The ACIT, Vapi Circle, Vapi V. Shri Chandravadan K.Bagadia, Vapi

ITA 835/AHD/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0233 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-10-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 17-03-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Question of law
• Section: 80IB; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 21.10.09 DRAFTED ON: 21.10.09 ITA NO.835/AHD/2005 ASSESSMENT YEAR : 2001-2002 ASSISTANT COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI VS. SHRI CHANDRAVADAN K. BAGADIA, BLOCK NO.405, 4 TH FLOOR, VASUNDHARA CO-OP. HOUSING SOCIETY, CHALA, VAPI. PAN/GIR NO. : AACPK0441M (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI C.K.MISHRA, SR. D.R. RESPONDENT BY: NONE O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF THE LD.CIT(APPEALS)-III, SURAT, DATED 28.12.2004 ON THE SOLE GROUND THAT LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN HOLDIN G THAT CUTTING OF E&I LAMINATIONS FROM CRNGO AND CRGO SHEETS BY THE ASSES SEE IS A MANUFACTURING ACTIVITY AND ELIGIBLE FOR DEDUCTION UNDER SECTION 8 0IB OF THE INCOME TAX ACT, 1961 AND ALLOWING DEDUCTION OF RS.29,48,780/- UNDE R SECTION 80IB OF THE INCOME TAX ACT, 1961. 2. THE FACTS OF THE CASE LEADING TO THIS APPEAL ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRODUCING ELECTRICAL LAM INATIONS. THE MANUFACTURING PROCESS OF THE ASSESSEE CONSISTS OF CUTTING E&I L AMINATIONS FROM CRNGO AND CRGO SHEETS. THE LEARNED ASSESSING OFFICER WAS OF T HE VIEW THAT THE ACTIVITY OF CUTTING E&I LAMINATIONS FROM CRNGO AND CRGO SHEET S FOR PRODUCING ELECTRICAL LAMINATIONS IS NOT MANUFACTURE OF ANY AR TICLE OR THING AND THEREFORE, THE SAME WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 8 0IB OF THE ACT AND DISALLOWED ITA NO.835/AHD/ 2005 M/S.CHANDRAVADAN K. BAGADIA ASST.YEAR -2001-02 - 2 - THE CLAIM OF DEDUCTION UNDER SECTION 80IB OF RS.29, 48,780/-. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE HOLDING THAT THE ASSESSEE WAS ENGAGED IN T HE MANUFACTURING OF ELECTRICAL LAMINATES FROM FROM CRNGO AND CRGO SHEETS. 3. AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSION ER OF INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFORE US. 4. NOTICE FOR THE HEARING WAS SENT TO THE RESPONDE NT ASSESSEE BY REGD. POST WITH A.D. ON 6.08.2009 WHICH WAS RETURNED BY THE PO STAL AUTHORITY WITH THE REMARK LEFT. THUS, NONE WAS PRESENT FOR THE RES PONDENT WHEN THE CASE WAS CALLED FOR HEARING. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE VERY FAI RLY CONCEDED THAT THE ISSUE NOW STANDS COVERED BY THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ALFA LAMINA TION (2009) 22 DTR (GUJ) 161 AND THEREFORE, THE APPEAL OF THE REVENUE HAS TO BE DISMISSED. 6. