TMI Blog2007 (7) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1979-80. 3. Brief facts which are necessary to dispose of this appeal are as under: The assessee is a registered firm engaged in the business of export of tea. The respondent-assessee purchases tea of diverse grades and brands and blends the same by mixing different kinds of tea. In this appeal, we are called upon to examine whether the business activity of the respondent assessee falls within the ambit of production, manufacturing or processing? The respondent-assessee would be entitled to weighted deduction under Section 35B(1A) of the Act in case the goods exported were manufactured or produced in small scale industrial undertaking but, in case it falls short of production or manufacture, then the respondent would not be entitled to the benefit under Section 35B(1A) of the Act. The said benefit, according to the relevant statute, is restricted to only goods produced or manufactured in the small scale industrial undertaking for export. The benefit cannot be extended in case the goods are merely processed by the small scale industrial undertaking. In order to derive benefit under Section 35B(1A) the goods have to be either manufactured or produced by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside India; and (b) the expenditure referred to in that sub-section is incurred by the assessee wholly and exclusively for the purpose of the business referred to in sub-clause (1) or, as the case may be, sub-clause (ii) of clause (a). Explanation. - For the purpose of this sub-section - (a) "small-scale exporter" means a person who exports goods manufactured or produced in any small scale industrial undertaking or undertakings owned by him; Provided that such persons do not own any industrial undertaking which is not a small-scale industrial undertaking. (b) "Export House Certificate" means a valid Export House Certificate is sued by the Chief Controller of Imports and Exports, Government of India; (c) "provision of technical know-how" has the meaning assigned to it in sub-section (2) of section 80MM; (d) "small-scale industrial undertaking" has the meaning assigned to it in clause (2) of the Explanation below sub-section (2) of section 32A. (2) Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in respect of such expenditure under any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by giving such materials new forms, qualities, properties or combinations, whether by hand labor or ma chine." 14. The word 'manufacture' has been defined in Haisbury's Laws of England, 3rd Ed. Vol. 29 p.23 as under :- "Manufacture has been defined as a 'manner of adapting natural materials by the hands of man or by man-made devices or machinery' and as 'the making of an article or material by physical labour or applied power'; but the practice is to accept as 'manufacture' a wider range of industrial activities than such a definition would suggest. It includes articles made in situ as well as articles made in a factory." 15. The Supreme Court of the United States of America has defined the term "manufacture" a century ago in Anheuser-Busch Brewing Assn. v. United States, (1907) 52 L Ed. 336. The definition has been followed in subsequent American, English and Indian cases. The definition reads as under: "Manufacture implies a change, but every change is not manufacture, and yet every change in an article is the result of treatment, labour and manipulation But something more is necessary. There must be transformation; a new and different article must emerge, 'having a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns taking place or carried on in a definite manner and leading to the accomplishment of some result." 22. In Chambers 21st Century Dictionary, the term "process" has been defined as under: "Process: 1. a series of operations performed during manufacture, etc. 2. a series of stages which a product, etc. passes through, resulting in the development or transformation of it." 23. In Collins Cobuild English Dictionary, the term 'process' has been defined as under: "A process is series of actions which are carried out in order to achieve a particular result. A process is a series of things which happen naturally and result in a bio logical or chemical change. When raw materials or foods are processed, they are treated chemically or industrially before they are used or sold." 24. The term 'process' as defined in the New Webster's Dictionary of the English Language [Deluxe Encyclopaedia Edition] is as under: "Process, To treat or prepare by some particular process; to convert, as an agricultural commodity, into marketable form by some special treatment; Produced or treated by some artificial means; as, process sugar; of or pertaining to photographic reproduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e packing." 29. According to the Marine Products Export Development Authority Act, 1972, [S. 3(1)], 'processing' in relation to marine produces includes the preservation of such products such as canning, freezing, drying, salting, smoking, peeling or filleting and any other method of processing which the authority may, by notification in the Gazette of India, specify in this behalf. According to Section 2(C) of the State Financial Corporation Act, 1951, the expression 'processing of goods' includes any art or process for producing, preparing or making an article by subjecting any material to a manual, mechanical, chemical, electrical or any other like operation. 30. Mr. Parasaran placed reliance on the decision in D.D. Shah Bros. v. Union of India Another reported in 2006 (283) ITR 486 (Raj.). In this case, similar question arose for consideration before the Rajasthan High Court whether the blending of different types of tea by the assessee amounts to production of a thing or an article by an industrial undertaking within the meaning of the expression as used in Section 80-1B of the Act. 31. The High Court in the said judgment has dealt with the terms "manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is not covered by Section 5- A(1)(a) of the Kerala General Sales Tax Act, 1963. This court after examining the relevant cases reached the conclusion that while preparing pineapple slices from the original fruit (pineapple), the commodity continues to possess its original identity, notwithstanding the removal of inedible portions, the slicing, and there after canning it on adding sugar to preserve it. The court was of the opinion that in canning the pineapple, the processing is definitely involved but it would not amount to manufacture as no new commodity came into existence. 36. In Bharat Forge and Press Industries v. CCE, (1990) 1 SCC 532, this court observed that tariff item 26-AA(iv) encompasses all sorts of pipes and tubes. It calls for no distinction between pipes and tubes manufactured out of sheets, rods, bars, plates or billets and those turned out from larger pipes and tubes. It is of no consequence whether the pipes and tubes are manufactured by rolling, forging, spinning, casting, drawing, annealing, welding or extruding. The expression 'pipe fittings' merely denotes that it is a pipe or tube of a particular length, size or shape. 