material on record. 7. The learned Authorised Representative Shri Sanjay Jhanwar has vehemently argued before us that the decision of the Hon'ble Supreme Court relied by the AO in the case of Lucky Minmat is distinguishable on facts and hence the ratio of this decision is not at all applicable to the facts of the present case. For that matter, he has relied on various decisions and has also taken us through the above decision of the Hon'ble Supreme Court, and the decision of Hon'ble High Court and also that of the Tribunal. 8. The learned Authorised Representative has taken us through a long paper book and has tried to convince us that the process involved in the production of the 'tile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been found entitled to and been extended benefit of sales-tax exemption by the Government of Rajasthan on manufacturing marble slabs and tiles under Sales-tax Exemption Scheme and Sales-tax Deferment Scheme. Copy of letter dt. 23rd March, 1995 GM, DIC, Member Secretary, District Industries Centre, Udaipur and dt. 20th March, 1998, issued by the Asstt. Commr., Commercial Taxes Department, Udaipur, Government of Rajasthan for such eligibility are annexed herewith marked Annexs. 2 and 3, respectively. Further letter dt. 11th Nov., 2002 issued by the Commr., Industries, Rajasthan, Jaipur, confirming eligibility under the Sales-tax Exemption Scheme on sale of marble slabs manufactured by the unit of the assessee is also annexed herewith marked as Annex. 4. (iii) The Asstt. Commr., Commercial Taxes Department, Udaipur, issued certificate of registration No. RST/2744/02679/SP dt. 26th Aug., 1995 permitting/allowing manufacturing of marble slabs and tiles. (iv) The Government of Rajasthan, District Industries Centre, Udaipur, issued permanent registration certificate for the manufacture of marble slabs. (v) The Central Excise Registration Certificate issued to the assessee confirming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any article or substance with a view to its use, sale, transport delivery or disposal. S. No. 959A : CCT Circular F. 16 (102) Tax/CCT/89/3581 dt. 9th Jan., 1995 issued by Commr., Government of Rajasthan It clarifies that after excavation of marble from mines, the activity of cutting blocks into slabs and tiles falls within the ambit of manufacture but mere edge cutting and/or polishing big stone will not be treated as manufacturing activity. Exim Policy 2002-2007, Chapter 9 para 9.30 Manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration. repacking, polishing and labelling. Manufacture for the purpose of this policy shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining. Calcutta High Court in the case of CIT vs. East India Hotels Ltd. (1995) 123 CTR (Cal) 27 : (1994) 209 ITR 854 (Cal) The test of manufacture lies in the answer to the question that whether what is produced or processed as the end of product is commerciall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not manufacture. A new and different article must emerge having different characters, use and name. CCE vs. Rajasthan State Chemicals Works 1991 (55) ELT 444, 448, 449 (SC) A process is a manufacturing process when it brings out a complete transformation for the whole components so as to produce commercially different article or a commodity. But, that process itself may consist of several processes which mayor may not bring about any change at every intermediate stage. But the activities of the operation may be so integrally connected that the final result is the production of a commercially different article or thing. CIT vs. Darshak Ltd. (2001) 165 CTR (Kar) 17 : (2001) 247 ITR 489 (Kar) Transforming plain glassware into decorative glassware amounts to manufacture as the end product is different and distinct from plain glassware. Ship Scrap Trader vs. CIT (2001) 168 CTR (Bom) 489 : (2001) 251 ITR 806 (Bom) Ship-breaking activity is manufacture since a new commercial and identifiable article comes into existence. CIT vs. S.L. Agarwal Co. (1992) 101 CTR (Ori) 222 : (1991) 197 ITR 239 (Ori), Breaking of huge iron ingots into small pieces amounts to manufacture, as smaller piece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed hereinabove, it must be held that when wheat is consumed for producing flour or Maida or Suji, the commodities so obtained are different commodities from wheat. The wheat loses its identity. It gets consumed and in its place new goods/commodities emerge. The new goods so emerging have a higher utility than the commodity consumed. They are different goods commercially speaking. Union of India vs. J.G. Glass Industries Ltd. AIR 1998 SC 839. The Court held that a two-fold test emerges for deciding whether the process is that of manufacture : (a) Whether by the said process different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist; and (b) Whether the commodity which was already in existence will serve no purpose but for the said process. CIT vs. Best Chem Lime Stone Industries (P) Ltd. (1993) 113 CTR (Raj) 298 : (1994) 210 ITR 883 (Raj) Manufacture involves the bringing into existence of a new product which may have a different physical or chemical composition and is understood differently in common and commercial parlance. It held that upon the conversion of the mineral into the form of Rodi and powder it does not retain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial names in common and commercial parlance and hence the dealer was a manufacturer entitled to avail of the benefit of notification under sales-tax law. Dy. CIT vs. Mysore Minerals Ltd. (2001) 167 CTR (Kar) 11 : (2001) 250 ITR 730 (Kar) Business of extraction of granite cutting, polishing and conversion into slabs amounts to manufacture and production of an article or thing entitled to investment allowance as the same involves manufacturing. 