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TMI Blog2019 (2) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... om duty which is only granted to manufacturing units. Thus as per the term defined by Section 2 (29BA) of the Act would be any activity that results in the creation of an article for object that is new and distinct from the raw material that go into its manufacture and having a different name, character , use and / or integral structure. It cannot be denied that the wooden crates are completely distinct from the planks, nails, fevicol foam etc. that are used to make them and have a use of their own. The change brought in wooden planks by hand by the labours using small cutters would amount as manufacture a product, which is obtained as wooden crates by the assessee. We find that the original commodity used by the assessee as raw material are a wooden sleepers / planks which are go into sizes to according to the orders placed with the assessee then the cut two sizes wooden planks are subject to smoothening use of planting machine then the planks are treated to fix the evafoam and thermocol to make the material carried in the crates jerk resistant then the planks are stapler and nail are used industrial nails and staplers, therefore, the result of the process is wooden crates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of wooden crates specially customized and designed for Asahi Glass. It was also submitted that the assessee has been granted registration by the District Industries Centre as manufacturer. Similarly the assessee is registered under the Factories Act for which factory is doing manufacturing activity. The assessee has also granted exemption from the excise duty by the Central Excise and the manufacturing units. It was further submitted that the assessed s activity of manufacturing are covered by the definition prescribed u/s 2(29BA) inserted by Finance Act, 2009 w.e.f. 01.04.2009. The reply and submissions filed by the assessee has been reproduced by the AO at page 6 to 7 of the assessment order which contains some case laws in support of his claim. However, the AO was of the view that the case laws cited by the assessee are not applicable in this case. The activities of the assessee are purely assembling of wooden planks with nail into wooden crates, if nails are removed, it will get its original shape as it was before used. Therefore these facts proved that the activities of the assessee are assembling and not manufacturing. Accordingly the AO has disallowed the deduction u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to manufacturing or not that would render the activity eligible for the deduction u/s 80IC. Thus, the crucial aspect for determination is the issue of whether the process employed by the asessee amount to manufacture or not. 15. The term manufacture has been defined by section 2(29)BA of the I.T. Act to mean any activity that result in the creation of an article or object that is new and distinct from the raw material that go into its manufacture and having a different name, character, use and/or integral structure. It cannot be denied that the wooden crates are completely distinct from the planks, nails, fevicol, foam etc. that are used to make them and have a use of their own .The fact that they are a different product is recogniesd by both the Central Excise classification and the VAT which assigns them specific codes and serial nos. for the purposes of taxation. Thus, from this stand point they fulfil the criteria of being manufactured products. The AO seems to disagree primarily on two issues i) That the work does not involve plant and machinery and is labor intensive. ii) That if the crates are dismantled the original products would return back. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of manufacturing. 18. Furthermore, the Hon ble Madras High Court has held in the case of CIT Vs. Jamal Photo Industries (I) Pvt. Ltd. There cannot be any dispute that the expression manufacture involves the concept of changes effected to a basic raw matenal resulting in the emergence of, or transformation into, a new commercial commodity. But it is not necessary that the original articleor material should have lost its identity completely. All that is required is to find outwhether as a result of the operation in question, a totally different commodity had been produced having its own name, identity, character or end use 19. From the above, it is quite clear that the mere fact that dismantling a manufacture article may bring back the original products (albeit in the form of waste), would not detract from the fact that a new and distinct product had emerged as a result of the process and therefore, it cannot be said that the same amounted to assembling and not manufacturing. 20. Finally, the Hon'ble Karnataka High Court has held in CIT Vs. Darshak Ltd. 247 ITR 489 (2001) The Supreme Court in Empire Industries Ltd. Anr. vs. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing activity has been seen at the premises of the companies except preparing the wooden crates by employing 13 to 15 laborers, hence making of wooden crates amounts to assembling and not manufacturing activities, therefore, the assessee is not entitled to claim deduction u/s 80IC which is allowable in respect of manufacturing activities. Ld. Sr. DR referred the photographs appearing at page 3 to 7 of the assessment order. The Ld. Sr. DR further drew our attention to page 8 of the assessment order which is finding of the assessing officer. The Ld. Sr. DR further referred a synopsis wherein definition of manufacturing given under the Excise Act has been discussed by the Hon ble Supreme Court in the case of Union of India vs. Delhi Cloth and General Mills Company Ltd. AIR 1963 SC 791 wherein the Hon ble Supreme Court held that the word manufacture is generally understood to mean as bringing into existence a new substance and does not merely mean to produce some change in substance . The Court quoted with approval a passage appearing in Volume 26 of the permanent Edition of the Words and Phrases as below : Manufacture implies a change, but, every change is not man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore it was contended that when four departments of Government has considered the assessee is a manufacturing unit than no contrary view can be taken by other department which is inconsistent with the stands taken by other four department. The Ld. Counsel further supported his above view by placing reliance on the decision of ITAT Delhi Bench in ITA no. 215/Del/2014 and others dated 30/05/2018 wherein para 13 it was observed that where the assessee is making packing material as per the requirement of the product with the aid and help of various kinds of machines as incorporated above and it is also registered as manufacturer under the various laws, then such a general inference based on statement of employees cannot be given much credence. Thus, we do not find any substantial merits in the grounds raised by the Revenue that assessee is not engaged in the manufacturing of packaging material (PB page 37- 38). 10. Ld. Counsel for the assessee further placed reliance on the decision of Hon ble Bombay High Court in the case of Pr. CIT - 31 vs. M/s. Unique Gem Jewellery ITA no. 1623 of 2016 dated 23/01/2019 wherein the Hon ble High Court in para 7 page 43 of paper book which is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e operation/ process falls within the meaning of the word manufacture . Therefore, it was contended that the Ld. CIT(A) has rightly allowed the appeal of the assessee and consequently deduction u/s 80IC of the Act. 12. We have heard the rival submissions and perused the material on record and case laws cited by the parties. We find that the original products used by the assessee are wooden planks, evafoam, thermocol, adhesive tape/ pheumatic, stapler pins, and nails. The final product obtained in the process by the assessee is wooden crates which are a distinct and separate article different from all the products that go into it manufacture and recognized as a distinct product by Central Excise and VAT classification which has assigned the product a specific HS Code and serial no. respectively in the Central Excise and VAT Schedules. It is further seen that as per Uttrakhand VAT Act, 2005, wooden crates were recognized as a distinct product and item. Similarly the assessee has been registered as manufacture with District Industries Centre and registered as a factory under the Factories Act. Further the assessee has been granted exemption from Excise Duty and has availed ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in Moouat vs. Betts Motors Ltd. 1958 (3) All ER 402, that two Departments of the Government cannot in law adopt contrary or inconsistent stands or raise inconsistent contentions or act at a cross purposes. Therefore when the 4 departments of the Government has considered the assessee as a manufacturing unit therefore, the other department of the Government cannot take a contrary view or stand inconsistent with the view taken by the other departments of the Government. 14. Coming to the observation of the Ld. AO that the activities of the assessee are purely assembling of wooden planks with nail into wooden crates and if nails are removed it will cut its original shape as it was before used. However, we find that the original commodity used by the assessee as raw material are a wooden sleepers / planks which are go into sizes to according to the orders placed with the assessee then the cut two sizes wooden planks are subject to smoothening use of planting machine then the planks are treated to fix the evafoam and thermocol to make the material carried in the crates jerk resistant then the planks are stapler and nail are used industrial nails and staplers, therefore, the ..... 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