'Pipe fittings' do not cease to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at manufacture is complete as soon as by the application of one or more processes, the raw material undergoes some change and a new article is brought into existence having a distinct name and character would amount to manufacture. 43. A Constitution Bench of this court in M/s. Ujagar Prints Others (II) v. Union of India Others, (1989) 3 SCC 488 and M/s. Saraswati Sugar Mills Others v. Haryana State Board Others, (1992) 1 SCC 418 took the same view. 44. In Gramophone Co. of India Ltd. v. Collector of Customs, Calcutta, (2000) 1 SCC 549, this Court examined earlier cases and held that "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 and use. In this case, the word 'manufacture' has various shades of meanings but unless defined under the Act, it is to be interpreted in the context of the object and the language used in the section. it would not be applicable in cases where only processing activity is carried out. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sugar Mills Ltd. Another etc. v. Union of India Another etc., AIR 1968 S.C. 922, Laminated Packings (P) Ltd. v. Collector of Central Excise, Guntur, 1990 (4) SCC 51, Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. M/s . Coco Fibres, 1992 Supp (1) SCC 290, Commissioner of Sales Tax, Orissa Another v. Jagannath Cotton Company Another, 1995 (5) SCC 527, Ashirwad Ispat Udyog Others v. State Level Committee Others, 1998 (8) SCC 85, State of Maharashtra v. Mahalaxmi Stores, 2003 (1) SCC 70, Aspinwall Co. Ltd. v. Commissioner of Income Tax, Ernakulam, 2001 (7) SCC 525, M/s. J.K. Cotton Spinning Weaving Mills Co. Ltd. v. Sales Tax Officer, Kanpur Another, 1965 (1) SCR 900, Collector of Central Excise v. Kiran Spinning Mills, 1998 (2) SCC 348, Park Leather Industry (P) Ltd. Another v. State of UP Others, 2001 (3) SCC 135. 47. Mr. Bhargava Desai, learned Counsel appearing on behalf of the respondent-assessee submitted that the respondent buys various varieties of packed tea of different grades and prices in public auction covering various tea gardens. These diverse varieties of tea are all different in size, liquor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the entire originality of the different varieties of tea is lost and a new product of tea is produced. This is entirely experts' job and cannot be done by anybody. The experts have the knowledge, experience and expertise in blending and the proportions based on tastes, colour, size, texture and the source and origin of the tea garden etc. It is further contended that the packing of tea is done manually and also by machines. Electrical packing and weighing is also carried out. The automation to a great extent was not available at the relevant time and as such this was also carried out partly manually. 50. Mr. Desai, appearing on behalf of the respondent-assessee also strongly relied on the judgment of this court in Chowgule's case and submitted that in view of the clear findings in the said judgment, the controversy involved in this case is no longer res integra . According to Mr. Desai, the present case is squarely covered by the decision in Chowgule's case and consequently the respondent-assessee is entitled to the weighted deduction under section 35B(1A) of the Act. 51. The respondent has also relied upon the decision in G.A. Renderian Ltd.'s case (supra). In the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon, referred to, or distinguished the said judgment of Chowgule's case (supra) without properly appreciating the facts of this case, therefore, we deem it appropriate to deal with the facts of this case in extenso from the judgment. 54. The assessee, Chowgule Co., was a private limited company carrying on business of mining iron ore and selling it in the export market after dressing, washing, screening and blending it. 55. The entire activity of the assessee in Chowgule's case can broadly be classified into seven different operations, one following upon the other, namely, (i) extraction of ore from the mine; (ii) conveying the ore to the dressing plant; (iii) washing, screening and dressing the ore; (iv) conveying of the ore from the mine site to the river side; (v) transport of the ore from the river side to the harbour by means of barges; (vi) stacking of the ore at the harbour in different stock piles according to its physical and chemical composition, and (vii) blending of the ore from different stock piles with a view to produce ore of the required specifications and loading it into the ship by means of the mechanized ore handling plant. The question wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e comprehensively examined Nilgiri's judgment and observed as under: "Now undoubtedly there is a close analogy between the facts of Nilgiri Tea Company case and the facts of the present case, but we do not think we can accept the decision of the Bombay High Court in the Nilgiri Tea Company case as laying down the correct law. When different brands of tea were mixed by the assesses in Nilgiri Tea Company case for the purpose of producing a tea mixture of a different kind and quality according to a formula evolved by them, there was plainly and indubitably processing of the different brands of tea, because these brands of tea experienced, as a result of mixing, qualitative change, in that the tea mixture which came into existence was of different quality and flavour than the different brands of tea which went into the mixture." 58. In view of the specific language of the Statutes in Nilgiri's case (supra) and Chowgule's case (supra); the term 'processing' has been specifically incorporated in the statute, therefore, the assessees were justifiably held to be entitled to the benefit. 59. Undoubtedly, the facts of Nilgiri's case are identical to the facts of the present case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee-Judge Bench of this court held that it is not the duty of the court either to enlarge the scope of legislation or the intention of the legislature, when the language of the provision is plain. The court cannot rewrite the legislation for the reason that it had no power to legislate. The power to legislate has not been conferred on the courts. The court cannot add words to a statute or read words into it which are not there. 64. In State of Kerala v. Mathai Verghese Others (1986) 4 SCC 746, this court has-reiterated the well settled position that the court can merely interpret the section; it cannot re-write, recast or redesign the section. In interpreting the provision the exercise undertaken by the court is to make explicit the intention of the legislature which enacted the legislation. It is not for the court to reframe the legislation for the very good reason that the powers to 'legislate' have not been conferred on the court. 65. In Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests, Palghat Another, 1990 (Supp) SCC 785, the court rightly observed that in seeking legislative intention judges not only listen to the voice of the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