4.4 It is evident from the above discussion that if the following tests are satisfied then one can say that there is manufacture or production: (i) There is a change or transformation of one commodity into another. (ii) The two commodities are commercially different and distinct. (iii) The resultant commodity emerging out of the process should have a distinct name, character or use. (iv) All the changes and mere change of size does not tantamount to manufacture and the change should be such as to bring into existence a new commodity having a different identity. 13. From various definitions and decisions, it finally emerges that if the following tests are satisfied by the assessee, then it can be said that there is a 'manufacture' o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Supreme Court decision placed at p. 255 of paper book clearly says that the assessee had a business of mining of limestones and marble blocks and thereafter cutting and sizing the same before being sold in the market. We would like to reproduce para 2 below: The High Court noted that the facts found by the Tribunal in the instant case were 'The assessee had business of mining of limestones and marble blocks and thereafter cutting and sizing the same before being sold in the market'. The High Court distinguished its earlier judgment in the case of CIT vs. Best Chem Lime Stone Industries (P) Ltd. (1993) 113 CTR (Raj) 298 because there the assessee was engaged in the business of extracting limestone and its sale either as such or after converting it into lime and lime dust or concrete by stone crushers. Such, the High Court found, were not the facts in the case before us. 18. From the above, it is crystal clear that in Lucky Minmat's case, the assessee had business of mining and the blocks were only cut to size before selling the same in the market and there was no other activity involved. 19. The Hon'ble Supreme Court in Lucky Minmat's case was consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined either by giving inclusive and exclusive definition. There cannot be a 'straightjacket' formula, in which the activity of manufacture/production can fit in. 23. The issue as to what constitutes manufacture is a perennial problem, because concessions meant for manufacturing units as new industrial undertakings or by way of development rebate, investment allowance, etc. are sought to be whittled down by adverse interpretations. 24. In the interesting decision of Karnataka High Court in CIT vs. Gogte Minerals (1996) 136 CTR (Kar) 499 : (1997) 225 ITR 60 (Kar), mining for excavating iron ore were accepted as a manufacturing process with the result that new machinery and plant used in mining operations, was held to be eligible for investment allowance. In coming to the conclusion, it took the view that there is production of an article or a thing in such operations of extracting iron ore embedded in earth. It distinguished its earlier decision against the assessee in Hind Nippon Rural Industries (P) Ltd. vs. CIT (1993) 201 ITR 581 (Kar) by pointing out that in this case the assessee in Hind Nippon's case is the subject-matter of special leave granted to the assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cutting the boulders into slabs. 29. In the above decision, it has been observed by the Hon'ble High Court as thus: The Supreme Court had spoken almost in the same words in the case of Union of India vs. Delhi Cloth General Mills (1977) ELT 199 (SC) where it was observed that manufacture implies a change, but every change in the raw material is not manufacture although every change of an article is the result of treatment, labour or manipulation. In order to make a change amount to 'manufacture' something more is necessary and that something more is such transformation of a production as brings into existence a new and different article having distinct name, character or use. The same view was expressed in the case of South Bihar Sugar Mills vs. Union of India (1978) ELT (J) 3, where it was observed that if a new substance known to the market emerges, this will amount to manufacture. In the case of Empire Industries Ltd. vs. Union of India (1986) 162 ITR 846 (SC), it was observed by the Supreme Court that to constitute manufacture, it is not necessary that one should absolutely make out a new thing because it is well-settled that one cannot absolutely make a thing by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to this case. But the decision of Lucky Minerals has laid down certain tests to come to a conclusion as to whether an activity can be said to be a manufacturing/production activity or not. In order to test this case on the above touchstone, we will have to see, as to whether, a new thing or article which has its own character, use and name has been manufactured by this assessee or not? 37. The steps which are taken by the assessee after purchasing blocks from mines to produce the end product of tiles/slabs are mentioned in our earlier part of the order. The Department has not at all contested these processes. The end result is a tile of different size, shape and name, there is no doubt about the same. The price is altogether different and market is altogether different. This product is known by a different name. So, the only test remains that if a new and distinct thing or article is produced in the process which is different from the raw material used by this assessee. 