TMI Blog2016 (10) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess is carried out on the substance, the same is not to be treated as manufacturing process. Whether the goods exported by the exporter was the same goods purchased from the respondent (dealer) and consequently sale by the dealer to the exporter would be sale prior to export sale and would be covered by section 5(3) of the Central Act? - Held that: - wherein the basic characteristic and the use is not drastically changed and since the learned Tribunal has come to the conclusion specifically with examination of process of the material sold by the purchaser is not out of any manufacturing process and therefore, the claim of exemption from the said Sales Tax Act is justified. The categorical finding that exporter who had purchased Castor oil from the opponent herein has not sold the Castor oil in the same form, but has done some process and therefore, it cannot be considered as a manufacturing process and therefore, it appears to this court also that the learned Tribunal has rightly come to the conclusion in passing the order impugned in the appeal. No illegality or irregularity of any nature committed by the learned Tribunal - appeal dismissed - decided in favor of Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Act ? 5. The facts giving rise to these appeals are summarized as under: In Tax Appeal No. 923 of 2013 with respect to a business of Castor oil, the respondent no.2 has registered himself under the provisions of Gujarat Sales Tax act, 1969 as well as under the Central Sales Tax Act, 1956 in response to the assessment year 1999-2000 the Assistant commissioner assessed the petitioner under both the Acts vide order dated 30.03.2002, which has led the opponent to file an appeal before the appellate authority and in the appeal the Deputy Commissioner has dismissed both the appeals by an order dated 17.12.2003 and it is against that order Second Appeal came to be filed before the VAT Tribunal at Ahmedabad and all the appeals, as referred to above, came up for consideration before the VAT Tribunal, which came to be disposed of by a judgment and order dated 21.10.2010 and it is against this judgment the Revenue has filed these appeals, which are put up for final consideration. 6. It is emerging from the record that opponent herein is manufacturing the Castor oil out of Castor seeds and sales to various customers and the commodity Castor oil sold against 'Form H'. th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition contained has also not been properly construed and based upon misconstruction since the order is passed, the same is required to be corrected. It was also contended by the counsel that the learned Tribunal has not considered the decision of the Hon'ble Apex Court reported in 1998 SC 3055 in case of B.P. Oil Mills Ltd. Vs. Sales Tax Tribunal which has led a proposition that refining crude oil amounts to manufacturing process. It was also contended that yet another decision reported in AIR 1967 SC 1895 in case of Devi Das Gopal Krishnan etc. Vs. State of Punjab , has also not been properly considered and by referring to the dictionary meaning of the word 'manufacture' the leaned counsel submitted that to transform or fashion raw material into a changed form for use and held that oil is produced out of the seeds, the process is nothing but a manufacturing process and leviable to tax being a new commodity generated out of it. The learned counsel further has drawn attention and contended that almost similar provision contained in Kerala General Sales Tax Act, 1984, wherein the Hon'ble Apex Court while dealing with the said provision in the year 1991, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oil is not substantially altered and therefore, the process which has been undertaken was not held as manufacturing process. Even Geo-Chem Laboratory Ltd. has also addressed a letter on 26.08.2005, which indicates that company is reputed and independent inspection and testing by company for Castor oil shipped to international destinations world wide, and therefore, the learned counsel for the respondent has submitted that the Tribunal, in addition to applicability of the relevant entry and provision, has gone into even the process stated to have been applied upon the Castor oil supplied by the opponent and therefore, since the order is passed in such a depth, the same is not required to be interfered with. It was also contended that since the foreign buyers of the opponent and exporters, wherein requirement of refining Castor oil / First Special Grade Castor oil, the exporter has merely cleaned and refined the oils before exporting the same and the same was transmitted against 'Form no.H' and therefore, denial of exemption and thrusting upon a tax liability is not just and proper, but not in consonance with the proposition of law on the issue and therefore, since the illeg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (16) is defining the word manufacture which covers the activity of producing, making, extracting, collecting altering ornamenting, finishing or otherwise processing of any goods, but does not include such manufactures or manufacturing processes as may be prescribed. The said definition reads as under: 2(16):- manufacture with all its grammatical variations and cognate expressions, means producing, making, extracting, collecting, altering, ornamenting, finishing or otherwise processing, treating or adapting any goods; but does not include such manufactures or manufacturing processes as may be prescribed . The word as may be prescribed as used under this definition clause is attracting the provision contained under Rule 3 of the rules in which the prescription is made and therefore, referring to this Rule 3 it can be seen that the process which has underwent on their product is not a manufacturing process and therefore, conjoin effect of the aforesaid statutory provision, it appears that the learned Tribunal has rightly come to the conclusion that the process carried out was not a manufacturing process as defined under Section 2(16) of the GST Act. 11. To substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the process had been indicated in the tariff item, it would amount to manufacture. These arguments were negatived. It was held that to start with the commodity was a marble and even after cutting it remained marble. It was held that there was no manufacture. 23. It was submitted that the decision in Aman Marble Industries case is not laying down the correct law in as much as it has not taken note of the amended definition of the term manufacture in Section 2(f). It was submitted that for a process to amount to manufacture it need not be so mentioned only in the section or chapter note and that it could also be so mentioned in the tariff item. It is true that the amended definition has not been taken note of. We are in agreement with the submission that under the amended definition, which is an inclusive definition, it is not necessary that only in the section or chapter note it must be specified that a particular process amounts to manufacture. It may be open to so specify even in the tariff item. However, either in the section or chapter note or in the tariff entry it must be specified that the process amounts to manufacture. Merely setting out a process in the tariff e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of changes take the commodity to a point where commercially it can no longer be regarded as the original commodity but is instead recognized as a new and distinct article that manufacture can be said to have taken place. 31. In this behalf the following observations by the Constitution Bench of this court in Tungabhadra Industries are quite apposite: (AIR p.417, para 18) 18. In our opinion, the learned judge of the High Court laid an undue emphasis on the addition by way of the absorption of the hydrogen atoms in the process of hardening and on the consequent inter-molecular changes in the oil. The addition of the hydrogen atoms was effected in order to saturate a portion of the oleic and linoleic constituents of the oil and render the oil more stable thus improving its quality ans utility. But neither mere absorption of other matter, nor inter-molecular changes necessarily affect the identity of a substance as ordinarily understood. The change here is both additive and intermolecular, but yet it could hardly be said that rancid groundnut oil is not groundnut oil. It would undoubtedly be very bad groundnut oil but still it would be groundnut oil and if so it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le slices for sale in sealed cans amounted to manufacture, observed as follows: (SCC p.176, para 5) 5. Commonly, manufacture is the end result of one [or] more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages or proceeding ans perhaps a different kind of processing at each stage. With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognized as a new and distinct article that a manufacture can be said to take place. Where there is no essential difference in identity between the original commodity and the processed article it is not possible to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, I must be regarded as still retaining its original identity. (emphasis supplied by us) 13. Thus, it can be said from the above circumstance that the facts of the case on hand are also akin, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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