TMI Blog2020 (3) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... SUPREME COURT] As apparent from the facts on record as in paragraphs 6 and 7 of this judgment, where I have set out and dwelt at length on the stages of the process involved, and the end product and its separate commercial utility and identity from that of the original ingredients, it is clear that poultry feed is not merely rice bran or maize or vitamins or minerals but a mixture of all in calculated proportions through a process involving mills and manufacturing by the use of machinery which run on electricity and where the end product being the pellet is wholly different from each of the ingredients and results in a product which is commercially different and distinct as a commodity so that it cannot be considered as any of the original commodities which were used as ingredients. As a result, the question of law framed by this Court as in paragraph 3 of this judgment is answered against the revenue and it is held that the conclusion of the learned tribunal that production of poultry feeds constitutes manufacture is not perverse. Consequentially, appeal of the Revenue is dismissed and the order of the learned tribunal is confirmed. The Revenue shall bear the costs of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely: (i) it is not formed by splitting up, or the reconstruction, of a business already in existence: Provided that this condition shall not apply in respect of an industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose; (iii) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India: **************************************************************** ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. 6. The Assessee gave, established and proved the following particulars about the manner in which it produced poultry feed, from the raw materials/ingredients such as maize, soya, raw rice bran, deoiled cakes, meat and bone meal, fish meal, shell grit, rice polish and edible oil and micro-ingredients such as Di Calcium phosphate, limestone powder and salt, which were mixed with vitamins, chemicals, minerals such as iron, copper, iodine, manganese, zinc and cobalt, amino acids, anti-oxidants, antibiotic drugs, cocktail enzyme, phytase enzyme and growth promoter, among other things, and cooked and cooled to produce the poultry feed: - (i) Receiving the individual Raw Materials and other inputs after proper quality check. (ii) Storage of the input materials in different silos-bins. (iii) Weighin gi npofut materials according to formula by the computer. (iv)Feeding of the input materials into the Batch Weigher. (v) Grinding of the input materials by Hammer Mills. (vi)Controlling the size of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess is to be completely different from ingredients, as regards its chemical composition, integrant structure or its use. However, it is argued that in the instant case, it may be seen that the composition of the end product is merely that of a mixture of the individual components which went into the process, and that such components are not intrinsically changed, enhanced or modified in the process of production. All the ingredients used in the Poultry feed are basically items which are even otherwise independently used for poultry feed. In the instant case, the whole process amounts to just mixing together of all the different ingredients. The use of end product is also no different from the use of maize, soya, vitamins or minerals etc. which are by themselves in wide use as food for poultry and animal husbandry. Thus the basic reasoning on which a process can be stated to be manufacture , as distinct from mere processing , does not hold true in this case. 9. In support of the above contentions, the Revenue has cited the order of the Income Tax Appellate Tribunal, Hyderabad Bench in the case of Venkateswara Feeds Feeds-v-ACIT, in ITA No.493 (Hyd)/2005 among other income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oil Industries Limited, which is similar to the facts and circumstance of this case. I would think that an order passed by the Income Tax Appellate Tribunal is binding on all income tax authorities in Kolkata in respect of assessments made with relation to activities carried on in West Bengal by the Assessee which alone are at issue, rather than an order passed by the Income Tax Appellate Tribunal at Hyderabad which would bind the authorities in Andhra Pradesh or Telengana, as the case may be. 11. More to the point, and with far more binding effect than what the Income Tax Appellate Tribunal at Hyderabad had held, the Assessee has cited several judgments of the Hon'ble Supreme Court, which the Revenue appears to have ignored since none, it appears, has told them that the law declared by the Hon'ble Supreme Court is binding on every civil and judicial authority in India, including revenue authorities, and this would override what a statutory tribunal has decided in Hyderabad for the authorities in respect of the State which the said tribunal has been formed for. The judgments cited are as follows: - 11.1. CST-v-Pio Food Packers reported in (1980) Supp SCC 174: the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ives rise to a new product, which is a mixed masala. Different ingredients are used in preparation of Masala after grinding and mixing several ingredients and when they are so grinded they lose their own identity and character and a new product separately known to the commercial world comes into existence. Sales tax is levied on sale of commercial commodities, therefore, individual spices could be termed as different commercial commodities. When they are grinded and mixed they give rise to a separate commercial commodity altogether which could be taxed separately. 11.5. Commissioner of Income Tax-v-Vinbros and Co. reported in (2012) 349 ITR 697 (SC) the Hon'ble Supreme Court was pleased to approve and follow the above decisions and lay down, as a general rule, that the generally accepted test to find out whether there was manufacturing was to see whether the application of processes brought out a change to take the commodity to a commercially different and distinct commodity that it could no longer be considered as the original commodity. 12. The combined effect of the above and reading them together with the new definition of manufacture which is there in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is precious little that I can add to the judgment. Nevertheless, I think that a few observations would be relevant. One has to ascertain the meaning of the words used to define manufacture in Section 2(29BA) of the Income Tax Act, 1961. The meaning conveyed by the sub-section is absolutely clear. So is the intention of the legislature expressed in the words in the sub-section. Section 2(29BA) is as follows: 2(29BA) 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. In sub-section (b) the legislature describes the resultant product as one with a different chemical composition or integral structure . In subsection (a) there is no reference to a different chemical or structural product. Therefore, sub-section (a) conceptualizes an end product which is new and distinct from the substance or subs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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