TMI Blog2014 (1) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... ansported from its place of storage or where it has been purchased to the point of crushing pit where it has to be off-loaded for crushing. To my mind, this is integrally connected part of process of manufacturing of sugar and therefore diesel purchased against form C if used for cane procurement from centres to factory, it would not amount to violation of purpose for which the said diesel was purchased. Whether user of diesel purchased by the assessee against form C for farm equipments' maintenance and repair would amount to violation of purpose for which the said diesel was purchased so as to amount violation of section 10(d), attracting penalty under section 10A of the Act, 1956 - Held that:- Farm equipments' maintenance and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ane procurement. While assessing authority accepted his claim with regard to consumption of former three items, in respect to farms equipments' repair and maintenance and cane procurement, it held that two activities do not constitute part of manufacture for which diesel was authorised to be purchased against form C and, therefore, consumption of diesel in the said two activities was unauthorised hence the assessee is liable to pay penalty under section 10A for consumption of diesel against these two activities. Vide order dated August 18, 2001, the Assistant Commissioner imposed penalty of ₹ 35,741 in respect to assessment year 1998-99, ₹ 43,32,461 in respect to assessment year 1999-2000 and ₹ 83,452 for assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The question would be whether the two activities, in respect whereto the Revenue has found the assessee guilty of violation, the purpose, for use of which, diesel was allowed to be purchased against form C, is one authorised or not. In order to understand, it would be appropriate first to examine as to what is the actual way in which the assessee claim aforesaid two activities to constitute part of manufacture and processing of goods. The assessee deals in manufacture and sale of sugar for which sugarcane is the basic raw material. The sugarcane is produced by individual farmers. Sugarcane constitutes basic raw material for the assessee for manufacturing sugar. However, the supply and purchase of sugarcane from farmers is not free ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, becomes property of factory owner at such purchase centres and therefrom, it has to be transported by him up to the pithead in the factory for the purpose of its crushing. It is not disputed by learned standing counsel that if the sugarcane stored in factory premises itself, at some place, since a very large quantity thereof would be required continuously, and, if it is transported from that storage point to the pithead for crushing purpose, such transportation would form part of manufacture. In that view, I do not find why transportation of sugarcane from purchase centres to factory premises should be excluded from the term manufacture of sugar . Nothing has been shown to this court so as to pursue to take a different view in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site where the mining operation comes to end to the place where the processing is carried on and that would clearly be an integral part of the operation of processing and if any machinery, vehicles, barges and other items of goods are used for carrying the ore from the mining site to the place of processing, they would clearly be goods used in processing of ore for sale. It is obvious that, in the present case, the mining of ore is done by the assessee with a view to processing the mined ore through the mechanical ore handling plant at the Marmagoa harbour and the entire operation of mining ore and processing the mined ore is one integrated process of which transportation of the mined ore from the mining site to the Marmagoa harbour is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of crushing pit where it has to be off-loaded for crushing. To my mind, this is integrally connected part of process of manufacturing of sugar and therefore diesel purchased against form C if used for cane procurement from centres to factory, it would not amount to violation of purpose for which the said diesel was purchased. The question No. 1, therefore, is answered accordingly. Coming to the question No. 2, farm equipments' maintenance and repair are also part of activities with respect to research and development so as to maintain a good quality of sugar and also to find out maximum quantity of sugar from per quintal sugarcane. Research, development, etc., is also integral part of manufacture and question No. 2 therefore, in m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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