TMI Blog2013 (9) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... iples of Law. 2) The learned CIT (A) erred on the facts of the case and existing legal position in confirming the view taken by the Learned Assessing Officer that the appellant is not entitled to deduction U/s. 10B although the appellant has fulfilled all the conditions required for allowance of deduction U/s. 10B. On the other hand, the CIT (A) ought to have allowed deduction U/s. 10B to the appellant for having fulfilled all the conditions for allowance of 10B. 3) The Learned CIT (A) erred in coming to the conclusion in para 7 of his order that the appellant claimed that their activity amounted to manufacture there by claiming that they were a manufacturing concern, whereas the appellant had been claiming that their activity would amount to manufacture/production, laying more stress on production. 4) The Learned CIT (A) erred in coming to the conclusion in para 7.1 of his order that the appellant as well as M/s. Sesa Goa Ltd., are engaged in the same line of business i.e. export of iron ore and as such the decision of the Honourable Supreme Court in the case of M/s. Sesa Goa Ltd., is directly applicable to the case of the appellant. Factually, although the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to 'Production'/ Manufacture of a high value product from a waste material which he failed to do. 7) The Learned CIT(A) ought to have considered the case laws relied upon the by the appellant in their favour and in support of their claim for allowance of deduction U/s. 10B and ought to have allowed their claims of deduction U/s. 10B treating their process as 'production' / manufacture. 8) For these reasons and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed and the appellant may be granted deduction U/s. 10B as claimed by them in the return of income. 2. The only issue involved in the grounds taken by the Assessee in the appeal is disallowance of the claim of deduction u/s 10B by the Revenue. 3. The brief facts relating to the case are that the Assessee, a Partnership firm, filed the return for the impugned assessment year on 17.9.2009 at an income of ₹ 1,05,11,410/-. The Assessee claimed exemption u/s 10B amounting to ₹ 8,39,57,651/-. The AO asked for the justification of the exemption. The Assessee pointed out that the Assessee is a 100% Export-Oriented Unit. The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction and manufacture in the case of mining activities. It clear from the decision of the Apex court that extraction and Processing amounts to production, whereas in the instant case, the assessee has done only the processing part, and therefore, the activities of the assessee would not amount to manufacture/production. It is important that both the activities of extraction and processing be carried out simultaneously to qualify for production as per the above quoted decision. 7.2 The assessee has stated that A.Y 2009-2010 is the first year of operation, which is factually incorrect. The assessee started its business from the A.Y 2006- 2007 relevant to the A.Y 2007-2008, which can be seen from the returns of income filed by the Assessee. 7.3 The assessee has claimed a net profit of 9.63 crores on a gross turnover of 12.45 crores which is more than 75% of the turnover and expenditure debited towards beneficiation/processing is very small compared to the turnover and profit, disclosed. 7.4 Such a fantastic profit margin also proves that raw iron ore is not waste as claimed by the assessee, otherwise it would not fetch such high returns. 8. Therefore, in view of the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and legal requirements of SEEPZ special Economic Zone. For the purposes of carrying on this business, the Appellant has set up its unit in Goa consisting of large number of machineries which are utilized in various processes which converts the tailing rejects and mineral waste which is otherwise a waste material into usable, valuable and exportable iron ore fines. List of machineries utilized is enclosed herewith as Annexure A . It has to be mentioned that the physical composition and form of the raw material and finished goods are totally different - the raw material is mostly in the semi liquid form, in the form of a slurry whereas the finished goods are in the form of dry powder. Similarly, the chemical composition of the raw material and finished goods are totally different - the raw material contains impurities, water and also its Fe content is in the range of 38% to 43% where as the finished goods is free from impurities, and its Fe content is more than 58%. For conversion of the wasteful raw material into exportable and valuable finished goods, a series of mechanical and chemical processes are involved. Since the tailing rejects and mineral waste is otherwise not usable o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as the Appellant purchases tailing rejects and mineral waste and using mechanical and chemical processes, converts the same into exportable iron ore fines whereas M/s. Sesa, Goa was involved in extraction of iron ore from its mines and the same was transported and processed involving removal of impurities and processing it to form iron ore of uniform consistency. 