Indian Kanoon - Search engine for Indian Law

82. The learned counsel for the assessee also claimed that the order of the learned Judicial Member is on the correct lines because, inter alia, it is supported by two decisions of the High Courts which are cited by him. These are the following :

(1) Nemichand Parasmal & Co. vs. Dy. CTO 55 STC 47 (Mad); and (2) Channulal Motilal 16 STC 297 (MP).

83. In both these decisions, it was held that sugar candy or diamond sugar is different from ordinary sugar. So it is claimed that a commodity commercially different from the raw material is produced by the assessee and so its activity tantamounts to manufacture and so it is entitled for deduction under s. 80-I. The learned counsel for the assessee has also sought to distinguish the cases relied upon by the learned Accountant Member on the ground that in those cases a different commercial commodity in commercial terms does not come into existence.

"Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation, a new and different article must emerge having a distinctive character, name and use."

87. The test is whether the processing has resulted in a commercially different product or not. The test to be applied is clear but the problem arises in its application, as in the present case. I am of the view that on the basis of the evidence filed by the assessee before the Revenue authorities and the Tribunal, it has to be held that a commercially different commodity has come into existence. I have quoted hereinabove the certificates filed from various pharmaceutical laboratories and the certificates are indicative of the fact that candy sugar is a different commodity from sugar and that it is not only known by a different name but has also different uses and serves different purposes from ordinary grade sugar.

Thus all these certificates do not apparently make any distinction between both the commodities ....."

94. It may be observed that in this case, the evidence produced by the assessee in terms of the various certificates filed did not show that copper sulphate powder was a commercially different commodity from copper sulphate crystal. The exact opposite is the position in the present case. The various certificates produced by the assessee from the pharmaceutical laboratories which I have extracted hereinabove show that candy sugar is a different commodity from sugar. The above conclusion is also supported by the decision of the Hon'ble Andhra Pradesh High Court in the case of Surana & Co. vs. The State of A.P. & Anr. 40 STC 192, wherein it was observed as follows :

"A goldsmith manufactures ornaments out of gold, a cobbler manufactures boots out of leather, a carpenter manufactures a box out of wood and a tailor manufactures a suit out of cloth; even though gold remains gold, leather remains leather, wood remains wood and cloth remains cloth. When the ornaments, the books, the box and the suit are prepared, there is manufacturing, because the articles brought into existence are commercially different commodities."

98. In the light of the above, it is hardly a disqualification for the chemical content of candy sugar not to be different from sugar for the process involved to be categorised as manufacture. In the present case, in the light of evidence furnished before me, to which I have adverted in the earlier part of this order, it is clear that candy sugar is put to different uses from sugar and it is generally known as a different commercial commodity. Candy sugar is used by pharmaceutical companies and it has been ascertained in the course of the hearing that 45 per cent of the sales of candy sugar by the assessee have been effected to pharmaceutical companies. There is merit in the contention of the learned Departmental Representative that a decision under sales-tax or excise laws in favour of the assessee is not decisive of the matter for ascertaining whether the process involved amounts to manufacture or not. That is because the legislative provision under those laws need not be identical with the relevant provision under the IT Act. However, independently of the cases decided under the sales-tax or excise laws cited by both the parties before me, it appears that there is sufficient evidence on record to come to the conclusion that candy sugar is a commercially different commodity from sugar. This is also the observation of Their Lordships of the Hon'ble Madhya Pradesh High Court in the case of Channulal Motilal vs. CST (supra) and the Hon'ble Andhra Pradesh High Court in the case of Surana & Co. vs. The State of A.P. & Anr. (supra). Similar is the decision of the jurisdictional High Court in the case of CST vs. Indian Oil Corporation Ltd. 41 STC 471 cited by the learned counsel for the assessee before me in which it was held that mixing of methonol with distilled water in certain proportion and sale of it as "Methimix" for using it as power augmentation fluid in aeroplane engines during take-off amounts to manufacture. I also find other cases cited by the learned Departmental Representative like Dy. CIT vs. Pio Food Packer 46 STC 63 (SC) are distinguishable. In this case, the Hon'ble Supreme Court observed as follows :