38. Our answer is, yes, a new and distinct thing has been produced. The distinct and new thing does not mean that there should be a physical or chemical change and then and only then it would be new and distin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book of the assessee. 42. The Hon'ble Supreme Court, was dealing with a case where preparation of pineapple slices was questioned as a manufacturing activity within the meaning of s. 5A(1)(a) of the Kerala General Sales-tax Act, 1963. In that case the assessee used to purchase pineapples fruit and consumed after washing and removing the inedible portion, the end crown, the skin, the inner core and thereafter sliced the fruit and sold in the market after filling into cans. 43. The Hon'ble Supreme Court held as under: Sec. 5A(1)(a) of the Kerala General Sales-tax Act envisages the consumption of a commodity in the manufacture of another commodity. The goods purchased should be consumed, the consumption should be in the process of manufacture, and the result must be manufacture of other goods. There are several criteria for determining whether a commodity is consumed in the manufacture of another. Generally prevalent practice whether the article produced is regarded in this trade by those who deal in it as distinct in identity from the commodity involved in its manufacture. Commonly, manufacture is the end result of one or more processes through which the original commodity is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achine; the slabs are further edge cut into required dimensions/tiles as per market requirement in perfect angles by edge cutting machine and multi-disc cutter machines; Step (vi) Polished slabs and tiles are buffed by shiner. 47. A new article or thing is produced by name of marble tiles and marble slabs which are different and entirely distinct in terms of name, character, use, and the market value and appearance. So, the activity of the assessee is a manufacture/production activity. We heavily draw support from Mysore Mineral Ltd. decision of the Hon'ble Karnataka High Court as well as the Hon'ble Supreme Court, which is a later decision and which we have discussed in earlier part of our order. We also draw support from the fact that the appellant-company is being consistently regarded as a manufacturer/producer by various Government Departments and agencies. The evidences are placed on record, in this regard, which we have discussed each and every such evidence, in earlier part of our order along with page numbers. These facts have not been controverted by the Department. So, the facts of this case and the Lucky Minerals and others relied by the Department are entirely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takes in bringing into existence new goods by a process which mayor may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. The next word to be considered is 'articles', occurring in the said clause. What does it mean? The word is not defined in the Act or the Rules. It must, therefore, be understood in its normal connotation-the sense in which it is understood in the commercial world. It is equally well to keep in mind the context since a word takes its colour from the context. The word 'articles' is preceded by the words 'it has begun or begins to manufacture or produce.' Can we say that the word 'articles' in the said clause comprehends and takes within its ambit a dam, a bridge, a building, a road, a canal and so on ? We find it difficult to say so. Would any person who has constructed a dam say that he has manufactured an article or that he has produced an article? Obviously not. If a dam is an article, so would be a bridge, a road, an underground canal and a multi-storied building. To say that all of them fall within the meaning of the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the judgment of the Hon'ble Supreme Court in the case of Lucky Minmat does not apply to the facts of the present case inasmuch as, the finding of facts recorded in that case by Tribunal as reproduced by Hon'ble Supreme Court, which we have also reproduced in our earlier part of the order, clearly reveals that in the Hon'ble Supreme Court's case, it was dealing with the case of mine owner who was doing the cutting work mainly for the purpose of taking the same to the market for selling the same. The case of a mine owner cannot be equated with the case of a factory owner, who is involved in comprehensive/production process. The present case is not that of a mine owner, but of a factory owner who is engaged in the activity of manufacturing which undergoes several stages through different technical procedures with the help of the set up exhaustive plant and machinery in the factory. The raw material of the assessee is marble blocks purchased from mine owners and the assessee transforms this raw material into an entirely different finished goods in the form of marble slabs/marble tiles. The raw material and finished goods