2. In the case of the Appellant, issue involved relates to claim of deduction under section 10B, which has been claimed on the ground that the Appellant's process amounts to manufacture/production whereas in the case of Sesa, Goa, the issue involved was claim of investment allowance U/s 32A on Tippers etc., which transported the extracted iron ore from mining sites to the processing unit treating them and plant and machinery. Further, the honorable Supreme Court held that the act of extraction and processing of iron ore amounts to manufacture/production for purposes of claim of investment allowance for tippers etc., treating them as machineries used in the manufacture/production of iron ore. It has nowhere given a decision or finding that processing of iron ore in itself does not amount to manufacture/prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also different in physical appearance and chemical composition. We do not agree with the learned D.R. that there is no any change in physical and chemical composition of the output than the input as is being processed in the three units. IF we go to section 2(29BA) inserted w.e.f. 1-4-2009, we find clause (b) of this section clearly states that bringing into existence of new and distinct object or article or thing with a different chemical composition or integral structure tantamount to 'manufacture'. The Crude ore once processed is made marketable and had a different chemical and physical composition than the ROM (Crude Ore) even though in common parlance both may be called iron ore. It is no more remains as crude ores. Tailing no more remains tailing but converted into a powder. In view of this clause and the decision of the Supreme Court in the case of Chowgule Co., it can be held that the assessee is engaged in these units in 'manufacturing . The honorable ITAT bench has in the order discussed various other decisions in coming to this conclusion. The honorable bench distinguished the decision of the honorable Supreme Court in the case of CIT vs Sesa Goa, rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the above, it is submitted that the case of the Appellant is a covered case of the bench of the same honorable Tribunal on facts and legal issue fully. It is therefore prayed that in view of the decision of the honorable Tribunal referred to above, the appeal of the Appellant may be allowed, cancelling the order of the honorable CIT, Appeal, Panaji and holding that the Appellant is entitled to deduction under section 10B on the facts of the case. In the Appellate Order passed by the CIT, Appeal, Panaji, a reference has been made to the higher rate of profit than normal. The learned CIT, Appeals has given a finding that such a fantastic profit margin also proves raw iron ore is not a waste as claimed by the Assessee, otherwise it would not fetch such high returns. The finding of the learned CIT (Appeals) is contrary to facts. It is a well known fact that tailing rejects and mineral waste is the discarded end product of the mining process which is in semi liquid form and is dumped into tailing pond. In fact to dispose it off as per the norms of pollution control board, it involves substantial expenditure and as such the miners are more than willing to sell it at thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra), the facts of the case and the process involved were identical as in the case of M/s. Tata Tea Ltd and the assessee was involved in purchase of tea from various sources, blending them and repacking in packets of various sizes. The matter was referred to special bench of the ITAT and the special bench gave the verdict in this case granting deduction under section 10B of the Income Tax Act, 1961. While arriving at the conclusion, the honorable special bench of the ITAT took into consideration the detailed facts of the case as also went into the definitions of the words manufacture, production and processing . The definition of manufacture given in the special economic zone act 2005 in section 2(r) was also taken into consideration. The learned special bench squarely relied on the decision of the honorable Supreme Court in the case of M/s. Chowgule Co. Pvt. Ltd., vs. Union of India (1981) 1 SCC 653 AIR 1981 SC 014, Aspinwall Co. Ltd., vs. CIT (251) ITR 323 (SC), Brooke Bond Lipton India Ltd., vs. State of Karnataka (1998) 109 STC 235(Kar.), Girnar Industries vs. CIT (2011) 338 ITR 277, Kerala and also Tata Tea Ltd., (supra). The honorable High Court took into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the above facts and decisions it is submitted that the process of the Appellant may please be held to amount to manufacture/production and the Appellant may be granted deduction under section 10B since all other conditions necessary for grant of deduction section 10B are already fulfilled. 3.2 The ld. DR, on the other hand, vehemently relied on the order of the authorities below and contended that the process adopted by the Assessee does not tantamount to manufacture or production of any article. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of CIT vs. Sesa Goa, 271 ITR 331 for the proposition that for manufacture, there must be extraction as well as processing of the ore. The Assessee is not carrying on any extraction activity. The Assessee was buying the ore, may be rejections having low density of iron. What the Assessee was producing was also iron ore which has Fe content of more than 58%. There is no change in the mechanical composition of the raw materials as well as the finished product. 