TMI Blog1980 (11) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that any process of manufacture is involved in blending of ore. The process of mining comes to an end when ore is extracted from the mines, washed, screened and dressed in the dressing plant and stacked at the mining site and the goods purchased by the assessee for use in the subsequent operations could not therefore be regarded as goods purchased for use 'in mining'. The requirement of Section 8(3)(b) and Rule 13 is that the goods must be purchased for use 'in mining' and not use 'in the business of mining'. It is only the items of goods purchased by the assessee for use in the actual mining operation which are eligible for inclusion in the certificate of registration under this head and these would not include goods purchased by the assessee for use in the operations subsequent to the stacking of the ore at the mining site. Allow the appeal of the assessee and direct the Sales Tax Officer to examine whether these 14 items of goods the machinery, vehicles, barges and other items of goods purchased by the assessee for use in carrying the mined ore from the mining site to the riverside and from the riverside to the Marmagoa harbour fall within the description of goods i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess is carried on every day round the clock in order to ascertain the chemical and physical composition of the ore which comes to Marmagoa harbour. Since the chemical and physical composition of the ore varies from mine to mine and even within the same mine itself, intra-mine blending of the ore is carried out at the mining site with a view to arriving at a certain specified chemical and physical composition. When the ore carried by barges arrives at the Marmagoa harbour, it is stacked in different stockpiles according to its chemical and physical composition. Since the assessee sells the ore only in the export market, it has to supply ore to the foreign buyers in accordance with the specifications required by them and therefore it is required to carry out blending of the ore mined by it in such a manner as to produce ore of the required chemical and physical composition. This operation of blending is carried out by the assessee, not before the loading of the ore into the ship, but in the process of loading itself through the mechanical ore-handling plant. What is done is to draw different quantities of ore from different stockpiles and put them together in the mechanical ore-hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied that the application is in conformity with the provisions of the Act and the Rules made thereunder, he shall register the applicant and grant to him a certificate of registration in the prescribed form which shall specify the class or classes of goods for the purposes of sub-section (1) of Section 8. Section 8 provides inter alia as under and we are setting out here the relevant part of the section as it stood at the material time : 8. (1) Every dealer, who, in the course of inter-State trade or commerce - (a) sells to the Government any goods; or (b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3); shall be liable to pay tax under this Act, which shall be 3 per cent of his turnover. (3) The goods referred to in clause (b) of sub-section (1) - (b) ... are goods of the classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication could be claimed by the Assessee in the certificate of registration were goods purchased for use in mining and since the process of mining came to an end when ore was extracted from the mines and washed, screened and dressed in the dressing plant and stacked at the mining site, the goods purchased by the assessee for use only in these operations were eligible for being specified in the Certificate of Registration and not the goods purchased for use in any of the subsequent operations including blending and loading through the mechanical ore-handling plant. The Sales Tax Officer held that only 11 items of goods could be regarded as goods purchased for use in mining and the remaining 25 items of goods did not fall within this description and hence were not includible in the Certificate of Registration. The Assessee preferred a revision application, but the Assistant Commissioner of Sales Tax who heard the revision application, took the same view as the Sales Tax Officer in regard to the nature of the operations carried on by the assessee and holding that the assessee was entitled to inclusion in the Certificate of Registration of only those items of goods which were purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence it preferred Appeal 107 of 1974 against the order of the Judicial Commissioner to the extent to which it was adverse against it. 4. There are two questions which primarily arise for consideration in these appeals. One is whether the blending of ore whilst loading it in the ship by means of the mechanical ore-handling plant constituted manufacture or processing of ore for sale within the meaning of Section 8(3)(b) and Rule 13 and the other is whether the process of mining, conveying the mined ore from the mining site to the riverside, carrying it by barges to the Marmagoa harbour and then blending and loading it into the ship through the mechanical ore-handling plant constituted one integrated process of mining and manufacture or processing of ore for sale, so that the items of goods purchased for use in every phase of this integrated operation could be said to be goods purchased for use in mining and manufacturing or processing of ore for sale falling within the scope and ambit of Section 8(3)(b) and Rule 13. We shall begin with the consideration of the first question, not because it has been formulated as a first question by us, but because on the answer to it depends to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 or 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) and Rule 13. The nature and extent of processing may vary from case to case : in one case the processing may be slight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compositions. 