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TMI Blog2013 (9) TMI 1139X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 7 of his order that the appellant claimed that their activity amounted to manufacture there by claiming that they were a manufacturing concern, whereas the appellant had been claiming that their activity would amount to manufacture/production, laying more stress on production. 4) The Learned CIT (A) erred in coming to the conclusion in para 7.1 of his order that the appellant as well as M/s. Sesa Goa Ltd., are engaged in the same line of business i.e. export of iron ore and as such the decision of the Honourable Supreme Court in the case of M/s. Sesa Goa Ltd., is directly applicable to the case of the appellant. Factually, although the appellant and M/s. Sesa Goa Ltd., are both involved in the export of Iron Ore, their process involved in manufacture/production as also the raw material used for producing the finished product are totally different. The Learned CIT (A) failed to consider this factual aspect and arrived at the incorrect decision that the appellant is not entitled to deduction U/s.10B. 5) The Learned CIT(A) erred in not correctly interpreting the decision of the Honourable Supreme Court in the case of M/s. Sesa Goa Ltd. In this decision, the Honourable Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al may be allowed and the appellant may be granted deduction U/s. 10B as claimed by them in the return of income. 2. The only issue involved in the grounds taken by the Assessee in the appeal is disallowance of the claim of deduction u/s 10B by the Revenue. 3. The brief facts relating to the case are that the Assessee, a Partnership firm, filed the return for the impugned assessment year on 17.9.2009 at an income of Rs. 1,05,11,410/-. The Assessee claimed exemption u/s 10B amounting to Rs. 8,39,57,651/-. The AO asked for the justification of the exemption. The Assessee pointed out that the Assessee is a 100% Export-Oriented Unit. The Assessee purchases unusable tailing rejects and mineral waste which has very low Fe content in the range of 38-43%. The Assessee converts it into usable iron ore fines with high Fe content of more than 58% and exports the same to China by carrying out the various processes through various machines installed by the Assessee. It was also submitted that the whole manufacturing process brings a change by way that the earlier commodity i.e. raw material and wasteful tailings and mineral waste loses its original identity and their emerges a marketable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peration, which is factually incorrect. The assessee started its business from the A.Y 2006- 2007 relevant to the A.Y 2007-2008, which can be seen from the returns of income filed by the Assessee. 7.3 The assessee has claimed a net profit of 9.63 crores on a gross turnover of 12.45 crores which is more than 75% of the turnover and expenditure debited towards beneficiation/processing is very small compared to the turnover and profit, disclosed. 7.4 Such a fantastic profit margin also proves that raw iron ore is not waste as claimed by the assessee, otherwise it would not fetch such high returns. 8. Therefore, in view of the facts of this case and legal issues involved in this case I do not see any infirmity in the order passed by the AO. Respectfully following the decision given by the Honourable Supreme Court in the case M/.s Sesa Goa, the order of the AO is confirmed and appeal of the assessee on this Ground is dismissed." 3.1 Before us, the ld. AR submitted the written submission as under : Submission of written arguments in the above case on behalf of the Appellant: The above mentioned Appellant has preferred an Appeal before the honorable Income Tax Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w material is mostly in the semi liquid form, in the form of a slurry whereas the finished goods are in the form of dry powder. Similarly, the chemical composition of the raw material and finished goods are totally different - the raw material contains impurities, water and also its Fe content is in the range of 38% to 43% where as the finished goods is free from impurities, and its Fe content is more than 58%. For conversion of the wasteful raw material into exportable and valuable finished goods, a series of mechanical and chemical processes are involved. Since the tailing rejects and mineral waste is otherwise not usable or consumable, and is available in abundance, if not sold it involves substantial further expenditure for disposal of the tailing rejects and mineral waste as per the norms prescribed by Pollution Control Board and as such this raw material is sold at very low price if a buyer is found for this material. The Appellant claimed deduction under section 10B of the Income Tax Act, 1961, for this process of conversion of tailing rejects and mineral waste into exportable finished goods since this amounts to manufacture/production as contemplated in section 10B of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction whereas in the case of Sesa, Goa, the issue involved was claim of investment allowance U/s 32A on Tippers etc., which transported the extracted iron ore from mining sites to the processing unit treating them and plant and machinery. Further, the honorable Supreme Court held that the act of extraction and processing of iron ore amounts to manufacture/production for purposes of claim of investment allowance for tippers etc., treating them as machineries used in the manufacture/production of iron ore. It has nowhere given a decision or finding that processing of iron ore in itself does not amount to