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TMI Blog2006 (7) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the claim of deduction under section 80-IB of the Income-tax Act. The Assessing Officer accordingly issued a show-cause notice to the assessee as to why the claim of deduction under section 80-IB should not be disallowed. In response thereto, assessee has filed a letter dated 11-2-2003 and other evidence explaining the manufacturing and production activity of adhesive tapes from Jumbo Tapes. The explanation furnished by the assessee were examined by the Assessing Officer, but, was not convinced with it and disallowed the claim of the assessee. 3. The assessee preferred an appeal before the CIT(A) with the submis-sions that the test applied by the Courts to ascertain the manufacturing process has been the test of comparing raw materials with the final product to find out whether the final product is regarded in the market place or by the customers on different marketable commodity. If the final product has a distinct name, character or use to a dealer or a user in the market, it is a different article. The test of goods being identified as a different article in the market perception is regarded relevant. He further explained before the CIT(A) that raw material used by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of the Advance Ruling in the case of Arthur Newell ( supra ) in which it has been held that the large size rolls imported by the company and two kinds of films produced by it would not be described as one and the same article, the different only in physical shape and formed. They accordingly, held the Indian company to be engaged in manufacturing activity. A reliance upon the judgment in the case of CIT v. Sisa Goa Ltd. [2004] 271 ITR 331 (SC) was also placed in which the mining of the ore was held to be production. Relying upon these judgments, the learned counsel for the assessee has emphatically contended that the assessee has imported rolls of adhesive tapes which have undergone mechanically and chemical process and the final product was known as "log rolls of double release foam tape" which would be either flattened for being punched cut to derive labels or stickers of the requisite customers specifications. The learned counsel for the assessee further contended that as per the ratio laid down by the various Courts on the subject the test applies to ascertain the manufacturing process has been the test of comparing raw material with the final product to find out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aper roll is mounted on a separate stand parallel to the rewinding machine. The edges of the release paper roll and the foam tape roll are synchronized end to end by manual labour and the other end of the foam tape roll is affixed on a rubber roller of the rewinding machine. After ensuring that both the rolls are ready for the process, the electric current is switched on and the release paper gets wound on the foam tape roll. The process also requires intervention of manual labour when the release paper gets jammed or stuck during the process so as to ensure smooth running of the entire process. The workers, either as per the instructions received which in turn depends upon the requirement of the customers stop the process at a particular time so as to detach the rolls on the basis of the size requirement or the machine is pre-set for cutting as per the specific length that is predetermined. Thereafter, these rolls are known as log rolls of double release foam tape which would be either flattened for being punched/cut to derive labels or stickers of the requisite customers specification or they are kept as rolls (stacked away) for the process of punching/cutting to be carried on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld to be the manufacturing activity, as different commodity emerged after the raw seeds underwent different stages, by the jurisdictional High Court. 9.1 In the case of Andaman Nicobar Islands Forest Plantation Develop-ment Corporation Ltd. v. CIT [2005] 280 ITR 118, Their Lordships of the Calcutta High Court have held that de-embarking and seasoning of tree trunks and converting them into logs would amount to a production of a new commercial article or thing within the meaning of sections 32AB, 80HH and 80J of the IT Act. Our attention was also invited to the judgment of the Apex Court in the case of Kores India Ltd. ( supra ) in which it has been held that the cutting of jumbo rolls of typewriter/telex ribbons in a smaller size through spooling machines wherein ribbons of standard length of 10 mtrs. and 5 mtrs. were cut and wound/spooled into metal spoons and 10 such spools blister packed and sealed with aluminum foil, amounts to a manufacturing activity. Their Lordships have further held that the assessee has produced ribbons in spools out of jumbo rolls and the resultant product is a distinct, identifiable article having distinct name, function and use. The resultan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shaped out of the original rolls exploiting their qualities so as to produce different marketable commodity designed to meet the varied demands of the society. The activities in which the assessee was engaged was held to be manufacturing operations and utilizing the expertise knowledge of the assessee acquired by him over a long period of service with the U.K. Company. 9.3 We have also been carried through the order of the Tribunal in the case of Punchline Forms ( supra ) in which assessee was held to be involved in manufacturing of continuous stationery for computer printing by using paper rolls, gum, carbon paper, ink etc. as raw material. It was also held in that case by the Tribunal that in order to decide as to whether it is a case of manufacture or not, one has to examine whether the inputs used in the making of the product and the end product are treated as commercially different products in the business parlance. Therefore, the guiding factor is not the purely scientific meaning but commercial usage and to use the phraseology employed by the Supreme Court in the case of Kores India Ltd. ( supra ) the commodity so made is, a new commodity, commercially known as dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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