TMI Blog1997 (6) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... 88 Assessing Officer had also imposed additional tax under section 104. On appeal, the levy has been cancelled on the ground that provisions of section 104 are inapplicable in respect of manufacturing concerns. Assessee-company being involved in shipbreaking activity, it has accordingly been held that section 104 is not applicable. The levy of ₹ 78,808 has accordingly been cancelled. 4. Revenue is in appeal against the aforementioned decisions of the first appellate authority. Reliance has been placed on the decision of the Bombay High Court in the case of CST v. Delhi Iron Steel Co. (P.) Ltd. [1995] 98 STC 202 in support of the contention that shipbreaking activity did not amount to manufacturing of any articles or things. Reliance was also placed on the decision of the Tribunal in the case of Asstt. CIT v. Virendra Co. [1995] 55 ITD 309 (Bom.). 5. Learned counsel for the assessee, on the other hand, contended that the issue is directly covered by the decision of the Bombay High Court in the case of Indian Metal Traders (supra) where their Lordships have clearly held that the purchase of ship for the purpose of breaking up and scrapping the same would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was liable to purchase tax under section 13 of the Bombay Sales Tax Act, 1959. Under section 13 of the said Act it is provided that where a dealer who is liable to pay tax purchases any goods specified in Schedule B, C, D or E from a person or a Government who or which is not a registered dealer and; uses them within the State in the manufacture of goods or in the packing of goods (whether manufactured by him or not), or . . . The question considered by their Lordships was, thus, as to whether assessee purchasing the condemned unserviceable ship, dismantling the same and selling the scrap would be liable to tax under section 13 of the Act. Their Lordships held that the ship had been purchased for breaking and scrapping purposes. It was also considered that as per the import policy item No. 15(b) the condemned ships which are not seaworthy that are sold by the shipping companies for scrapping purposes, are treated as rollable scrap. Their Lordships of the Bombay High Court relied upon the decision of the Supreme Court in the case of State of Tamil Nadu v. Raman Co. [1994] 93 STC 185 and held that the ratio of the decision squarely applies to the facts of assessee s case. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacturing process. 11. In our considered view, the controversy as to whether the decision of the Bombay High Court in the case of Indian Metal Traders (supra) is applicable or in the case of Delhi Iron Steel Co. (P.) Ltd. (supra) is unnecessary. As held by their Lordships of the Supreme Court in the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297, the decision of a Court must be read in the context in which it is taken. Keeping in view this principle laid down by their Lordships of the Supreme Court, we are of the considered view that the word manufacturer of articles and things has got to be viewed in the context of section 80-I and section 80HHA and not in the context of the definition of manufacture in section 2(17) of the Bombay Sales Tax Act, 1959. The decision of Bombay High Court in the case of Sterling Foods (Goa) (supra) is relevant as it is in the context of section 80HH. Their Lordships in the aforementioned case held that- A statutory enactment must ordinarily be construed according to the plain natural meanin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinctive name, character or use. 13. In the case of Dy. CST v. Pio Food Packers [1980] 46 STC 63, Their Lordships of the Supreme Court held as under : There are several criteria for determining whether a commodity is consumed in the manufacture of another. The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved, in its manufacture. 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 of processing and 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 recognised 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 process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, has purchased the ship which is not sea worthy. In other words, what has been purchased is scrap. The scrap is constituted of various materials. Assessee simply breaks the said ship and derives the material for sale. There is no process of manufacture involved nor is the original commodity made to pass through any processes. As held by their Lordships of the Supreme Court in the case of Pio Food Packers ( supra) that commonly manufacture is the end result of one or more processes through which the original commodity is made to pass. It was further held that there might be several stages of processing and perhaps a different kind of processing at each stage and with each process the original commodity experiences a change. 18. Moreover, a mere change in the original commodity does not amount to manufacture. The change must be as a result of process or processes through which the original commodity experiences a change. In the present case, the scrap in the form of a ship is broken and the material used in making the ship is segregated and sold in the market. The activity of breaking the ship, in our considered view, does not amount to manufacture. As held by the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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