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TMI Blog2014 (11) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... any was engaged in the business of manufacturing of LED based products and this fact is recorded by AO in his assessment order. The assessee claimed deduction u/s. 80IB of the Act in the return of income filed by assessee for the relevant assessment year. The assessee is a Small Scale Industrial Undertaking having registration No.30325068/SI dated 18.08.1997. The factory is situated at 44, Armenian Street, Kolkata-700 001. The assessee is also registered with Central Excise vide RC No.20/M/8/C/9 Cal-E/97 dated 06.06.1997, now Central Excise changed the RC to AABCB2719DXM001. The assessee claimed to have been manufacturing LED based Aviation signaling, Warning, Traffic Lights, Push Buttons, Selector Switch, lamp Holders, LED Modules/Lamps/Indicators, LED based heavy duty line tester falling under Central Excise tariff 8530, 8536.90, 8530.8000m 8536.5010. The assessee is having following machineries and equipments: "Digital Meter, Lux Motor, Photometric, High Voltage machine, Meagre, Vibration Machine, Heat Chamber and various other testing equipments." The assessee claimed to have basic manufacturing process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons are thereafter carried out by the assessee to adhere to strict quality control norms and also to ensure the development of the product in accordance with the specification of the customer. The product which satisfies the quality control test is then considered as final manufactured product. Labeling of the product is carried out thereafter. All raw materials, components and other inputs are being processed and purchased by the assessee. In pursuance of appropriate Excise Notification the assessee has declared before Central Excise Authorities, the removal of raw materials and components from its stores to the factory of the job worker for carrying out fitting, mounting and soldering of various raw materials/ components in the Circuit Board according to the drawing and design of the circuit. It was further declared that after carrying out the operation of fitting, mounting and soldering of raw materials/components at the factory of the Job Worker under close supervision and monitoring by the employees of the assessee, further processing, burning and testing shall be carried out at the factory of the assessee, whereby and whereto a product will emerge which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, packing the sale and then selling/supplying to customers. Thus considering the activity of the assessee and its involvement in products of Led and other electrical goods it is found that the designing, testing and packing of the goods manufactured cannot be treated as manufacturing. In this situation it is held that the assessee is not the real manufacturer of the goods. Hence, the assessee is not entitled for the deduction u/s. 80IB and accordingly the assessee's claim of deduction u/s. 80IB is disallowed." 5. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the action of AO vide para 5 as under: "5. I have carefully considered the facts of the case and submission made as above. The AO has rejected the claim of deduction u/s 801B on two grounds- first, that the appellant is not engaged in manufacturing activities and, second, the deduction u/s 80IB has already allowed to its sister concern. On the basis of facts and its manufacturing activities produced by the appellant company both before the AO and before the undersigned, it is clear that the entire activities are being managed from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd main operational performance of the product, the emission of light, the frequency thereof and the brightness. (11) Any defect in the process is recognized through this process and remedial measures are taken. (12) Various testing operations are thereafter carried out to adhere to strict quality control norms to ensure the development of the products in accordance with the specification of the customers. Out of the various stages of production process only number (4) as mentioned above is carried through Binay Led Displays & devices Pvt. Ltd. 7. In view of the above facts, assessee also claimed that details of Principal items of Raw materials as regards opening stock, purchases, consumption and closing stock reflects that Raw Materials consumed during the year was Rs. 8099915 and movement of Finished Goods evidencing opening stock, Production, Sales and Closing Stock are filed before the AO. All raw materials, components and other inputs are being processed and purchased by the Assessee and declared before Central Excise Authorities, removal of raw materials and components from its Stores, Job Worker carrying out the job of mounting and so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 862) : "Fabric itself means woven materials. It was contended that processing the manufactured fabric does not bring into existence any new woven material but the question is : do new and different goods emerge having a distinctive name, use and character ?" Answering, the Bench said (see [1986] 162 ITR 846, 865): "It appears in the light of the several decisions and on the construction of the expression that the process of bleaching, dyeing and printing etymologically also means manufacturing processes..." It is strenuously urged for the processors that the view taken by the Division Bench in Empire Industries' case [1986] 162 ITR 846 suffers from fallacies both of reasoning and conclusion and requires to be reconsidered. The prevalent and generally accepted test to ascertain whether there is "manufacture" is to find whether the change or the series of changes brought about by the application of processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D, gasket, PCB, Lens and Capacitor out of the manufacturing activities carried out by the Assessee. The assessee is a small-scale industrial undertaking and is engaged in the business of manufacturing of any article or thing. All conditions laid down in Section 80-IB of the Act stands satisfied. Central Excise authorities recognizes the assessee as manufacturer and is collecting Excise Duty from the Assessee for manufacture of excisable goods. In view of the facts and circumstances, claim of deduction under section 80-IB of the Act is as per law and same is allowed. 10. From the above case law of Hon'ble Supreme Court in the case of Ujagar Prints, supra and the facts of the case that the Central Excise Authorities recognizes assessee as manufacturer and is collecting Excise Duty for manufacture of excisable goods for carrying out the operation of fitting, mounting and soldering of raw materials/components at the factory of the Job Worker under close supervision and monitoring by the employees of the assessee, further processing, burning and testing shall be carried out at the factory of the assessee, whereby and whereto a product will emerge which is having distinct Identity in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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