TMI Blog1996 (10) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... of. Even if it is so the following question expects our answer in I. T. R. No. 46 of 1993 :--- " Whether, on the facts and in the circumstances of the case, did the Tribunal correctly interpret entry 27 of the Eleventh Schedule to the Income-tax Act to hold that the assessee is entitled to investment allowance under section 32A of the Income-tax Act, 1961 ? " Our discussion, inspite of the above situation would also provide answer thereto. These are all relating to the assessment year 1985-86 in the matter of the assessee, Kerala Rubber and Reclaims Ltd., a company in which the public are substantially interested. The return was filed on October 10, 1985. The assessee-company prepares rubber compounds for utilisation in rubber industries. The raw material used is rubber, carbon black, oils and chemicals. The end-product is in sheet form. The assessee contends that these sheet forms are the end-products, claimed benefit of sections 32A and 80-I of the Income-tax Act, 1961. The Income-tax Officer relied upon item No. 27 of the Eleventh Schedule to hold that investment allowance under section 32A of the Act could not be granted as a result of the above item of the Eleventh Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be entitled in regard thereto under section 80-I of the Act. The situation required both the Revenue as well as the assessee to approach the Income-tax Appellate Tribunal, Cochin Bench. Before the Tribunal on behalf of the assessee, it was submitted that the raw material used by the assessee is natural rubber and rubber is masticated for reduction of viscosity and to increase the plasticity. It was further submitted that this masticated rubber is then further mixed with carbon black, rubber processing oil and other rubber chemicals in " intermix " at 150'C and high pressure. The intermix is a closed mixing mill operated with a big compressor and hydraulic power pack. It was further brought to the notice by way of submission in the context that the machine is driven by a 300 HP motor to enable the mixing to take place at a very high pressure and because of the high pressure and temperature, the rubber, carbon black, rubber processing oil and other rubber chemicals are masticated to form a homogeneous lump. It was submitted that this homogeneous lump is known as rubber compound. This rubber compound is then fed into an open mill by opening the drop door of the intermix. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , tubes, etc., would not make the assessee's product an intermediate product. The Tribunal has amply illustrated the situation by providing an example of a paddy cultivator in the context. Therefore, the factual peculiarity as found from the findings in regard thereto would show that the product under the circumstances is not masticated rubber but a further process is in regard thereto. It is mixed with carbon black, rubber processing oil and other rubber chemicals in an intermix at 150'C and at high pressure. The intermix is a closed mixing mill operated with a big compressor and hydraulic power pack. The machine is driven by a 300 HP motor to enable the mixing to take place at a very high pressure. It is because of the high pressure and temperature, the carbon black, rubber processing oil and other rubber chemicals get formed as a homogeneous lump. As far as the assessee is concerned it is known as they call it as rubber compound. This rubber compound is then fed into an open mill by opening of the drop door of the intermix. It is also driven by a 60 HP motor. Ultimately, as a result of the further remilling, the end-product is in the nature of sheets into pieces of 3' x 6' len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon are considered in regard to the proposition that for levy of excise duty the first condition is that as a result of the manufacture goods must come into existence and in regard thereto actual sale in the market is not determinative but the article must be capable of being sold in the market and known in the market as goods. Reliance is placed on the factual material tendered on record in the nature of the affidavit of the respondents for a factual position that in regard to the process of masticated rubber no other materials are added to the rubber except a negligible quantity (0.1 per cent.) of peptiser, which is added only to hasten the softening and homogenising process. There is an additional material in the said affidavit which is taken into consideration by this court to emphasize the fact that there is no market anywhere in the world where masticated rubber can be bought or sold. If this is the factual position that the commodity is masticated rubber simpliciter and in regard to that there is no market anywhere in the world where masticated rubber can be bought or sold, the situation would have been a closed door one. The situation is totally otherwise as we have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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