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESEN TATIVE AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE, THE ASSESS EE IS ENGAGED IN THE BUSINESS OF PRODUCING ELECTRICAL LAMINATIONS. THE MANUFACTURING PROCESS OF THE ASSESSEE CONSISTS OF CUTTING E&I LAMINATIONS FROM CRNGO AN D CRGO SHEETS. THE LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT THE ACTIVITY OF CUTTING E&I LAMINATIONS FROM CRNGO AND CRGO SHEETS FOR PRODUCIN G ELECTRICAL LAMINATIONS IS NOT MANUFACTURE OF ANY ARTICLE OR THING AND THER EFORE, THE SAME WAS NOT ELIGIBLE SFOR DEDUCTION UNDER SECTION 80IB OF THE ACT AND DI SALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB OF RS.29,48,780/-. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALLOWED THE CLA IM OF THE ASSESSEE HOLDING THAT THE ASSESSEE WAS ENGAGED IN THE MANUFA CTURING OF ELECTRICAL LAMINATES FROM CRNGO AND CRGO SHEETS. WE FIND THAT THE ISSUE AT HAND IS NOW COVERED BY THE DECISION OF HON'BLE GUJARAT HIGH COURT ITA NO.835/AHD/ 2005 M/S.CHANDRAVADAN K. BAGADIA ASST.YEAR -2001-02 - 3 - IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ALFA LAMINATION (2009) 22 DTR (GUJ) 161, WHEREIN IT WAS HELD AS UNDER: - 8. THERE IS NO DISPUTE ON FACTS, INASMUCH AS IT IS AN ACCEPTED POSITION BETWEEN THE PARTIES THAT THE ASSESSEE COMPANY IS ENGAGED IN MAKING CRGO CORE LAMINATION OR TRANSFORMER CORE, A VITAL COMPONENT O F VARIOUS KINDS AND TYPES OF TRANSFORMERS USED IN POWER DISTRIBUTION. AS ALREADY NOTED, THE CORE LAMINATION IS MADE BY USING THE RAW MATERIAL KNOWN AS CRGO/CRN O. THE MAJORITY HAS RECORDED THE FOLLOWING PROCESSES AS BEING INVOLVED IN MAKING OF CORE LAMINATION AFTER PURCHASING CRGO/CRNO COILS AND/OR SHEETS. I SLITTING : SLITTING PROCESS A HIGH PRECISION COMP UTERIZED CONSTITUTES THE FIRST IMPORTANT MANUFACTURING ACTIVITY AND FUNDAMENTAL IN ORDER TO OBTAIN THE FINAL PRODUCT. THE QUALITY AND ACCURACY OF THE PROCESS LA RGELY DETERMINES THE QUALITY OF THE FINAL PRODUCT. THE SLITTING IS DONE ON THE S LITTING LINES (MACHINES) MAINTAINING TWO LOOPS SYSTEM WHICH ENSURES THAT THE GRAINS ARE NOT STRAINED OR STRETCHED DURING THE PROCESS. THE LOOP BEFORE AN D AFTER SLITTING ALSO ENSURES THE PARALLELBILITY OF THE SLITS AND MINIMUM EDGE CA MBER TO PREVENT ROUGHNESS ON THE EDGES. ALL THE SLITTING BLADES ARE MADE OF FULL Y HARDENED AND GROUND ALLOY STEEL TO ENSURE SHARPNESS AND DURABILITY PARTICULAR LY TO REMOVE CAMBER (WAVINESS), IS TAKEN TO KEEP THE EDGE BURR UNDER CO NTROL, WITHIN THE SPECIFIC TOLERANCES. II SHEARING : THE SECOND STAGE OF THE PROCESS IS SH EARING AT 45 OR 90 AS REQUIRED BY THE CUSTOMERS. STRICT TOLERANCES ARE MA INTAINED AND A UNIQUE THREE POINT LOCATION METHOD TO ENSURE ACCURACY IN DIMENSI ON IN TERMS OF ANGLE AND LENGTH. BURRS ARE CONTROLLED BY ENSURING THE BLADES ARE ALWAYS SHARP. CONTINUES LINE INSPECTION EXISTS TO ENSURE THAT ALL PARAMETER S ARE STRICTLY MAINTAINED WITHIN THE ACCEPTABLE LIMITS. III-V NOTCHING : THE THIRD AND IMPORTANT STEP OF TH E MANUFACTURING PROCESS IS THE REQUIREMENT OF V-NOTCH WHICH IS PER THE CUSTOME R S DESIGN AND POSITION OF CENTRE LIMBS. ACCURACY IS OF UTMOST IMPORTANCE DURI NG INDIVIDUAL V-NOTCHING OPERATIONS. DURING STEP LAP, THE SIZE AND POSITION OF V- NOTCH WILL DIFFER DUE TO DIFFERENT SIZES