3.3 We have carefully considered the rival submissions and perused the material on record. We have also gone through the case laws as has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act which deals with the special provisions in respect of the newly established undertakings in free-trade zone, etc., and sec. 10AA of the Act which deals with the special provisions in respect of the newly established units in special economic zones; and also sec. 10B of the Act which deals with the special provisions in respect of the newly established 100% export oriented undertakings were inserted by the Finance Act, 1988 w.e.f. 01/04/1989. Sec. 10B provides that any profits and gains derived by an assessee from a 100% EOU shall not be included in the total income of the assessee. This provision applies to any undertaking which manufactures or produces any article or thing. Explanation (i) to sec. 10B provides that the expression 100% Export Oriented Unit means an undertaking which has been approved by the Board appointed in this behalf by the Central Government in exercise of the powers confirmed by sec. 14 of the Industries (Development Regulation) Act, 1951 and the riles made there under. Explanation (iii) which was there at the time of the said sec. 10B defined the word manufacture for the purpose of the said section to include any - (a) process or (b) assemblin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was available for a period of 10 consecutive years in a graded manner. The new provisions contained the following additional conditions: i. The sale proceeds of articles or things or computer software exported out of India, should be received in or brought into India within a period of 6 months from the end of the previous year or within such further period as the competent authority may allow - Sub-section (3); ii. The profits derived from the export of articles or things or computer software shall be the amount which bears to the profits of the business, the same proportion, as the export turnover in respect of such article or things or computer software bears to the total turnover of business - Sub-section (4); iii. The assessee must furnish in the prescribed form No. 56G, along with his return of income, the report of a Chartered Accountant certifying that the deduction has been correctly claimed in accordance with the provisions of section 10B - Sub-section (5); iv. Where the assessee avails of the benefits of section 10A or section 10B, it will not be eligible for other tax exemptions available under other provisions of the Act during the period of 10 years - S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hips held and observed at pages 659 and 660 of the reports as under:- It still remains to consider whether the ore blended in the course of loading through the mechanical ore handling plant can be said to undergo processing when it is blended. The answer to this question depends upon what is the true meaning and connotation of the word processing in Section 8(3)(b) and Rule 13. This word has not been defined in the Act and it must therefore be interpreted according to its plain natural meaning. Webster s Dictionary gives the following meaning of the word process : to subject to some special process or treatment, to subject (especially raw material) to a process of manufacture, development of preparation for the market etc.; to convert into marketable form as livestock by slaughtering, grain by milling, cotton by spinning, milk by pasteurizing, fruits and vegetables by sorting and repacking. Where therefore any commodity is subjected to a process or treatment with a view to its development or preparation for the market , as, for example, by sorting and repacking fruits and vegetables, it would amount to processing of the commodity within the meaning of Section 8(3)(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion is concerned, it is impossible to argue that they do not suffer any change in their respective chemical and physical compositions. Thus the Hon ble Supreme Court accepted that there is change in chemical compositions after processing of the iron ore in this case.From the said decision of the Apex Court, it is apparent that Hon ble Apex Court held even blending of iron ore for the purpose of export involves change in the chemical and physical composition of iron ore. But if we look to the facts in the impugned case of the assessee, the assessee is not only blending iron ore but carrying out various processes as to make iron ore called crude ore useable to Ispat Industries. The activity of the units of the assessee for Amona and Chitradurga involved converting input into output consist of crushing (crude ore called ROM which appeared to be pieces of rocks as we noted during the course of hearing on the basis of sample shown to us) screening, washing, stacking, loading in barges, river transportation to the boat and export in ships. The finished product which comes out are called lumps and fines which are used for Ispat Industries and brought by the foreign buyers. The finis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Vs. State of Bihar (1961) 12 STC 150 (SC), Hon ble Supreme Court defined the word production , albeit, in connection with the Bihar Sales Tax Act, 1947. The definition was adopted from the meaning ascribed to the word production in the Oxford English Dictionary, as meaning amongst other things that which is produced; a thing that results from any action, process or effort, a product; a product of human activity or effort . For the wide definition of the word production , it has to follow that mining activity for the purpose of production of mineral ores would come within the ambit of the word production since ore is a thing , which is the result of human activity or effort. 