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2015 (4) TMI 60 - HIMACHAL PRADESH HIGH COURT

2015 (4) TMI 60 - HIMACHAL PRADESH HIGH COURT - TMI - Entitlement to deduction u/s 80IC - process of cutting of stainless steel pipes of larger size with electric cutter and including painting and welding of pipes - whether manufacturing of "Route Markers" falls within the definition of "manufacture", entitling him to the deductions, under Section 80IC? - Tribunal allowed the claim - Held that:- The question as to what amounts to manufacture, is no more res integra. It is a settled principle of .....

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5) TMI 30 - SUPREME COURT OF INDIA]).

In Collector of Central Excise v. Technoweld Industries, [2003 (3) TMI 123 - SUPREME COURT OF INDIA] as relied by revenue the Court was dealing with a case where the assessee was engaged in the business of drawing wires into thinner gauge from wires of thicker gauge, by cold drawing process. The old product did not lose its identity or could be put to similar and same use. In our considered view, no ratio of law is laid down by the Apex Court in t .....

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n the market. In other words, the assessee was engaged in manufacturing of the said product. Therefore, the assessee was entitled to deduction claimed under Section 80IC of the Income Tax Act. We find no reason to disagree with the said opinion of the Tribunal. - Decided in favour of assessee. - ITA No. 23 of 2011 - Dated:- 17-3-2015 - Sanjay Karol And P. S. Rana,JJ. For the Appellants : Mr Vinay Kuthiala, Sr. Adv. & Ms Vandana Kuthiala, Adv. For the Respondents : M/s Anuj Nag & C S Anan .....

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209 (SC)]? 2. Primarily, the issue, which requires consideration, is as to whether manufacturing of "Route Markers" by the respondent herein (herein after referred to as the assessee), falls within the definition of "manufacture", entitling him to the deductions, under Section 80IC of the Income Tax Act. 3. The Income Tax Officer, Nahan (H.P.), during assessment of the assessee, for the Assessment Year 2006-2007, disallowed deduction under Section 80IC, so claimed by the ass .....

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bunal took into account the manufacturing process of "Route Markers", which is reproduced as under: "Manufacturing Process of Route Marker: For the manufacture of route marker, 1. Stainless steel pipes and electronic rods are taken. They are checked for required dimensions for length, diameter and thickness with the help of length gaze and micrometer and those having deviation are separated. 2. The pipes are sorted into 25mm and 22mm sizes, 2mm pipes are further cut by electric sa .....

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nd grinder. 6. Part A and B of the pipe will have 22mm nipple welded to them at one end. For this hold Part A/Part B in the jig and insert 25mm length of the 22mm nipple, keeping balance 50mm length outside the part. Then nipples are weld with stainless steel welding electrodes. Then the welded surface is grinded to smooth finish. 7. Then two L shape stainless strips are weld on stainless pipe A for sign sheets at desired length. 8. Two O Ring travelers are weld at required distance on pipe A. 9 .....

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ked in the packing case." 5. Significantly, the appellate authority took into account the fact that in addition to the stainless steel pipes, inside winding machine, rope travelers, display board, welding electrodes, end caps were also required and used. 6. After considering the factual aspect of the matter, the Appellate Tribunal, which is the final fact finding authority, held that the assessee was involved in the activity of manufacture, inasmuch as steel pipes were cut into different pi .....

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f law that "manufacture" implies a change, though every change may not be a manufacture, even though article is a result of treatment, labour and manipulation. (Deputy Commissioner of Sales Tax v. Pio Food Packers, (1980) Supp1 SCC 174). 10. However, what is required is that there must be a transformation; a new and different article, having a distinct name, character and use, emerging from the process of manufacturing. The test to be applied is; does the processing of original commodi .....

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4 SCC 315). 12. It is also a settled principle of law that the prevalent and generally accepted test to ascertain that there is manufacture' is 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, recognized as a distinct and new article that has emerged as a result of the process. {M/s Ujagar Prints and Others (II) v. Union of Ind .....

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le, it would amount to manufacturing activity. (Aspinwall and Co. Ltd. V. Commissioner, Income Tax, Ernakulam, (2001) 7 SCC 525). 14. In a case where the assessee was involved in the activity of conversion of jumbo rolls of photographic films into small flats and rolls of different sizes, the Apex Court held the activity carried out by the assessee to be manufacturing. (India Cine Agencies v. Commissioner of Income Tax, Madras, (2008) 17 SCC 385). 15. It is also a settled principle of law that w .....

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iated Stone Industries, (2000) 6 SCC 141; and CIT v. N.C. Budharaja & Co., 1994 Supp (1) SCC 280, held that in a case where the assessee was involved in the business of converting blocks of marble into polished slabs and tiles, by applying the principle that the product can no longer be regarded as original commodity, but recognized in trade as a distinct and new commodity, he was entitled to the exemptions under the provisions of the Income Tax Act. 16. To similar effect is the principle la .....

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roduct is manufactured may necessarily lose its identity or may become transformed into the basic or essential properties. 18. It is also a settled principle of law, as to whether an activity is manufacturing or not, is dependent upon several factors and no straightjacket formula or principle can be applied. 19. The Tribunal has held that the raw material procured and the finished products produced by the assessee are not known in the market by the same name. In fact, there are different brand n .....

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e, combined price of raw materials used to produce the finished product, is lower than the price of the finished product. 20. These findings of fact, after having perused the record and heard learned counsel for the parties, we find to be in no manner perverse or erroneous, warranting interference. In fact, we are in agreement with the opinion so rendered by the Tribunal. 21. In Collector of Central Excise v. Technoweld Industries, 2003(155) ELT 209 (SC), the Court was dealing with a case where .....

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e manufacturing a new product. 22. Learned counsel for the Revenue also seeks reliance upon the decision rendered by the Apex Court in M/s Bharat Forge and Press Industries (P) Ltd. V. Collector of Central Excise, Baroda, Gujarat, (1990) 1 SCC 532. Even the said decision, in our considered view, is inapplicable in the given facts and circumstances. There the assessee was dealing with the process of cutting pipes and tubes in small sizes and shapes, which were though passed through chemical proce .....

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