of this assessee are entirely different and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k cutter machine. (iv) The sawn slabs are further reinforced by way of filling cracks by epoxy resins and fiber netting; (v) The slabs are polished on polishing machine; the slabs are further edge cut into required dimensions/tiles as per market requirement in perfect angles by edge cutting machine and multi-disc cutter machines; (vi) Polished slabs and tiles are buffed by shiner. Now, the main question that requires to be decided is whether the above activities/processes undertaken by the assessee for converting the marble blocks into marble slabs and tiles amount to manufacturing of goods and articles. There is no dispute about the fact that the assessee would be entitled to deduction under s. 80-IA only if it is found to be engaged in the manufacturing or production of article. The expression manufacturing of articles has not been defined in the Act. Therefore, one has to necessarily draw an assistance from the ratio of various decisions as to what amounts to manufacturing activity. This issue came to be considered by the Hon'ble Supreme Court in the case of CIT vs. N.C. Budharaja Co. (1993) 114 CTR (SC) 420 : (1993) 204 ITR 412 (SC) where the Hon'ble Supreme Court has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. No doubt such commodity undergoes several processes from the initial stage to the final stage and undergoes a change, but it is only when the change or series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. Where there is no difference in identity between the original commodity and the processed article, it is not possible to say that one commodity has been consumed in the manufacture of another. It would still be regarded retaining its original identity. 2B. This issue was again considered by the Hon'ble Supreme Court in the case of Union of India vs. Delhi Cloth General Mills (1977) ELT (J) 199 where it was observed that manufacture implies a change, but every change in the raw material is not manufacture although every change of an article is the result of treatment, labour or manipulation. In order to make a change amount to manufacture something ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 ITR: The above discussion leads us to hold that 'manufacture' implies a change, but as cautioned by the Supreme Court, every change is not 'manufacture' although every change in the article is the result of treatment, labour and manipulation. To bring about the change qualifying as manufacture something more is necessary and that something is transformation i.e. a new and different article, having a distinct name, character or use, must emerge. This view of ours, we think, is in conformity with the views expressed by the Court in the case of Polar Marmo Agglomerates Ltd. 1994 (73) ELT 536 (Raj). In that case the question involved was whether conversion of agglomerated marble block into agglomerated marble slabs/tiles amounted to manufacture or not. The Court considered the question in great detail and finally, making reference to a number of decisions of this Court in different cases, held as under in para 16 of the decision: '16. It has been held in the following decisions of the Court that conversion of marble blocks into marble slabs/tiles by sawing does not involve manufacturing process: 1. Amrutsheele vs. Union of India, Civil Writ Petn. No. 1654 of 1982 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto marble slabs/tiles does not amount to manufacture or production of articles. According to the learned counsel for the assessee, the facts of the present case are distinguishable from the facts of the case of CIT vs. Lucky Mineral (P) Ltd. The learned counsel has contended that the facts in the case of Lucky Minmat (P) Ltd. were that the assessee was mine owner and extracted marble boulders and cut them into slabs. But in this case, the assessee is not a mine owner. The assessee purchased marble blocks from mine owners and then converted them into marble slabs/tiles. Thus, according to the assessee, the various processes carried on by the assessee for converting them into marble slabs/tiles amounted to manufacture and production of goods. However, I do not agree with this view for the reason that even if the facts of the case before the High Court related to extraction of marble boulders and cutting them into marble slabs, yet the cases relied on by the Hon'ble High Court and as discussed above also related to subsequent process of cutting marble blocks into marble slabs/tiles. Here also the activities of the assessee are the same. The assessee is buying marble blocks and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he activities undertaken by the assessee were the same as that of the assessee. Therefore, in my view the judgment of the Hon'ble Rajasthan High Court and the Hon'ble Supreme Court in the aforesaid cases are fully applicable to the facts of the present case. Now the nature of activities undertaken by the assessee does not result into a new item which could be categorized different from the original commodity. The item made by the assessee is known as marble tiles or marble slabs. Mere suffixing of blocks and slabs does not change the identity, character and nature of article. Still the end product is known as marble. Therefore, the same cannot be considered as a new item different from the original commodity. Hence, the activities carried on by the assessee cannot be regarded as manufacture or production. 