43.7 According to Webster International English Dictionary, the verb produce means to bring forward, beget, etc. The juxtaposition of the word manufacture with agriculture and horticulture is significant and cannot be lost sight of. The intention in employing the word produced obviously was to introduce an element of volition and effort involving the employment of some process for bringing into existence some goods. 43.8 In paragraph 7 of its in the case of Chowgule C0 (P) Ltd. Vs. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of Nilgiri Tea Company case [10 STC 500 (Bom HC)] 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 [10 STC 500 (Bom HC)] as laying down the correct law. When different brands of tea were mixed by the assessee in Nilgiri Tea Company case [10 STC 500 (Bom HC)] 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 flavor than the different brands of tea which went into the mixture. There are, it is true, some observations in the judgment of the Bombay High Court which seem to suggest that if instead of manual application of energy in mixing the different brands of tea, there had been application of mechanical force in producing the tea mixture, the court might have come to a different conclusion and these observations were relied upon by the Assessee, since in the present case the blending was don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the purpose of carrying out the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes processing . 43.10 Therefore, Hon ble Supreme Court, in construing the expression processing allowed the appeal of the assessee, in Chowgule Co. Pvt. Ltd. (supra), holding, inter alia, that where any commodity is subjected to a process or treatment with a view to its development or preparation for the market it would amount to processing of the commodity within the meaning of Central Sales Tax Act, 1956. Hon ble Supreme Court, in the said judgment, did not consider the expression manufacture since the question was decided only on the expression processing . However, considering the judgment of the Bombay High Court in the case of Nilgiri Tea Co. [1959] 10 STC 500, Hon ble Supreme Court observed that, 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 a qualitative change, in that the tea mixture w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment had no case that the assessee s unit engaged in export of tea bags and tea packets was not a 100% EOU. If exemption was denied on the ground that products exported were not produced or manufactured in the industrial units of the assessee s 100% EOU, it would defeat the very object of section 10B of the Act. (similar to assessee s case). Further, industrial units engaged in the very same activity, i.e., blending, packing and export of tea in the special economic zones and free trade zones, would continue to enjoy tax exemption under section 10A of the Act and section 10AA of the Act respectively. The assessee was allowed exemption on the profit derived by its 100% EOU engaged in blending, packing and export of tea bags and tea packets. Hon ble High Court held as under: The finding of this court is that the purpose of incorporation of section 2(r) of the Special Economic Zones Act, 2005, into section 10AA of the Income-tax Act is to provide a liberal meaning to the word manufacture which takes in even blending, refrigeration, etc. It was noticed by this court that the definitions of manufacture contained in the above definition clauses are very liberal which takes in eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of this court above referred to we hold that the assessee is entitled to exemption on the profit derived by its 100 per cent export oriented unit engaged in blending, packing and export of tea bags and tea packets. Consequently, we allow the appeals by reversing the orders of the Tribunal and by restoring the orders of the first appellate authority declaring the appellant s entitlement for exemption. 43.12 Hon ble high court in this case, in our opinion, has clearly laid down that once the assessee is recognized as a 100% EOU for engaging in an activity and assessee is engaged in the same very activity, if the exemption is denied to the assessee on the ground that there is no production or manufacturing but only processing of the products exported in the 100% export oriented unit, the same would defeat the very object of section 10B. The Hon ble high court took the view that the decision of the Hon ble Supreme Court in Tara Agency s case 292 ITR 444 will not apply even though Hon ble Supreme Court in that case has held that blending of tea does not amount to manufacture or production of an article but is only processing. Thus, the Hon ble Kerala high court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in respect of its 100% EOU for export of manufactured jute bags, packet tea, tea bags, bulk tea, etc. The AO rejected the claim of assessee of exemption u/s 10B in respect of export of blending of tea. The rejection of exemption u/s 10B was confirmed by the CIT(A). When the matter went before the special Bench, Special Bench after discussion the relevant provisions as well as the various decisions of High Court and the Supreme Court held as under:- 32. The provisions of section 10AA of the Act was inserted on the statute book by the Special Economic Zones Act, 2005 w.e.f. 10.02.2006. Even prior to the enactment of the said SEZ Act, Special Economic Zones (including units therein) were all along treated like EQU / FTZ / EPZ for all purposes whatsoever and were dealt within the Exim Policy accordingly. Section 2(k) of the Special Economic Zone Act, 2005 defines the expression Existing Special Economic Zone to mean every Special Economic