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TMI Blog2000 (7) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee through his Tax consultant, filed written submissions stating that the word 'manufacture' has not been defined in the Income-tax Act and therefore, the issue has to be considered with the help of decision of Courts rendered under various Sales-tax legislations. In this connection, he relied on the decision of Supreme Court reported as Anwarkhan Mehboob Co. v. State of Bombay, 11 STC 698, A. Hajee Abdul Shukoor Co. v. State of Madras [1964] 15 STC 719 (SC), the State of Madras v. Swasthik Tobacco Factory [1966] 17 STC 316 (SC) and Ganesh Trading Co. v. State of Haryana, 32 STC 623. The process carried on by the assessee was stated as under: "5.3 The manufacturing operations involved are as under: When we take the forest the manufacturing process is started at the very initial stage by us as under: (a) The bidi leaves shrubs are pruned at a particular height which is commonly known as katai. For the work of pruning labourers are employed. The work of katai is normally done in the months of February and March. (b) The process of pruning is carried on to get good quality and bigger sized bidi leaves. Pruning also helps in increasing the quantity of bidi leaves. (c) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng without cracking the leaves. These bundles are then bagged into gunny bags. (iv) The next process involved is of removal of moisture from the packed bags. If this moisture is not removed, the bidi leaves bundles will decay and the whole bundle will be spoiled within few days and become unfit for any use. (v) For removing the moisture from the packed bags, a special procedure is followed. Small portion of the bag is opened from the side and the bags are kept in open for few days. After the moisture is completely evaporated and checked by the Supervisors, the open portion is stuck and these bags are transported to the Godowns. All the bags must reach the godown before the onset of the Monsoon. (vi) Due to carrying out of the above operations, the tendu leaves become a unique wrapping material. The tendu leaves absorb moistures only to certain level and absorption of moisture makes the bidi leaves pliable for manufacture of bidis. The bidi leaves also gives out the moisture easily when they are kept in open for drying without losing its shape and colour. The entire operation has been perfected with experience of last many decades. (vii) The light brown colour of bidi leaves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th July 96, copy of which has been placed on the file. 4. On the other hand. the Id. senior D.R. has strongly supported the order of CIT by contending that process carried on by the assessee is a natural process carried on to preserve the tendu leaves from decaying and making them fit for marketing. According to him, the tendu leaves continue to remain tendu leaves and no different commercial item emerges out of the process carried on by the assessee. In support of his contention, he relied on various decisions reported as CIT v. Venkateswara Hatcheries (P.) Ltd. [1999] 237 ITR 174 (SC), Empire Industries Ltd. v. Union of India [1986] 162 ITR 846 (SC), Ujagar Prints v. Union of India [1989] 179 ITR 317 (SC), CIT v. Sterling Foods (Goa) [1995] 213 ITR 851 (Bom.), Gondia Bidi Leaves Contractors Association v. Union of India [1998] 229 ITR 388 (Born.) and CIT v. Ashwinkumar Gordhanbhai Bros. (P.) Ltd. [1994] 122 CTR (Guj.) 164. 5. Rival submissions of the parties have been considered carefully. The question for consideration centers around to the meaning of the word ,manufacture'. Though various tests and guidelines have been laid down by the Supreme Court in various cases from ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter that such leaves are put in bundles and then subject to process of drying in a particular manner. In this process, moisture is completely removed and the colour of leaves is changed from green to brown. Since dry leaves may crack while packing, these are watered by sprinkling for making them soft, so that the proper packing may be done. Again, the moisture is removed to avoid any decay. So, by these processes, the green tendu leaves become fit for use in making of bidis. The entire process, in our opinion, is carried out for making the green leaves fit for the market and the final product continues to have a substantial identity. The commodity continues to remain as tendu leaves throughout. Therefore, it is difficult to accept the contention of the Id. counsel for the assessee that process carried on by the assessee amounts to manufacture. 7. In this connection, it is useful to refer to the judgment of the Supreme Court in the case of CST v. D.S. Bist [1979] 44 STC 392 wherein on similar facts, though slightly in a different context, it was held that processing of green tea leaves into dry leaves did not amount to manufacture. In that case, the grower of tea leaves carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view stands fortified by the aforesaid judgment. 8. Our views are further fortified by the decision of Madhya Pradesh High Court in the case of Natwarlal v. Union of India [1998] 233 ITR 490 and by the decision of Patna High Court in the case of North Koel Kendu Leaves and Mahulam Leaves wherein it has been held on identical facts that collection of tendu leaves, pruning, prevention of deceases, plucking of green leaves, drying the same by solar energy, classification of leaves and putting them in bags etc., did not amount to activity of processing. These are direct decisions on the issue before us. Therefore, the decision of Tribunal Nagpur Bench in the case of Jayeshkumar Ambubhai Patel relied on by the ld. counsel for the assessee would not help the assessee. The other decisions of Supreme Court in the case of Dy. CST v. Pio-Food Packers [1980] 46 STC 63, in the case of Chowgule Co. (P.) Ltd 47 STC 124 and IX in the case of Tungabhadra Industries, 11 STC 827 also IX supports our view. Lastly, we would like to refer to the Supreme Court decision in the case of CST v. Harbilas Rai Sons [1968] 21 STC 17. In that case, the assessee bought pig bristols plucked by kanjars, boile ..... X X X X Extracts X X X X X X X X Extracts X X X X
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