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TMI Blog2009 (10) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... icant being manufacturer of hard coke is liable to tax. Being aggrieved by the assessment order, the dealer/opposite party filed the appeal before the Deputy Commissioner (Appeals), Trade Tax, Varanasi which has been rejected vide order dated November 15, 1995. The dealer filed second appeal before the Tribunal. The Tribunal by the impugned order allowed the appeal and declared the turnover of hard coke as non-taxable. The Tribunal held that the coal and hard coke are not a different commodity but are the same commodity and since it is made out of the tax-paid coal the hard coke is not further liable to tax. Heard Sri B.K. Pandey, learned standing counsel for the applicant and Sri Piyush Agrawal, learned counsel appearing on behalf of the opposite party. Sri B.K. Pandey, learned standing counsel, submitted that the assessing authority found that the hard coke was manufactured after the processing of coal breeze. He submitted that as against 12058 tons of coal, 8938 ton hard coke was manufactured. The difference has been shown as burning loss. He submitted that the Tribunal in its order has also observed that in the manufacturing of hard coke from coal a manufacturing process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture and extent of processing may vary from case to case; in one case the processing may be slight and in another it may be extensive; but in each process suffered the commodity would experience a change. The court further observed that whatever be the means employed for carrying out of processing operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes processing. In the case of Chowgule Co. [1981] 47 STC 124; 1981 UPTC 702 the apex court has held as follows (at page 131 of STC): 7. The Revenue however relied on the decision of the Bombay High Court in Nilgiri Ceylon Tea Supplying Co. v. State of Bombay [1959] 10 STC 500. The assessees in this case were registered dealers in tea under the Bombay Sales Tax Act, 1953, and they purchased in bulk diverse brands of tea and without the application of any mechanical or chemical process, blended these brands of different qualities according to a certain formula evolved by them and sold the tea mixture in the market. The question arose before the sales tax authorities whether the different brands of tea purchased and blended by the assessees for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the assessee, since in the present case the blending was done by application of mechanical force, but we do not think that that is the correct test to be applied for the purpose of determining whether there is 'processing'. The question is not whether there is manual application of energy or there is application of mechanical force. Whatever be the means employed for the purpose of carrying out the operation, it is the effect of the operation on the commodity that is material for the purpose of determining whether the operation constitutes 'processing'. We are clearly of the view that the blending of ore in the course of loading through the mechanical ore handling plant amounted to 'processing' of ore within the meaning of section 8(3)(b) and rule 13 and the mechanical ore handling plant fell within the description of 'machinery, plant, equipment' used in the processing of ore for sale. It must therefore follow as a necessary corollary that if any items of goods were purchased by the assessee as being intended for use as 'machinery, plant, equipment, tools, spare parts, stores, accessories, fuel or lubricants' for the mechanical ore hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly one of manufacture. In Ashirwad Ispat Udyog v. State Level Committee [1999] 112 STC 207; [1998] 8 SCC 85; [1999] UPTC 93, apex court considered the scope of the definition of the term manufacture under the provisions of section 2(j) of the Madhya Pradesh General Sales Tax Act, 1958, which is in pari materia with section 2(e1) of the Act, and held that manufacture is not confined to a new marketable commodity but also includes old articles made saleable. The court held as under (at page 210 of STC): Decisions construing the meaning of the word 'manufacture' as used in other statutes do not apply unless the definition of that word in the particular statute under consideration is similar to that construed in the decisions. The plain construction of the special definition of the word in a particular Act must prevail. In the special definition given in section 2(j) of the said Act 'manufacture' has been defined as including a process or manner of producing, collecting, extracting, preparing or making any goods. There can be no doubt whatsoever that 'collecting' goods does not result in the production of a new article. There is, therefore, inherent ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d strictly and the definition clause must be examined in a correct perspective giving the meaning of each word contained therein. The court held as under: 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. . . The essential point thus is that in manufacture, something is brought into existence which is different from that originally existed in the sense that the thing produced is by itself a commercially different commodity whereas in the case of processing it is not necessary to produce a commercially different article. Processing essentially effectuates a change in the form, contour, physical appearance or chemical combination or otherwise by artificial or natural means and in its more complicated form involves progressive action in performing, producing or making something. (Vide Corn Products Refining Co. v. Federal Trade Commission [1944] C.C.A. 7; 144 F 2d 211). In Union of India v. Delhi Cloth and General Mills Co. Ltd. AIR 1963 SC 791, the apex court explained the word manufacture used as a verb which is generally understood to mean bringing into existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to the processing, treating or adapting changes or not, is not very material. . . . The learned counsel for the appellant Shri Rakesh Dwivedi submitted that coal briquettes are produced merely by using a binding material such as clay or molasses along with the coal, and hence he submitted that the identity does not change. We regret, we cannot agree with his submission. Firstly, we do not agree that the coal briquettes are the same commercial commodity as coal. In our opinion, coal is a raw material for making coal briquettes. The method of manufacturing coal briquettes has been stated above, and this certainly is a processing, treating or adapting the coal. The appellant manufactures coal briquettes by compiling the hard coke breeze mechanically with the help of cinders which is usually five per cent of the total hard coke breeze. In the compilation of the hard coke breeze, 95 per cent of the hard coke breeze, which is known as coal-dust or breeze coke is taken which is compiled with the help of clay and molasses. Hence, in our opinion, coal briquettes is a different commercial commodity from coal. Moreover, even if it is not a different commercial commodity, the proces ..... X X X X Extracts X X X X X X X X Extracts X X X X
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