OF PLATES. IV-PUNCHING AND HOLING : THE FOURTH STEP OF THE PRO CESS IS KNOWN AS PUNCHING AND HOLING OF LIMBS AND PLATES. AS PER CUSTOMER S DRAWINGS AND CUTTING INSTRUCTIONS HOLES ARE PUNCHED ON TO THE YOKE PLATE S. THE YOKE PLATES ARE KEPT UNDER THE HOLING POWER PRESS MACHINES TO ACHIEVE TH E DESIRED POSITION OF HOLES. THE POSITION OF HOLES MAY EVEN BE OFFCENTRE WITH RE SPECT TO THE LONGITUDINAL AXIS OF THE LIMB. DURING STEP LAP, PUNCHING OF HOLES VAR IES ACCORDING TO DIFFERENT SIZES OF PLATES. THESE HOLES ARE UTILIZED DURING BO LTING AND ASSEMBLING THE CORE LAMINATION. ALL LIMBS/PLATES OR LAMINATIONS : AFTER THE ABOVE PROCESSES, PHYSICALLY ALL THE LIMBS OR PLATES ARE PREPARED HOW EVER EVERY SINGLE AND INDIVIDUAL PLATE IS YET TO BE FURTHER PROCESSED TO RESTORE OR IMPROVE ITS QUALITY CHARACTERISTICS. V-ANNEALING : THE FIFTH AND ONE OF THE MOST IMPORTA NT STEPS OF THE PROCESS IS THE ANNEALING PROCESS. THIS PROCESS IS UNDERTAKEN TO DE BURR AND RELIEVE THE STRESS AND STRAINS ON THE LIMBS/PLATES THROUGH A ROLLER HE ARTH ANNEALING FURNACE, ITA NO.835/AHD/ 2005 M/S.CHANDRAVADAN K. BAGADIA ASST.YEAR -2001-02 - 4 - CRGO ELECTRICAL STEEL AND CORE LAMINATIONS DEVELOP STRESS, STRAINS AND BURRS DURING SHIPMENT TRANSIT AND PROCESSING WHICH AFFECT S ITS QUALITY. ANNEALING PROCESS IS DOWN AS PER THE MILL S SPECIFICATION A T A TEMPERATURE OF 820 FOR 72 TO 90 SECONDS DEPENDING UPON THE THICKNESS AND GRAD E OF MATERIAL. THIS PROCESS OF ANNEALING IS TO RESTORE AND IMPROVE THE MAGNETIC AND ELECTRICAL PROPERTIES OF LAMINATION. VI-TESTING OF LAMINATION : AFTER ANNEALING, THE LAM INATIONS ARE PHYSICALLY INSPECTED FOR TECHNICAL DETAILS. THEY ARE VERIFIED TO ENSURE THAT THEY ARE AS PER CUSTOMER S DRAWINGS AND SPECIFICATIONS. KEY ASPEC TS LIKE LENGTH, WIDTH, THICKNESS, MITERING, HOLING, NOTCHING AND PHYSICAL APPEARANCES ARE VERIFIED AND EXAMINED DURING THIS PROCESS. THE VERIFICATION IS D ONE BY EXPERIENCED AND SKILLED QUALITY EXECUTIVES. TO CERTIFY AND VERIFY T HAT THE ANNEALING PROCESS HAS RESTORED OR IMPROVED THE MAGNETIC AND ELECTRICAL PR OPERTIES OF THE LAMINATION, A TEST IS CONDUCTED. THE FRANKLIN POWER SUPPLY UNIT M EASURES THE SURFACE INSULATION OF THE LAMINATION AND THE EPSTEIN TESTER IRON LOSS TESTER MEASURES THE CORE/IRON LOSS IN THE LAMINATION. THE QUALITY AND T ECHNICAL STAFF ENSURES THAT THE LAMINATION IS AS PER ITS TECHNICAL DETAILS. CERTIFI CATES ARE PREPARED AND ISSUED BY QUALITY DEPARTMENT AS PER THE RESULTS. VII-CORE STACKING : THE CORE LAMINATIONS ARE STACKE D AS PER CUSTOMER S SPECIFICATION. THE LAMINATIONS ARE STACKED IN SUCH A FASHION THAT MINIMUM MANHANDLING IS OCCURRED WHILE ASSEMBLING/PACKAGING OR TRANSPORTING THE CORE. DUE TO THE LARGE SIZES OF CORE LAMINATIONS OF POWER TRANSFORMERS, THEY STACKED AND DIRECTLY SENT TO PACKAGING DEPARTMENT FOR PACKA GING AND FORWARDING. VIII-CORE ASSEMBLY : THE TRANSFORMER LAMINATIONS FO R DISTRIBUTION TRANSFORMERS ARE ASSEMBLED AND BUILT TO FORM AN ASSEMBLED TRANSF ORMER CORE. DRAWINGS, SPECIFICATIONS AND