1981 (4) TMI 48 - HC - Income Tax

Summary

Issues Involved:
1. Entitlement to additional rebate under Section 2(5)(a)(ii) of the Finance Act, 1964.
2. Interpretation of "articles manufactured" in industries specified in the First Schedule to the Industries (Development and Regulation) Act, 1951.
3. Applicability of Clause (5)(c) of Section 2 of the Finance Act, 1964.

Issue-wise Detailed Analysis:

1. Entitlement to additional rebate under Section 2(5)(a)(ii) of the Finance Act, 1964:
The primary issue revolves around whether the assessee, engaged in the manufacture of sugar, oil, ice, and power alcohol, is entitled to an additional rebate on the export of de-oiled cake under Section 2(5)(a)(ii) of the Finance Act, 1964. The Tribunal had initially ruled in favor of the assessee, stating that the rebate was applicable as the assessee was engaged in an industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951. However, the High Court needed to ascertain if the export of de-oiled cake, a by-product, qualified for this rebate.

2. Interpretation of "articles manufactured" in industries specified in the First Schedule to the Industries (Development and Regulation) Act, 1951:
The court analyzed the language of Section 2(5)(a)(ii) and the First Schedule to the Industries Act, 1951. It noted that the Schedule lists industries by the articles they produce. The court emphasized that the rebate is applicable only to the export of articles explicitly mentioned in the First Schedule. The court concluded that the First Schedule enumerates items of articles, and only those articles are considered for the purposes of the rebate under Section 2(5)(a)(ii). Since de-oiled cake is not listed in the First Schedule, the assessee's claim for an additional rebate on its export does not hold.

3. Applicability of Clause (5)(c) of Section 2 of the Finance Act, 1964:
Clause (5)(c) of Section 2 of the Finance Act, 1964, excludes certain items, including vegetable oils and vanaspathi, from the benefits of sub-clauses (ii) and (iii) of Clause (5)(a). The court acknowledged the argument that Clause (5)(c) should be read as excluding only the export of the specific articles "vegetable oils and vanaspathi" and not their by-products. However, given the conclusion that de-oiled cake is not an article listed in the First Schedule, the court found it unnecessary to delve into the applicability of Clause (5)(c) further.

Conclusion:
The court concluded that the assessee is not entitled to the additional rebate under Section 2(5)(a)(ii) of the Finance Act, 1964, for the export of de-oiled cake. The question referred was answered in the negative and against the assessee, with the assessee required to pay the costs of the reference.