manufacture/production. The issue that whether extraction of iron ore as well as processing of iron ore if taken independently of each other would also amount to manufacture/production independent of each other was not deliberated and answered since it was not the issue before the honorable Supreme Court. Thus the learned Assessing Officer as also the learned CIT,(Appeals) wrongly applied the decision of the honorable Supreme Court referred to above to the case of the Appellant and held that the Appellant's process does not amount to manufacture/production since the Appellant d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a different chemical and physical composition than the ROM (Crude Ore) even though in common parlance both may be called iron ore. It is no more remains as crude ores. Tailing no more remains tailing but converted into a powder. In view of this clause and the decision of the Supreme Court in the case of Chowgule & Co., it can be held that the assessee is engaged in these units in 'manufacturing". The honorable ITAT bench has in the order discussed various other decisions in coming to this conclusion. The honorable bench distinguished the decision of the honorable Supreme Court in the case of CIT vs Sesa Goa, reported at 271 ITR 331 and held that the said decision is not applicable to the facts of the case. Further the Bench has relied on the decision of the honorable Supreme Court in the case of CIT, N.C Budharaja & Co., reported at 204 ITR 412 to determine the meaning of production and manufacture. The honorable bench has squarely relied on the decision of the Kerala High Court in the case of Tata Tea Ltd., vs. ACIT reported at 338 ITR 285, as also the decision of ITAT Special Bench, Kolkata in the case of Madhu Jayanti International Ltd., vs. DCIT, Circle 1, Kolkata reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit than normal. The learned CIT, Appeals has given a finding that such a fantastic profit margin also proves raw iron ore is not a waste as claimed by the Assessee, otherwise it would not fetch such high returns. The finding of the learned CIT< (Appeals) is contrary to facts. It is a well known fact that tailing rejects and mineral waste is the discarded end product of the mining process which is in semi liquid form and is dumped into tailing pond. In fact to dispose it off as per the norms of pollution control board, it involves substantial expenditure and as such the miners are more than willing to sell it at throw away price if they find a buyer since this waste is generated in huge quantities and is available in abundance. This being the case the Appellant has purchased the tailing rejects and mineral waste at the prevailing market price and due to the value addition made after incorporating various mechanical and chemical processes the other wise waste is converted into valuable finished goods. The Appellant has declared the profit correctly based on the actual expenditure involved in the process. Therefore the finding of the learned CIT, Appeals, need not be given any cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture, production and processing". The definition of manufacture given in the special economic zone act 2005 in section 2(r) was also taken into consideration. The learned special bench squarely relied on the decision of the honorable Supreme Court in the case of M/s. Chowgule & Co. Pvt. Ltd., vs. Union of India (1981) 1 SCC 653 AIR 1981 SC 014, Aspinwall & Co. Ltd., vs. CIT (251) ITR 323 (SC), Brooke Bond Lipton India Ltd., vs. State of Karnataka (1998) 109 STC 235(Kar.), Girnar Industries vs. CIT (2011) 338 ITR 277, Kerala and also Tata Tea Ltd., (supra). The honorable High Court took into consideration the decision of the Supreme Court in the case of CIT vs. Sesa Goa Ltd., reported at 271 ITR 331 and distinguished the same from the facts of the case. In spite of taking into consideration, the decision of the honorable Supreme Court in the case of Sesa Goa, (supra), the honorable High Court relying on the decisions cited above held that the Assessee's process amounted to manufacture /production and as such held that the assessee was entitled to deduction under section 10B of the Income Tax Act, 1961. The Appellant would also like to draw kind attention of the bench to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT vs. Sesa Goa, 271 ITR 331 for the proposition that for manufacture, there must be extraction as well as processing of the ore. The Assessee is not carrying on any extraction activity. The Assessee was buying the ore, may be rejections having low density of iron. What the Assessee was producing was also iron ore which has Fe content of more than 58%. There is no change in the mechanical composition of the raw materials as well as the finished product. 3.3 We have carefully considered the rival submissions and perused the material on record. We have also gone through the case laws as has been relied on before us. The only issue involved before us is whether the Assessee is processing the tailing rejects into iron ore whether it can be said that the Assessee is engaged in manufacture so that the Assessee can be entitled for exemption u/s 10B. The AO rejected the claim of the Assessee only on the basis that in his opinion the Assessee was not engaged in the manufacturing or production of an article. The Activity of the Assessee of improving the grade of purchased iron ore can at best be termed as process but cannot tantamount to manufacture or production of an article or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. This provision applies to any undertaking which manufactures or produces any article or thing. Explanation (i) to sec. 10B provides that the expression „100% Export Oriented Unit' means an undertaking which has been approved by the Board appointed in this behalf by the Central Government in exercise of the powers confirmed by sec. 14 of the Industries (Development &Regulation) Act, 1951 and the riles made there under. Explanation (iii) which was there at the time of the said sec. 10B defined the word „manufacture' for the purpose of the said section to include any - (a) process or (b) assembling or (c) recording of programme on disc, tape, perforated media or other information storage device. Thus, „process' was included within the word manufacture for the purpose of sec. 10B. Explanation (iv) of the said sec. 10B further provided that the word „produce' for the purpose of said section, in relation to any article or thing shall include production of computer programme. CBDT vide its circular no. 528 dated 16/12/1988 176 ITR ST. 154 explained the [provisions enacted by the Finance Act, 1988 under para 8.2 of the circular. In this circular, CBDT had cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the business, the same proportion, as the export turnover in respect of such article or things or computer software bears to the total turnover of business - Sub-section (4); iii. The assessee must furnish in the prescribed form No. 56G, along with his return of income, the report of a Chartered Accountant certifying that the deduction has been correctly claimed in accordance with the provisions of section 10B - Sub-section (5); iv. Where the assessee avails of the benefits of section 10A or section 10B, it will not be eligible for other tax exemptions available under other provisions of the Act during the period of 10 years - Sub-section (6); v. "manufacture" shall have the same meaning as assigned to it in clause (r) of section 2 of the Special Economic Zones Act, 2005. 43.3 Subsequently, Special Economic Zone Act, 2005 was passed by the Parliament in May, 2005, which was brought into effect w.e.f. 23/06/2005. Section 2(r) of Special Economic Zone Act defines the expression „manufacture' as under:- "Manufacture" means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinct name, character ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing meaning of the word „process': "to subject to some special process or treatment, to subject (especially raw material) to a process of manufacture, development of preparation for the market etc.; to convert into marketable form as livestock by slaughtering, grain by milling, cotton by spinning, milk by pasteurizing, fruits and vegetables by sorting and repacking." Where therefore any commodity is subjected to a process or treatment with a view to its "development or preparation for the market", as, for example, by sorting and repacking fruits and vegetables, it would amount to processing of the commodity within the meaning of Section 8(3)(b) and Rule 13. The nature 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 with each process suffered, the commodity would experience a change. Wherever a commodity undergoes a change as a result of some operation performed on it or in regard to it, such operation would amount to processing of the commodity. The nature and extent of change is not material. It may be that camphor powder may just be compressed into camphor cubes by application of me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, the assessee is not only blending iron ore but carrying out various processes as to make iron ore called crude ore useable to Ispat Industries. The activity of the units of the assessee for Amona and Chitradurga involved converting input into output consist of crushing (crude ore called ROM which appeared to be pieces of rocks as we noted during the course of hearing on the basis of sample shown to us) screening, washing, stacking, loading in barges, river transportation to the boat and export in ships. The finished product which comes out are called lumps and fines which are used for Ispat Industries and brought by the foreign buyers. The finished product technically after processing had different name. As shown to us during the course of hearing we noted that the lumps and fines are entirely different from crude ore. During conversion of crude ore into lumps and fines, waste is generated which is called tailing and discharged into tailing pond. In Codli Unit these tailings which are in liquid form are converted into ultra fine. In our opinion as we noted from this physical sample also crude ore is entirely different from the lumps and fine in physical appearance used and chem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining activity for the purpose of production of mineral ores would come within the ambit of the word „production' since ore is „a thing', which is the result of human activity or effort. 43.7 According to Webster International English Dictionary, the verb "produce" means to bring forward, beget, etc. The juxtaposition of the word "manufacture" with „agriculture' and „horticulture' is significant and cannot be lost sight of. The intention in employing the word "produced" obviously was to introduce an element of volition and effort involving the employment of some process for bringing into existence some goods. 