7. The Revenue however relied on the decision of the Bombay High Court in Nilgiri Ceylon Tea Supplying Co. v. State of Bombay - 10 STC 500 (Bom. HC). The assessees in this case were registered dealers in tea under the Bombay Sales Tax Act, 1953 and they purchased in bulk diverse brands of tea and without the application of any mechanical or chemical process, blended these brands of different qualities according to a certain formula evolved by them and sold the tea mixture in the market. The question arose before the Sales Tax Authorities whether the different brands of tea purchased and blended by the assessees for the purpose of producing the tea mixture could be said to have been 'processed' after the purchase within the meaning of the proviso to Section 8(a), so as to preclude the assessees from being entitled to deduct from their turnover under Section 8(a) the value of tea purchased by them. The High Court of Bombay held that the different brands of tea purchased by the assessees could not be regarded as 'processed' within the meaning of the proviso to clause (a) of Section 8, because there was "not even application of mechanical force so as to subject the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing' of ore within the meaning of Section 8(3)(b) and Rule 13 and the mechanical ore-handling plant fell within the description of "machinery, plant, equipment" used in the processing of ore for sale. It must therefore follow as a necessary corollary that if any items of goods were purchased by the assessee as being intended for use as "machinery, plant, equipment, tools, spare parts, stores, accessories, fuel or lubricants" for the mechanical ore-handling plant, they would be eligible for inclusion in the Certificate of Registration of the assessee. 8. The question which then arises is as to whether items of goods purchased by the assessee for use in carrying the ore from mining site to the riverside and from the riverside to the Marmagoa harbour could be said to be goods purchased for use in mining or in processing of ore for sale. Now there can be no doubt, and indeed this could not be seriously disputed, that the process of mining comes to an end when ore is extracted from the mines, washed, screened and dressed in the dressing plant and stacked at the mining site and the goods purchased by the assessee for use in the subsequent operations could not therefore be regarded as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough the mechanical ore-handling plant at the Marmagoa harbour and the entire operation of mining ore and processing the mined ore is one integrated process of which transportation of the mined ore from the mining site to the Marmagoa harbour is an essential part and, in the circumstances, it is difficult to see how the machinery, vehicles, barges and other items of goods used for transporting the mined ore from the mining site to the Marmagoa harbour can be excluded from consideration on the ground that they are not goods used in processing of ore for sale. The decision of this Court in Indian Copper Corporation case is directly in point and completely supports this conclusion which we are inclined to reach on principle. The assessee in that case was a company which mined copper and iron ore from its own mines, transported the ore to its factory and manufactured finished products from the ore for sale. There were several questions which arose for consideration before the court in regard to the assessee's claim for inclusion of certain items of goods in its certificate of registration and one of them was whether the locomotives and motor vehicles used for removing ore from the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for inclusion in the Certificate of Registration. 10. It is in the light of this discussion that the question whether the 14 items of goods disallowed by the Sales Tax Authorities and the Judicial Commissioner are eligible for inclusion in the Certificate of Registration has to be decided. We do not however think any useful purpose will be served by ourselves examining each of these 14 items for the purpose of deciding whether, according to the principles enunciated by us, any of them qualifies for being included in the Certificate of Registration. That is a matter which can appropriately be decided by the Sales Tax Officer in the light of the principles laid down by us and it need not occupy our time here. We accordingly allow the appeal of the assessee and direct the Sales Tax Officer to examine these 14 items of goods and determine in the light of the principles laid down in this judgment whether any of these 14 items of goods is liable to be included in the Certificate of Registration. So far as the appeal of the Union of India is concerned, we do not think that the Judicial Commissioner was in error in giving relief to the assessee in respect of 14 items of goods, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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