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TMI Blog2010 (12) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified in Part B of 13th Schedule of I.T. Act. Assessing Officer further noted that articles or things specified at Sr. No. 5 of Part B of 13th Schedule were organic chemicals including pro-vitamins/vitamins etc. The Assessing Officer was of the view that Attars were organic chemicals a prohibited item and deduction was thus not allowable. He therefore asked the assessee to explain as to why the claim should not be rejected. The assessee explained that it was engaged in the manufacturing of Attars under various brand names. The process consisted of blending various aromatic chemicals such as Hydroxy Citronellal, Hexyle Cinnamic Aldelyde, Covmain, and Essential Oils by hand in different proportions and keeping on hold for the purpose of maturation for varying time periods based on the requirement of different blending. Such blends were reblended with other products to give the required effect. The ready blend was taken to fill manually into various sizes of bottles ranging from 1 gm to 30 gm and then packed for sale. 2.1 Assessing Officer however observed that an industrial undertaking necessarily required machinery for manufacturing and processing of goods. In this case, the mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SOT 440); the decision of Tribunal in case of J.M. Perfumery v. CCE, Vapi (90 RLT 485 CESTAT-Ahmd.); and the decision of Tribunal in case of Hindustan Essential Oil Co. v. DCIT (2010-TIOL-115). CIT(A) however did not accept the contention raised. He distinguished the cases cited by the assessee. It was pointed out that the case of Shree Par Fragrance Pvt. Ltd. v. ITO (supra) was distinguishable as in that case the assessee was manufacturing perfumery components and not Attars which was blend of such perfumery components. The decision in the case of J.M. Perfumery v. CCE (supra) was also distinguishable as in that case there was steam distillation process which was held as manufacturing process whereas in the case of the assessee there was simple mixing of aromatic chemicals and essential oils. He also distinguished the case of Hindustan Essential Oil Co. (supra) on the ground that in that case there were various machines/equipments such as heating mantles, motorized stirrers, grinders which had been used under controlled conditions of temperature and pressure resulting into value addition unlike the case of the assessee in which the process was admittedly hand made. CIT(A) referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n placed in a separate category. CIT(A) observed that classification made under different statutes was for different purposes which could not be imported into other statutes. He therefore held that Attars was an organic chemical not entitled for deduction. Accordingly CIT(A) confirmed the disallowance made by Assessing Officer aggrieved by which the assessee is in appeal before the Tribunal. 4. Before us the Learned AR for the assessee reiterated the submissions made before lower authorities. It was submitted that attar was not an organic chemical. He referred to the report of the VJTI to point out that the report clearly stated that Attars was a mixture whereas in case of the raw material i.e. Citronellal etc it clearly stated that these were organic components. The test report thus showed that Attar was not an organic chemical. It was also argued that the production of Attars involve a manufacturing process as the end product, in common parlance, was different. He referred to judgment of Hon'ble High Court of Mumbai in case of Gopalanand Rasayan v. State of Maharashtra in Sales tax reference No. 5 of 2001 in which it was held that popular name or common parlance name was importa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in case of ITO v. Arihant Tiles & Marbles Pvt. Ltd. (320 ITR 79) in which sawing of marble blocks into slabs and tiles and polishing them was held as manufacturing and production. The Hon'ble Supreme Court in the said case held as under : "This was not a case of merely cutting marble blocks into slabs. There was further activity of polishing and ultimate conversion of the blocks into polished slabs and tiles. There were various stages through which the blocks had to go through before they became polished slabs and tiles. The original block did not remain marble block; it became a slab or tile. Blocks were converted into polished slabs and tiles resulting in the emergence of a new and distinct commodity. Such an activity was something beyond manufacture and brought a new product into existence. The stepwise activity constituted "manufacture or production" 5. TheLearned DR on the other hand strongly supported the orders of authorities below. It was submitted that neither the process was manufacturing nor the product was eligible for deduction as it was an organic chemical excluded from the purview of deduction under Schedule 13 of the Income-tax Act. He placed relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onents and therefore the process is manufacturing. It has also been argued that in common parlance Attar is known as a different product and that under the excise Act Attar has been placed in Chapter 33 whereas the organic chemicals have been placed in Chapter 29 which also shows that Attar is a different product and is not an organic chemical. 6.3 We have to first address the issue whether Attar is an organic chemical as this is a basic condition on which allowability of deduction depends. Admittedly Attar is a manual mixture of aromatic chemical and essential oil. The case of the revenue is that aromatic chemicals and essential oils which are organic chemical do not undergo any reaction and maintain their original character and therefore the Attars have the same characteristics and qualities as organic chemicals as the original ingredients. The assessee had submitted a report from technical institute called VJTI but the report does not clearly state whether Attars are not organic chemicals. Report only says that this is a deliberate mixture carried out on the basis of experience and final appeal. On the basis of such report it cannot be concluded that Attar is not an organic che ..... X X X X Extracts X X X X X X X X Extracts X X X X
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