DETAILS ARE PROVIDED BY THE CUST OMERS. THE SUPPORTING UTILITIES TO BUILD THE CORE LAMINATION ARE ALSO SUPPLIED BY T HE CUSTOMERS WHICH INCLUDE IRON CHANNELS, IRON RODS OF VARIOUS SIZES, NUTS AND BOLTS, INSULATION TAPE, CRAFT PAPER, RESINS ETC. ALL THE LIMBS/PLATES ARE INTERLE AVED IN MITERED JOINTS IN ORDER TO FACILITATE THE PASSAGE OF THE MAGNETIC/ELECTRICA L FLUX AND TO AVOID HOT SPOTS AND REDUCE NO LOAD LOSSES, NO LOAD CURRENT AND LOW NOISE LEVEL. HIGHLY EXPERIENCED, PROFESSIONAL AND TRAINED PERSONNELS AR E EMPLOYED TO ASSEMBLE THE TRANSFORMER CORE. THE PERSONNELS PRACTICE UTMOST CA RE DURING BUILDING THE CORE AND ENSURE THAT STACKING FACTOR, BUILDING, WINDOW H EIGHT, AIR GAPPING AND OTHER TECHNICAL ASPECTS ARE WITHIN TECHNICAL LIMITATIONS/ DETAILS. IX-TESTING OF ASSEMBLED CORE : AFTER ASSEMBLING AND BUILDING THE CORE, IT IS MANDATORY TO TEST AND CERTIFY THE NO LOAD LOSSES OF THE BUILT CORE. EMCO NO LOAD TESTER MEASURES AND ENSURES THAT ITS TECHNICAL RESU LTS ARE WITHIN STANDARD LIMITS SPECIFIED IN CUSTOMER S DRAWINGS. THE TECHNICAL S TAFF AND TESTING LABORATORY ARE FULLY EQUIPPED TO DETECT AND RECTIFY ANY LAPSE IN T HE BUILT CORE. CERTIFICATES ARE PREPARED BY QUALITY DEPARTMENT. X-PACKAGING AND FORWARDING : FOR PACKING THE ASSEMB LED CORES, THE WHOLE CORE IS HORIZONTALLY LAID DOWN ON TO WOODED SKIDS THEN S ECURELY WRAPPED WITH JUTE CLOTH AND PLASTIC COVERS. THE CORE IS THEN STRAPPED TIGHTLY TO THE SKIDS/PALLETS WITH STEEL STRAPS. FOR PACKING STACKED CORE LAMINAT IONS, INDIVIDUAL LIMBS/ LAMINATIONS ARE PACKED SEPARATELY WITH JUTE CLOTH A ND PLASTIC WRAPPERS FURTHER ITA NO.835/AHD/ 2005 M/S.CHANDRAVADAN K. BAGADIA ASST.YEAR -2001-02 - 5 - THEY ARE STRAPPED TIGHTLY ONTO WOODEN SKIDS/PALLETS . STRAPPING THE FINAL PRODUCT ON TO WOODEN SKIDS ENSURES AND PREVENTS ANY DAMAGED OR DISTURBANCE TO THE MATERIAL DURING TRANSPORTATION. PACKING LISTS PROVI DED TO CUSTOMERS. THE PACKAGING DEPARTMENT FOLLOWS THE PYRAMID STYLE OF P ACKING THE LAMINATIONS WHICH IS ADVANTAGEOUS DURING CORE ASSEMBLY. 9. ADMITTEDLY, THE MAJORITY OPINION HAS RECORDED TH AT THE AFORESAID ACTIVITIES IN CASES OF SOME ASSESSEES ARE WITHOUT THE PROCESS OF ANNEALING BUT THE SAID FACT BY ITSELF DOES NOT MAKE ANY DIFFERENCE. THE MAJORITY O PINION, AS EXPRESSED BY THE THIRD MEMBER, IN HIS ORDER, READS AS UNDER : '.... LOOKING TO THESE FACTS, THERE CANNOT BE TWO O PINIONS THAT THE SHAPE OF LAMINATION HAS UNDERGONE A COMPLETE CHANGE AFTER PE RFORMING VARIOUS PROCESSES. I ALSO FIND THAT THERE WAS NO DISPUTE TH AT THE RAW MATERIAL FROM WHICH THE CORE IS MADE IS CALLED CRGO COILS WHEREAS THE I TEM WHICH HAS EMERGED AFTER VARIOUS PROCESSES IS CALLED TRANSFORMER CORE. IT IS ALSO UNDISPUTED POSITION THAT THE CRGO COILS EVEN WITH FEW PROCESSES CANNOT BE USED IN A TRANSFORMER UNLESS ALL THE PROCESSES WERE COMPLETE. IT IS THE T RANSFORMER CORE ONLY WHICH IS END-PRODUCT WHICH COULD BE USED IN THE MANUFACTURIN G OF TRANSFORMER. THUS THERE CANNOT BE ANY DISPUTE THAT DUE TO VARIOUS PRO CESSES, THE PRODUCT HAS DISTINCT NAME, SHAPE AND USES. BY THESE PROCESSES T HE RAW MATERIAL LOSES ITS IDENTITY AND NEW PRODUCT COMES INTO EXISTENCE WHICH IS COMMERCIALLY RECOGNIZED AS A NEW PRODUCT. 