43.8 In paragraph 7 of its in the case of Chowgule & C0 (P) Ltd. Vs. UOI (supra), Hon'ble Apex Court also considered the question whether the different brands of tea purchased and blended by the assesses for the purpose producing the tea mixture could be said to have been „processed', after the purchase, within the meaning of the proviso to section 8(a), so as to preclude the assesses from being entitled to deduct their turnover under section 8(a), so as to preclude the value of the tea purchased by them. The relevant observations made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by them, there was plainly and indubitably processing of the different brands of tea, because these brands of tea experienced, as a result of mixing, qualitative change, in that the tea mixture which came into existence was of different quality and flavor than the different brands of tea which went into the mixture. There are, it is true, some observations in the judgment of the Bombay High Court which seem to suggest that if instead of manual application of energy in mixing the different brands of tea, there had been application of mechanical force in producing the tea mixture, the court might have come to a different conclusion and these observations were relied upon by the Assessee, since in the present case the blending was done by application of mechanical force, but we do not think 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 whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with a view to its "development or preparation for the market" it would amount to processing of the commodity within the meaning of Central Sales Tax Act, 1956. Hon'ble Supreme Court, in the said judgment, did not consider the expression "manufacture" since the question was decided only on the expression "processing". However, considering the judgment of the Bombay High Court in the case of Nilgiri Tea Co. [1959] 10 STC 500, Hon'ble Supreme Court observed that, for the purpose of producing a tea mixture of a different kind and quality according to a formula evolved by them, there was plainly and indubitably processing of the different brands of tea, because these brands of tea experienced, as a result of a qualitative change, in that the tea mixture which came into existence was of a quality and flavor from the different brands of tea which went into the mixture. 43.11 Hon'ble Kerala High Court had the occasion to consider whether assessee is engaged in the manufacture or production of an article or thing when assessee was exclusively engaged in blending, packaging and export of tea bags, tea packets and bulk tea packs in the case of Tata Tea Ltd. Vs. ACIT 338 ITR 285. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding, packing and export of tea in the special economic zones and free trade zones, would continue to enjoy tax exemption under section 10A of the Act and section 10AA of the Act respectively. The assessee was allowed exemption on the profit derived by its 100% EOU engaged in blending, packing and export of tea bags and tea packets. Hon'ble High Court held as under: "The finding of this court is that the purpose of incorporation of section 2(r) of the Special Economic Zones Act, 2005, into section 10AA of the Income-tax Act is to provide a liberal meaning to the word "manufacture" which takes in even blending, refrigeration, etc. It was noticed by this court that the definitions of "manufacture" contained in the above definition clauses are very liberal which takes in even processing like blending. The contention of the counsel for the assessee is that the purpose of removal of the definition of "manufacture" from section 10B was not to provide a restricted meaning for that term contained in the main section because if that was so, then the Legislature would have only modified the definition clause. Further, the definition of 100 per cent export oriented unit even after the amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43.12 Hon'ble high court in this case, in our opinion, has clearly laid down that once the assessee is recognized as a 100% EOU for engaging in an activity and assessee is engaged in the same very activity, if the exemption is denied to the assessee on the ground that there is no production or manufacturing but only processing of the products exported in the 100% export oriented unit, the same would defeat the very object of section 10B. The Hon'ble high court took the view that the decision of the Hon'ble Supreme Court in Tara Agency's case 292 ITR 444 will not apply even though Hon'ble Supreme Court in that case has held that blending of tea does not amount to manufacture or production of an article but is only processing. Thus, the Hon'ble Kerala high court in the case of Tata Tea Ltd. (supra) gave the clear cut finding impliedly that even if the assessee is engaged in processing and is recognized as 100% EOU, it will be entitled for exemption claimed u/s 10B of the Act. 43.13 The crux of the submissions of the Ld. special Counsel for the department is that the assessee is engaged in these 100% export oriented units only in processing of iron ore and by processing it get it u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court and the Supreme Court held as under:- "32. The provisions of section 10AA of the Act was inserted on the statute book by the Special Economic Zones Act, 2005 w.e.f. 10.02.2006. Even prior to the enactment of the said SEZ Act, Special Economic Zones (including units therein) were all along treated like EQU / FTZ / EPZ for all purposes whatsoever and were dealt within the Exim Policy accordingly. Section 2(k) of the Special Economic Zone Act, 2005 defines the expression "Existing Special Economic Zone" to mean every Special Economic Zone which is in existence on or before the commencement of the said Act. Section 2(e) defines the expression "existing unit" to mean every unit which has been set up on or before the commencement of the said Act in an existing Special Economic Zone. In other words, admittedly all Special Economic Zones were