Zone which is in existence on or before the commencement of the said Act. Section 2(e) defines the expression existing unit to mean every unit which has been set up on or before the commencement of the said Act in an existing Special Econo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers conferred by section 30(5)(3) of The Tea Act, 1953, the expressions manufacturer , Buyer , Packet Tea , Tea Bag ,- Green Tea , Quick Brewing Black Tea , Instant Tea and Made Tea have also been distinctly and separately defined. Clause (29BA) was inserted in section 2 of the Income Tax Act, 1961 by the Finance (No.2) Act, 2009 w.e.f. 01.04.2009 to define the expression manufacture as under: manufacture , with its grammatical variations, means a change in a non-living physical object or article or thing, - (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure; The aforesaid definition of the expression manufacture , although brought into the statute book w.e.f. 01.04.2009, was applied by the Hon'ble Supreme Court even for the assessment year 2001-02 in ITO v. Arihant Tiles and Marbles Pvt. Ltd. (2010) 320 ITR 79, 82 (SC) on the ground that Parliament had taken note of ground reality in inserting section 2(29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 as well as the Rules and Regulations framed by the Tea Board and also Calcutta Tea Traders Association from time to time as discussed above. 35. We find from the above facts and circumstances and case laws relied on by both the sides that the assessee was exclusively engaged in blending, packaging and export of tea bags, tea packets and bulk tea packs. The assessee's division enjoys recognition as a 100% EOU, which is granted by the Development Commissioner, Ministry of Commerce Industry, Govt. of India. The assessee claimed exemption u/s. 10B of the Act for AYs 2000-01 onwards, which was granted upto the AY 2003-04. However, for the AY 2004-05, exemption was declined for the reasons that by the Finance Act, 2000, the definition of `manufacture which included 'processing' contained in section 1OB of the Act was deleted w.e.f. 01.04.2001. The argument of the department is that manufacture or production had liberal meaning under the definition clause contained in section 10B of the Act until its deletion which covers even processing and, therefore, blending and packaging of tea for export was treated as 'manufacture' or 'production' of an article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parlance, and it includes processing, blending, packaging etc. In view of the above and respectfully following the decision of Hon'ble Kerala High Court in the case of Girnar Industries (supra) and Tata Tea Limited (supra), we hold that the assessee is entitled for exemption under Section 10B of the Act on account of blending of tea. Similarly, in our view, the industrial units engaged in the very same activity i.e. blending, packing and export of tea in the free trade zone shall also be entitled to enjoy tax exemption under Section 10A of the Act. 37. Accordingly, we answer the question referred in favour of the assessee by holding that the assessees who are in the business of blending and processing of tea and export thereof, in 100% EOUs are manufacturer/ producer of the tea for the purpose of claiming exemption u/s.10B of the Act. Further, assessees who are in the business of blending and processing of tea hi respect of undertakings in free trade zones are manufacturer/producer of tea for the purpose of claiming exemption u/s. 10A of the Act. We have examined and discussed the facts in the case of Madhu Jayanti International Ltd. and found that there is blending of tea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 79(sc). In this case when the assessee was engaged in the activity of cutting and polishing of marble blocks, the question before the Supreme Court was whether the activities undertaken by the assessee would fall within the meaning of the words manufacture or production in section 80-IA of the Income-tax Act, 1961? In this case, Hon ble Supreme Court, after discussing the definition of manufacture given in section 2(29BA) of the Income-tax Act, 1961 and also discussing the provisions of section 80-IA(2)(iii) and after going through various decisions, held as under: 22. Applying the above tests laid down by this Court in CIT Vs. N.C. Budharaja and Co. 204 ITR 412 (SC) to the facts of the present cases, we are of the view that blocks converted into polished slabs and tiles after undergoing the process indicated above certainly results in emergence of a new and distinct commodity. The original block does not remain the marble block, it becomes a slab or tile. In the circumstances, not only there is manufacture but also an activity which is something beyond manufacture and which brings a new product into existence and, therefore, on the facts of these cases, we are of the vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides exemption for processing also, the law would have made it very clear by apparently stating that processing is also entitled for exemption. When the expression processing is omitted in section 10B, we are not supposed to fill up the omission. If something is not there we should accept as it is not there. We should not provide for the omission that amounts to judicial legislation. There is no confusion in the provision of law provided under section 10B. The exemption is available only to manufacture or production. It is not available for processing. Although subsequently this Tribunal has rectified the order under section 254 vide