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TMI Blog1981 (6) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to the development rebate at such higher rate. The assessee purchases special steel, subjects it to heat treatment in the course of processing, and manufactures wires as an end-product. The assessee contends that he, as a manufacturer of wires by the aforesaid process, is entitled to development rebate at a higher rate which is admissible to a manufacturer of special steels. The contention has been accepted by the Income-tax Appellate Tribunal. Thereupon at the instance of the Revenue the following question has been referred to us under s. 256(1) of the I.T. Act, 1961 : " Whether, the Income-tax Appellate Tribunal was right in law in holding that the assessee was entitled to the higher rate of development rebate of 25% under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to heat treatment. The output or the ultimate product manufactured by the assessee was the wire drawn from special steel. " Special steel " as a product manufactured by an industry is one product. Wire manufactured from out of special steel after subjecting it to a process of heating and drawing is a distinct product. This aspect cannot be over-emphasised, for, the answer to the problem hinges on this distinction in the basic character of the two products. What the assessee produces is the latter category of article (wire drawn from special steels) and not the former (special steel in itself). Can it then be said that the assessee was manufacturing " special steel " in order to claim development rebate at a higher rate ? The assessee will h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an ice-cream from the milk purchased from the market contend that he is producing milk? He manufactures " ice-cream " from the milk. He does not produce " milk ". So also the assessee manufactures wire from the special steel. Special steel admittedly is purchased by him from outside. Somebody else manufactured the special steel. If what the assessee has purchased from the market in order to manufacture his end-product is itself special steel, it is obvious that the end-product is not special steel. Of course, it is an article manufactured " from " special steel or an article " made of " special steel. That, however, is not the article which is listed in the Fifth Schedule. The article which is listed in the Fifth Schedule in respect of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall within the description of iron and steel (metal). We are unable to discern any reasoning or principle enunciated in that decision which can be called into aid by the assessee. We are concerned with an altogether different entry in that we are not concerned with a different end-product, viz., de wire " manufactured from a special steel. Merely because M. S. Rods were considered to fall within the description of " Iron and steel (metal) ", it does not follow that what was manufactured was special steel and would fall within the description of special steel. We are not prepared to hold that the manufacture of wire " from " special steel is manufacture "of " special steel within the meaning of the relevant entry read with the aforesaid pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a raw material and could not be held to be goods manufactured from iron and steel. To be noted is that the item in the Madhya Bharat Sales Tax Act did not read 'Iron and steel (metal)' as in the statute before us and no other goods made out of iron and steel was specifically exempted. " It is a decision in the facts of that particular case and no principle of law has been enunciated which would make us take a view different from the view which we are taking. We will be required to amend the entry in the guise of interpreting it by reading the entry special steel," as if it reads as " articles manufactured from special steel in order to uphold the contention of the assessee. We cannot do so by recourse to any known canon of construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hard quality) will be allowed (25%). " The AAC was of the opinion that this entry supported the view canvassed by the assessee. In our opinion, in point of fact these entries lend support to the view which we are inclined to take rather than to the view which has found favour with the AAC. Entry at Sr. No. A-48, in terms, provides for exemption in respect of export of " steel wire Products made of special steel ". What we wish to emphasize is that the entry in terms provides for exemption in respect of steel wire products of special steel. It does not refer to special steel simpliciter. This would go to show that where there was an intention to grant exemption in respect of products manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X
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