5. The expression manufacture was also considered by the Tribunal, Calcutta Bench in the case of Jai Mica Supply Co. (P) Ltd. vs. Asstt. CIT (2003) 79 TTJ (Kol)(TM) 953 : (2003) 86 ITD 93 (Kol)(TM). In that case the assessee had claimed deduction under s. 80HHC in respect of export of fabricated mica products. The question was whether the items manufactured by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granite from quarry, converting it into slabs, cutting and polishing them amount to manufacturing activity. The claim of the assessee is that this judgment is applicable to the facts of the present case. I am unable to subscribe to such view. The reasons for the same are as under: (i) In the case of Mysore Minerals Ltd., the activity involved is extracting of granite stone from quarry and then further converting it into slabs, cutting and polishing them. Thus original commodity found in the mines was different i.e. stones from the final end product. All these operations were carried on by the assessee itself. But in this case, the assessee is not extracting marble from mines. The assessee is purchasing only marble block from the mine owners. Moreover, the operations involved in converting granite into granite slabs are far more sophisticated as compared to converting marble blocks into marble slabs/tiles. These processes have been explained by the Hon'ble Madras High Court in the case of CIT vs. Pooshya Exports (P) Ltd. (2003) 179 CTR (Mad) 557 : (2003) 127 Taxman 369 (Mad) which are as under: 2. The assessee is a company doing business of mining and quarrying of granite stone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside the jurisdiction of the Hon'ble High Court. (iii) Further, the judgment of the Hon'ble Supreme Court in the case of Lucky Minmat (P) Ltd. vs. CIT was not brought to the notice of the Hon'ble Supreme Court in the case of Mysore Minerals Ltd. The judgment of the Rajasthan High Court which was also upheld by the Hon'ble Supreme Court was also not quoted before the Hon'ble Karnataka High Court. The counsel has not drawn our attention to any judgment of the Hon'ble Supreme Court overruling the judgment of the Hon'ble Rajasthan High Court. (iv) Moreover, the judgment of Hon'ble Karnataka High Court is with reference to deduction under s. 32A whereas the judgment in the case of Lucky Minmat (P) Ltd. is with reference to deduction under s. 80HH i.e. where conditions are the same as involved in the present case. (v) While deciding the case of CIT vs. Lucky Mineral (P) Ltd., the Hon'ble High Court has considered various judgments on the issue whether conversion of marble blocks into marble slabs/tiles amounts to manufacture or production of articles. However, the Hon'ble High Court decided the issue against the assessee and in favour of the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had set up 3rd and 4th units subsequently. Deduction in respect of the 3rd unit was also allowed to the assessee in earlier years. So, however, deduction was denied to the assessee for the asst. yrs. 2000-01 and 2001-02 on the ground that it was not engaged in the business of production or manufacture of any article or thing. The CIT(A) has confirmed the disallowance of the deduction. On appeal, whereas the learned JM held that assessee was entitled to deduction under s. 80- IA, the learned AM relying upon the decision of the Supreme Court in the case of Lucky Minmat (P) Ltd. vs. CIT (2000) 162 CTR (SC) 404 : (2000) 245 ITR 830 (SC), held that the assessee was not entitled to such deduction. 4. Before me, the learned counsel for the assessee contended that assessee was engaged in the production or manufacture of article or thing within the meaning of s. 80-IA. It was pointed out that whereas the mine owner excavates the marble blocks from the mines after necessary cuttings, sells the same to various manufacturers for varied uses, the assessee purchases the marble blocks from the miners and by a mechanized process cuts the blocks into slabs and tiles and after buffing and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dy. CIT vs. Mysore Minerals Ltd. and accordingly the said decision is applicable in respect of marble as well. It was pointed out that the Hon'ble Supreme Court has held the process of extracting, cutting and polishing amount to production of article or thing. 5. Reliance was also placed on the decision of Calcutta High Court in the case of Andaman Nicobar Islands Forest Plantation Development Corporation Ltd. vs. CIT (2005) 198 CTR (Cal) 76 : (2006) 280 ITR 118 (Cal) in support of the contention that sawing of timber into planks, etc. amounts to production of article or thing. Reliance was also placed on the decision of Allahabad High Court in the case of CIT vs. Shiv Oil Dall Mill (2006) 281 ITR 221 (All), wherein oil refining has been held to amount to manufacture. Reliance was also placed on the decision of the Supreme Court in the case of Kores India Ltd. 2004 (174) ELT 7 (SC), wherein the cutting of ribbon from big rolls into small rolls and selling the same after winding on pullies has been held to amount to production of article or thing. According to the learned counsel, the learned JM has rightly held the activities carried on by the assessee amount to at least produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka