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Home Case Index All Cases Central Excise Central Excise + SC Central Excise - 1979 (10) TMI SC This

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1979 (10) TMI 77 - SC - Central Excise


Issues:
- Whether a lease of premises for retreading tyres constitutes a lease for "manufacturing purposes" under Section 106 of the Transfer of Property Act.

Analysis:
The case involved a dispute over the termination of a lease for premises used for the business of retreading tyres. The plaintiff leased the accommodation to the defendant for this purpose but later sought to evict the defendant for non-payment of rent. The defendant argued that the lease was for manufacturing purposes, requiring a longer notice period for termination under Section 106 of the Transfer of Property Act.

The trial court and the first appellate court ruled in favor of the plaintiff, holding that the retreading of tyres did not qualify as a manufacturing purpose, allowing the lease to be terminated with a 30-day notice. The defendant contended that the process of retreading old tyres involved sophisticated machinery and created a distinct commercial commodity, meeting the criteria of a manufacturing process.

The Supreme Court examined the definition of "manufacturing purposes" as per the Transfer of Property Act. Referring to previous judgments, the Court emphasized that a manufacturing process must result in a transformation where a new and distinct article emerges. Citing relevant cases, the Court reiterated that the key test is whether the process brings about a complete change in the old components to produce a commercially different article.

The Court distinguished the present case from a precedent involving fur remodelling, where a new entity was created through significant alterations. In contrast, the Court found that retreading old tyres did not lead to a commercially distinct entity, as the basic identity of the tyre remained unchanged. Drawing parallels with resoling old shoes, the Court concluded that retreading did not produce a new or distinct article but rather improved the performance of the original tyre.

In dismissing the appeal, the Court cautioned against applying definitions of "manufacture" from other enactments while interpreting the term in the Transfer of Property Act. The Court upheld the lower courts' findings that the lease in question was not for manufacturing purposes, affirming the validity of the 30-day notice for termination. The appeal was therefore dismissed with costs.

 

 

 

 

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