TMI Blog1990 (7) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... t rebate as provided in section 33(1)(b)(B)(i) of the Act in respect of the machinery used by it in its business ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the operations carried on by the asses see would amount to manufacture of textiles as specified in item No. 32 of the Fifth Schedule ?" The assessee is a registered firm. In respect of the assessment year 1974-75, in the course of the assessment proceedings, it claimed development rebate at the higher rate of 25% in accordance with the provisions of section 33(1)(b)(B)(i) of the Act as, according to it, it installed machinery and plant for the purpose of manufacture and production of an article or thing falling under item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee on the grey cloth manufactured or produced by others and purchased by the assessee, it was found that the assessee did not manufacture the cloth, but merely expended its labour on the cloth manufactured by others by carrying out some operations and that the end-product was not, in any manner, different from the feed-in-material. It was also further found that the operations carried on by the assessee were not directed towards the "manufacture or production" of textiles in that such operations did not bring into existence any textile material, cloth or fabric contemplated under section 33(1)(b)(B)(i) of the Act read with item No. 32 of the Fifth Schedule to the Act. In so answering the reference, the nature of the operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re [1985] 155 ITR 791 (Mad) would not have any application. On the other hand, learned counsel for the Revenue submitted that Ujagar Prints v. Union of India [1989] 179 ITR 317 (SC) concerned itself with the validity of the extended or expanded definition of "manufacture" occurring in section 2(f) of the Central Excises and Salt Act, 1944, as amended by the Central Excises and Salt and Additional Duties of Excise (Amendment) Act, 1980, and in the absence of any definition of "manufacture" in the Act, that expression has to be interpreted and understood as a word of ordinary import connoting bringing into existence a new and different article, having a distinct name and character and since that was not done by the assessee, it was not entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Salt Act, 1944, prior to the amendment of the said section 2(f) by section 2 of Act VI of 1980, and whether the decision in Empire Industries Ltd. v. Union of India [1986] 162 ITR 846 (SC) holding that these operations amounted to "manufacture" was wrongly decided and required reconsideration. In considering and deciding the question referred to above, the Supreme Court, after referring to the definition of the expression "manufacture" occurring in section 2(f) of the Central Excises and Salt Act, 1944, proceeded to advert to the test generally applied for ascertaining whether there is "manufacture". In this context, the Supreme Court reiterated the principles applicable by observing that the test is to find whether the change or the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word " manufacture" as defined in section 2(f) of the Central Excises and Salt Act, 1944, as it stood before and after its expansion with reference to items Nos. 19 and 22 of the First Schedule by the Amending Act VI of 1980, to include incidental and ancillary processes of the kind enumerated, in relation to items Nos. 19 and 22 also as falling within the scope of the expression "manufacture". It is common ground that, under the Act, there is no definition of the expression "manufacture" or "produce". It, therefore, follows that those expressions have to be understood as words of ordinary import so as to mean to bring into being or existence a product falling under item No. 32 of the Fifth Schedule to the Act. What is significant is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged and under those circumstances, the assessee cannot claim to have manufactured or produced textiles falling within item No. 32 of the Fifth Schedule to the Act. We may also incidentally observe that there are some provisions in the Act which contemplate certain processes and, in such cases, they have been clearly and explicitly indicated in unmistakable terms, as for instance,in section 109(i)(a) of the Act, but in the absence of any indication in the language employed under the relevant provisions that processes like those carried out by the assessee would also fall within the expression "manufacture" or "produce", the assessee cannot claim a higher development rebate. We are, therefore, of the view that the decision in Ujagar Prints v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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