order dated 19th July, 2007 on the application of the assessee and took the view that the assessee is entitled for exemption under section 10B as the assessee-company itself is extracting the entire iron ore from own mines and mines taken on lease and thereafter processing the same. We cannot look into the finding of the coordinate Bench whether they have correctly interpreted the decision of Supreme Court in 271 ITR 331 or not. The Ld. AR vehemently contended that the decision dt. 12th July, 2007 of this Tribunal in that case got overruled by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as judicial discipline require that. This Tribunal is bound to consider those decisions and the Tribunal is not bound with the decision of the coordinate Bench. The jurisdictional Bombay High Court in the case of H.A. Shah Co. Vs. CIT (1956) 30 ITR 618, 625 (Bom.) even took the view that in case fresh material facts came to the knowledge of subsequent bench, the decision of coordinate bench is not binding. In this regard, Hon ble High Court observed as under :- Nor are we satisfied that in order to enable the second Tribunal to depart from the finding of the first Tribunal it is essential that there must be some fresh facts which must be placed before the second Tribunal which were not placed before the first Tribunal. If the first Tribunal failed to take into consideration material facts, facts which had a considerable bearing upon the ultimate decision, and if the second Tribunal was satisfied that the decision was arrived at because of the failure to take into consideration those material facts and that if these material facts had been taken into consideration the decision would have been different, then the second Tribunal would be in the same position to revise the ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Special Bench, High Court and the Supreme Court cited by us in discussion held here in above. We noted that subsequent to the decision of this Tribunal in ITA No. 162/PNJ/2006 dt. 12th July, 2007, the Special Bench of this Tribunal in the case of Madhu Jayanti International Ltd. [2012-TIOL-424-ITAT-KOL- SB] has dealt with the issue exhaustibly whether the assessees who are in the business of blending of tea i.e processing of tea and export thereof in 100% EOU can be said to be manufacturer / producer of tea for the purpose of section 10A/10B. When the Supreme Court has already held in the case of Tara Agencies 292 ITR 444 that blending of tea is processing. Thus, the Special Bench has decided the issue in respect of 100% EOU for the purpose of exemption under section 10B whether an assessee who is engaged in processing can be said to be engaged in manufacture / processing. We also noted that Kerala High Court in the case of Tata Tea Ltd. Vs. ACIT 338 ITR 285 dealt with the issue in respect of 100% EOU for the purpose of exemption under section 10B whether the processing of tea is treated as manufacture or production of an article qualifying for exemption. Not only these deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Tiles Marbles (SC) as well as Kerala High Court in the case of Tata Tea (Supra) which would have disallowed the claim of the assessee u/s 10B on this basis after considering the Explanation (iii) of section 10AA as well as definition given u/s 2(29BA). Thus, due to the decision rendered by the Special Bench, High Courts and Supreme Court subsequent to the date of order in the case of Chowgule Co. Ltd. Vs. ACIT in ITA No. 162/PNJ/2006 in our opinion, the issue raised by the Revenue is not fit to be referred to Special Bench as the decisions of Special Bench / High Court / Supreme Court are binding on us in preference to the decision of the coordinate Bench. Thus, we have in our opinion germane reason not to refer this issue for constitution of a Special Bench as in our opinion even if the Special Bench is constituted the earlier decision of the Special Bench in the case of Madhu Jayanti will be binding until and unless there are special and germane reasons for constituting a large Special Bench. We, therefore, dismiss the application dt. 18/01/2013 moved by the Revenue for constituting the Special Bench. 45.8 Now coming back to the issue whether an assessee who is engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding for marketing. Thus, in view of the decision of the Special Bench and other decisions discussed in the preceding paragraphs and that of Hon ble Supreme Court in the case of Chowgule co (supra) as well as definition of manufacture as inserted w.e.f 1.4.2009 by way of section 2 (29AB) of the Income Tax Act as referred to by both the parties, we hold that all the three 100% EOU engaged in processing so as to make crude ore and waste i.e tailings usable or marketable are entitled for exemption u/s 10B subject to the other conditions for exemption under section 10B are being fulfilled. From the aforesaid decision, it is apparent that this Tribunal in the case of Codli Unit of Sesa Goa Ltd. which was engaged in processing the tailings into iron ore, in which the Assessee is also engaged, this Tribunal took the view that the Assessee was engaged in manufacturing. This Tribunal clearly laid down that during conversion of the crude ore into lumps and fines, waste is generated which is called tailing and discharged into the tailing pond. In Codli unit, these tailings which are in liquid form are converted into ultra fine. The crude ore is entirely different from the lumps and fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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