High Court has held that cutting of granite blocks into slabs and tiles and selling the same after polishing amounts to production and manufacture of article and thing. It was accordingly pleaded that the view taken by the learned JM may be adopted in preference to the view expressed by the learned AM and assessee be held to be entitled to deduction under s. 80-IA. 9. I have given my careful consideration to the rival contentions. The issue involved in this appeal, as pointed out earlier, is as to whether the assessee is engaged in the business of manufacture or production of article or thing. The assessee purchases marble blocks from the mine owners. The deduction claimed by the assessee is under s. 80-IA falling under Chapter VI-A. The said section as applicable for the relevant assessment year provided for deduction out of gross total income to the extent of 25 per cent of profits derived from industrial undertaking engaged in the manufacture or production of article or thing. Whether conversion of marble blocks by sawing into slabs, tiles and polishing amounts to manufacture of article or thing is, in my view, covered against the assessee by the decision of Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 133 of 1983, decided on 7th Nov., 1990, and 4. J.S. Marbles vs. Union of India, Civil Writ Petn. No. 479 of 1985, decided on 19th July, 1990. In the above cases also it was held by the Rajasthan High Court that conversion of marble blocks into marble slabs/tiles by sawing does not involve manufacturing process. Thus, the mere fact that the decision in the case of Lucky Minmat (P) Ltd., is in respect of the mine owner does not help the assessee in regard to the ratio laid down by the Hon'ble High Court that cutting of the marble blocks into marble slabs/tiles does not amount to manufacture. As pointed out earlier, even otherwise, the Hon'ble Supreme Court in the case of Aman Marble Industries (P) Ltd. has also laid down the principle of law that cutting of marble blocks into slabs and tiles and polishing does not amount to manufacture and, therefore, there is no escape from the same. Even in the case of Lucky Minmat, their Lordships of the Supreme Court held, Conversion into lime and lime dust or concrete by stone crushers could legitimately be considered to be a manufacturing process while the mere mining of limestone and marble and cutting the same before being sold in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assage from the judgment in the case of N.C. Budharaja Co. was reproduced: The word 'production' has a wider connotation than the word 'manufacture'. While every manufacture can be characterized as production, every production need not amount to manufacture.... The word 'production' or 'produce' when used in juxtaposition with the word 'manufacture' takes in bringing into existence new goods by a process which mayor may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods. At p. 235, their Lordships of the Supreme Court held as under: We are, therefore, of the opinion that extraction and processing of iron ore amounts to 'production' within the meaning of the word in s. 32A(2)(b) (iii) of the Act and, consequently, the assessee is entitled to the benefit of s. 32A(1) of the Act. The question whether the High Court was correct in holding that the activity did not amount to 'manufacture' is left open. Affirming the decision of Karnataka High Court in the case of CIT vs. Mysore Minerals Ltd., their Lordships of the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity and consequently, the assessee would be entitled to investment allowance on the screening plant and electrical installations used in mining. In the case of Hind Nippon Rural Industries vs. CIT (1993) 201 ITR 588 (Kar), the Hon'ble Karnataka High Court held that the assessee purchasing granite blocks made on specifications stated by the assessee and no quarrying was done by the assessee, the assessee mainly engaged in the export of stones was not engaged in the manufacturing process of goods. In the case of Dy. CST vs. Pio Foods Packers 46 STC 63 (SC), their Lordships of the Supreme Court held as under: When pineapple fruit is processed into pineapple slices for the purpose of being sold in sealed cans, there is no consumption of original pineapple fruit for the purpose of manufacture and the case does not fall within s. 5A(1)(a) of the Kerala General Sales-tax Act, 1963. Although a degree of processing is involved in preparing pineapple slices from the original fruit, the commodity continues to possess its original identity notwithstanding the removal of inedible portions, the slicing and thereafter canning it or adding sugar to preserve it. Their Lordships further held, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after polishing would amount to production of article or thing (integrated activities). It will be pertinent to mention that mere cutting of granite blocks and selling the same would not amount to production of article or thing insofar as no new article emerges on cutting of granite blocks. The reasoning given by the Bombay High Court in the case of CIT vs. Sesa Goa Ltd. (2004) 188 CTR (Bom) 120: (2004) 266 ITR 126 (Bom), and later affirmed by the Hon'ble Supreme Court in CIT vs. Sesa Goa Ltd. would be relevant to appreciate the distinction as under: The ore has to be extracted or raised from the earth in which it is embedded