also being governed by the Exim Policy prior to the enactment of SEZ Act, 2005. Clause (iii) of Explanation 1 to section 1OAA lays down that the expression "manufacture" shall have the same meaning as assigned to it in section 2(r) of the Special Economic Zones Act, 2005, which definition is as under: "Manufacture" means to make, produce, fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture", with its grammatical variations, means a change in a non-living physical object or article or thing, - (a) resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or (b) bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure; The aforesaid definition of the expression "manufacture", although brought into the statute book w.e.f. 01.04.2009, was applied by the Hon'ble Supreme Court even for the assessment year 2001-02 in ITO v. Arihant Tiles and Marbles Pvt. Ltd. (2010) 320 ITR 79, 82 (SC) on the ground that Parliament had taken note of ground reality in inserting section 2(29BA) in the Income Tax Law. The said definition was again applied by the Hon'ble Supreme Court in CIT V. Emptee Poly-Yarn Pvt. Ltd. (2010) "Green Tea" means the variety of manufactured tea commercially known as green tea; 320 ITR 665,667 (SC). 33. The Assessee Company carries out its operations of blending, packaging and export of tea bags, tea packets and bulk tea packs in its modern factory, well equipped with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... U, which is granted by the Development Commissioner, Ministry of Commerce & Industry, Govt. of India. The assessee claimed exemption u/s. 10B of the Act for AYs 2000-01 onwards, which was granted upto the AY 2003-04. However, for the AY 2004-05, exemption was declined for the reasons that by the Finance Act, 2000, the definition of `manufacture' which included 'processing' contained in section 1OB of the Act was deleted w.e.f. 01.04.2001. The argument of the department is that manufacture or production had liberal meaning under the definition clause contained in section 10B of the Act until its deletion which covers even processing and, therefore, blending "and packaging of tea for export was treated as 'manufacture' or 'production' of an article qualifying for exemption. We are of the considered view that the contention of the assessee that the scheme of income tax exemption available to units in the SEZ u/s. TOA of the Act and units in the free trade zone provided u/s, 10AA of the Act and the exemption available to 100% EOU u/s. 10B of the Act are very similar in nature and the wordings of the statutory provisions are similar in nature is correct. We find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. blending, packing and export of tea in the free trade zone shall also be entitled to enjoy tax exemption under Section 10A of the Act. 37. Accordingly, we answer the question referred in favour of the assessee by holding that the assessees who are in the business of blending and processing of tea and export thereof, in 100% EOUs are manufacturer/ producer of the tea for the purpose of claiming exemption u/s.10B of the Act. Further, assessees who are in the business of blending and processing of tea hi respect of undertakings in free trade zones are manufacturer/producer of tea for the purpose of claiming exemption u/s. 10A of the Act. We have examined and discussed the facts in the case of Madhu Jayanti International Ltd. and found that there is blending of tea and consequently the assessee is eligible for exemption u/s. 10B of the Act as prayed for. Their appeal for the AY 2004-05 is allowed. As regards other appeals and that of the interveners, the matters are restored back to the Division Bench, with directions to decide those appeals in the light of principle laid down herein, so far as the claim for relief u/s. 10A or 10B of the Act in accordance with law." 44.1 From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture' given in section 2(29BA) of the Income-tax Act, 1961 and also discussing the provisions of section 80-IA(2)(iii) and after going through various decisions, held as under: "22. Applying the above tests laid down by this Court in CIT Vs. N.C. Budharaja and Co. 204 ITR 412 (SC) to the facts of the present cases, we are of the view that blocks converted into polished slabs and tiles after undergoing the process indicated above certainly results in emergence of a new and distinct commodity. The original block does not remain the marble block, it becomes a slab or tile. In the circumstances, not only there is manufacture but also an activity which is something beyond manufacture and which brings a new product into existence and, therefore, on the facts of these cases, we are of the view that the High Court was right in coming to the conclusion that the activity undertaken by the respondents-assessees did constitute manufacture or production in terms of Section 80IA of the Income Tax Act, 1961. 23. Before concluding, we would like to make one observation. If the contention of the Department is to be accepted, namely that the activity undertaken by the respondents herein is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. There is no confusion in the provision of law provided under section 10B. The exemption is available only to manufacture or production. It is not available for processing." Although subsequently this Tribunal has rectified the order under section 254 vide order dated 19th July, 2007 on the application of the assessee and took the view that the assessee is entitled for exemption under section 10B as the assessee-company itself is extracting the entire iron ore from own mines and mines taken on lease and thereafter processing the same. We cannot look into the finding of the coordinate Bench whether they have correctly interpreted the decision of Supreme Court in 271 ITR 331 or not. The Ld. AR vehemently contended that the decision dt. 12th July, 2007 of this Tribunal in that case got overruled by the decision of this Tribunal vide order dt. 19th July, 2007 but we do not agree on this with the Ld. AR. We have gone through the order dt. 12 th July, 2007 as well as order dt. 19th July, 2007 but we noted that the Tribunal rectified the order as the Tribunal noted the assessee itself was extracting the entire ores and processing the same. Thus, the assessee complied with both the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate bench is not binding. In this regard, Hon'ble High Court observed as under :- "Nor are we satisfied that in order to enable the second Tribunal to depart from the finding of the first Tribunal it is essential that there must be some fresh facts which must be placed before the second Tribunal which were not placed before the first Tribunal. If the first Tribunal failed to take into consideration material facts, facts which had a considerable bearing upon the ultimate decision, and if the second Tribunal was satisfied that the decision was arrived at because of the failure to take into consideration those material facts and that if these material facts had been taken into consideration the decision would have been different, then the second Tribunal would be in the same position to revise the earlier decision as if fresh facts had been placed before it. On principle there is not much difference between fresh facts being placed before the second Tribunal and the second Tribunal taking into consideration certain material facts which the first Tribunal failed to take into consideration". 45.5 The other exception is for non-binding of the coordinate Bench decision is when there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of blending of tea i.e processing of tea and export thereof in 100% EOU can be said to be manufacturer / producer of tea for the purpose of section 10A/10B. When the Supreme Court has already held in the case of Tara Agencies 292 ITR 444 that blending of tea is processing. Thus, the Special Bench has decided the issue in respect of 100% EOU for the purpose of exemption under section 10B whether an assessee who is engaged in processing can be said to be engaged in manufacture / processing. We also noted that Kerala High Court in the case of Tata Tea Ltd. Vs. ACIT 338 ITR 285 dealt with the issue in respect of 100% EOU for the purpose of exemption under section 10B whether the processing of tea is treated as manufacture or production of an article qualifying for exemption. Not only these decisions subsequent to the decision of the coordinate Bench, Supreme Court has also decided following cases in which also, in our opinion, similar issue whether processing is manufacture or production has been decided. These decisions are given as under:- i) India Cine Agencies 308 ITR 98 (SC) ii) Oracle Software India Ltd. 320 ITR 546 (SC) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent to the date of order in the case of Chowgule & Co. Ltd. Vs. ACIT in ITA No. 162/PNJ/2006 in our opinion, the issue raised by the Revenue is not fit to be referred to Special Bench as the decisions of Special Bench / High Court / Supreme Court are binding on us in preference to the decision of the coordinate Bench. Thus, we have in our opinion germane reason not to refer this issue for constitution of a Special Bench as in our opinion even if the Special Bench is constituted the earlier decision of the Special Bench in the case of Madhu Jayanti will be binding until and unless there are special and germane reasons for constituting a large Special Bench. We, therefore, dismiss the application dt. 18/01/2013 moved by the Revenue for constituting the Special Bench. 45.8 Now coming back to the issue whether an assessee who is engaged in processing for upgrading and making the commodity fit for export and which is a 100% EOU approved by the competent authority can be said to have been engaged in manufacture or production of an article or thing. We have noted that this issue is duly covered by the decision of the Special Bench in the case of Madhu Jayanti International Ltd.(supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the parties, we hold that all the three 100% EOU engaged in processing so as to make crude ore and waste i.e tailings usable or marketable are entitled for exemption u/s 10B subject to the other conditions for exemption under section 10B are being fulfilled." From the aforesaid decision, it is apparent that this Tribunal in the case of Codli Unit of Sesa Goa Ltd. which was engaged in processing the tailings into iron ore, in which the Assessee is also engaged, this Tribunal took the view that the Assessee was engaged in manufacturing. This Tribunal clearly laid down that during conversion of the crude ore into lumps and fines, waste is generated which is called tailing and discharged into the tailing pond. In Codli unit, these tailings which are in liquid form are converted into ultra fine. The crude ore is entirely different from the lumps and fines in physical appearance, use and chemical composition. Even technical names are also different, similarly what comes as output from the input in Codli unit that is also different in physical appearance and chemical composition. The Tribunal clearly held that they do not agree with the ld. DR that there is no change in physical and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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