and has to be brought to the surface, as an article or thing. If that be the case, winning or extracting of ore would fall within the expression 'production'. Once it falls within the expression 'production', the assessee would be entitled to the benefit under s. 32A of the said Act. That being the case, it would not be possible to interfere with the view taken by the Tribunal in all the three appeals. While affirming the decision of the Bombay High Court, their Lordships of the Hon'ble Supreme Court also pointed out that what is embedd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nverting the same into logs and planks either manually or mechanically would amount to production of article or thing insofar as the standing trees are different than the logs and planks. On the other hand, mere cutting and polishing does not amount to production or manufacture of article or thing, as in the case of CIT vs. Gem India Manufacturing Co. (2002) 172 CTR (SC) 615: (2001) 249 ITR 307 (SC). In the said case, their Lordships of the Supreme Court held that cutting and polishing of uncut diamonds does not amount to production or manufacture of article or thing. 19. On the analysis of the above decisions, it would be necessary to consider as to whether the sawing of marble blocks into marble slabs and tiles with or without polishing amounts to production of article or thing. I have earlier pointed out that the aforesaid activities do not amount to manufacture of article or thing. A reference has been made by me to the decision of the Hon'ble Supreme Court in the case of Aman Marble Industries (P) Ltd. vs. CCE, in which the decision of the Central Excise Tribunal was reversed by the Hon'ble Supreme Court. When the matter came up before the Tribunal in the case of Aman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sides. The principles that evolve out of these decisions are that (i) mere change is insufficient and a new product should emerge. In the assessee decision in the case of Union of India vs. Delhi Cloth Mills, the Supreme Court has observed, relying on passage from an American judgment, the word 'manufacture' implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation, a new and different article must emerge having a distinctive name, character or use . (ii) a new substance known to the market must emerge. (iii) there should be loss of original identity. The fact that the product has undergone a degree of processing would be irrelevant if the original commodity continues to possess its original identity. 7. We have to analyse in the light of legal principles set out above, whether the respondents have manufactured a product liable for duty. The process of cutting marble block into marble slabs has been set out in the earlier para. The marble slabs that are merely sawn from the marble blocks cannot be called a distinct commodity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the commodity involved in the manufacture or otherwise. Shri Laxmi Kumaran, pointed out that pineapple would continue to be pineapple whether taken in slices or as a whole fruit, and Shri Ravinder Narain countered by saying that so would marble continue to be marble whether in the form of block, slab or tile. Be that it may, we have to consider whether the slicing of pineapple would amount to manufacture. Applying the ratio of that decision, it is seen that cutting marble slabs from marble blocks would not produce a commercially distinct and marketable article. 10. From the decision cited by the senior Departmental Representative, we find that in certain cases certain processes involved have been treated as 'manufacture'. For example 1982 ELT 253 (Teleprinter in sub-item (ii) Tariff Item 17 is a distinct entry) 1987 ELT 389 (the product viz. circles fully specified the description contained in Item 26A(2), (iii) 1980 ELT 735. But those were instances where the article or product was covered under a specific Tariff entry. As rightly pointed out by the learned counsel for the respondents, the product now in question, before and after the said process of sawing, are not so d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods had also been amended to mean goods specified in the Schedule to Central Excise Tariff Act, 1985 as being subject to duty of excise . Before this amendment, the Hon'ble Supreme Court in the case of Aman Marble Industries (P) Ltd. vs. CCE, had laid down the law that the activity of cutting, trimming, polishing of marble does not amount to production or manufacture of article or thing. It is by virtue of the inclusive definition of 'manufacture' under the Central Excise Act, 1944, which enables the levy of excise duty in respect of marble slabs and marble tiles. It is well-settled principle of law that in interpreting a statute with reference to other statutes, it is necessary to keep in mind the relevant provisions of a statute. Definition of a particular statute may not be applicable in interpreting the meaning of a word under a different statute. Under the IT Act, the word 'manufacture' is not defined. Therefore, one will have to depend on the interpretation of the word 'manufacture' as per settled precedents laid down by the Hon'ble Supreme Court or the High Courts. The decision of the Supreme Court has got to be read in the context in which it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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