45. I HAVE, THEREFORE, EXAMINED AS TO WHETHER OUT O F VARIOUS PROCESSES PERFORMED BY THE ASSESSEES, IT COULD BE SAID THAT T HE MANUFACTURE OF TRANSPORTER CORE HAS TAKEN PLACE. I FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS, THE EXPERTS OPINION FROM SAIL, VJTI AND ERDA WAS FILED. THESE INSTITUTIONS ARE WELL RECOGNIZED I NSTITUTIONS IN THE TECHNICAL FIELDS. ONCE TECHNICAL OPINION FROM THEM WAS FILED THE SAME SHOULD HAVE BEEN CONSIDERED ON ITS MERITS. THOUGH THE OPINION EXPRES SED BY THEM WAS NOT SACROSANCT YET ONCE THE SAME WAS FILED, THE SAME SH OULD BE ACCEPTED OR REJECTED ON MERITS. I HAVE ALSO PERUSED THE OPINION GIVEN BY THEM IN THE FORMS OF QUESTION AND ANSWER ALSO. IN THEIR OPINION THEY HAVE CONFIRM ED THAT VARIOUS ACTIVITIES PERFORMED BY THE ASSESSEES FOR MAKING THE TRANSFORM ER CORE WAS MANUFACTURING ACTIVITY. NOTHING HAS BEEN BROUGHT TO MY NOTICE TO TAKE A DIFFERENT VIEW IN THIS REGARD.' 10. THUS, THE FINDINGS OF FACTS, AFTER APPRECIATION OF EVIDENCE ON RECORD, BY THE TRIBUNAL ARE THAT CRGO COILS EVEN WITH A FEW PROCES SES, OUT OF ALL THE PROCESSES ENUMERATED HEREINABOVE, CANNOT BE USED IN A TRANSFO RMER UNLESS ALL THE PROCESSES WERE COMPLETED. THAT AFTER COMPLETION OF ALL THE PROCESSES, CRGO/CRNO COILS GET CONVERTED INTO TRANSFORMER CORE WHICH IS THE END- PRODUCT WHICH CAN BE USED IN MANUFACTURE OF TRANSFO RMER. THERE IS NO DISPUTE THAT DUE TO VARIOUS PROCESSES, THE END-PRODUCT, WHI CH IS AN INPUT FOR THE PURPOSE OF MANUFACTURING TRANSFORMER, HAS A DISTINCT NAME, SHAPE AND USE. AFTER THE RAW MATERIAL IN THE FORM OF CRGO/CRNO COILS AND/OR SHEE TS GOES THROUGH ALL THE AFORESAID PROCESSES, THE RAW MATERIAL LOSES ITS IDE NTITY AND A NEW PRODUCT COMES INTO EXISTENCE WHICH IS COMMERCIALLY DISTINCT FROM RAW MATERIAL ON WHICH THE PROCESSES HAVE BEEN PERFORMED. THE TRIBUNAL HAS FUR THER REFERRED TO VARIOUS OPINIONS OF DIFFERENT EXPERTS ON THE SUBJECT AND RE CORDED THAT SUCH TECHNICAL OPINIONS SHOULD BE CONSIDERED ON MERITS, AND THOUGH NOT SACROSANCT, EITHER THE ITA NO.835/AHD/ 2005 M/S.CHANDRAVADAN K. BAGADIA ASST.YEAR -2001-02 - 6 - SAME SHOULD BE ACCEPTED OR REJECTED ON MERITS, BUT CANNOT BE IGNORED. THAT THE EXPERTS HAVE OPINED THAT VARIOUS ACTIVITIES PERFORM ED BY THE ASSESSEE FOR MAKING THE TRANSFORMER CORE AMOUNT TO MANUFACTURING ACTIVI TIES AND NOTHING WAS POINTED OUT TO TAKE A DIFFERENT VIEW, I.E. DIFFEREN T FROM THE VIEW EXPRESSED BY THE EXPERTS. 11. IN LIGHT OF THE AFORESAID FINDINGS OF FACTS REC ORDED BY MAJORITY OF THE MEMBERS OF THE TRIBUNAL, THE COURT IS OF THE OPINIO N THAT IT CANNOT BE SAID THAT ANY SUBSTANTIAL QUESTION OF LAW IS INVOLVED. WHETHE R A PARTICULAR ACTIVITY AMOUNTS TO MANUFACTURE OR NOT WOULD ALWAYS BE A QUE STION DEPENDENT UPON THE FACTS AND EVIDENCE ON RECORD AND WOULD BE BASED ON THE FACTS OF EACH CASE. THE ONLY ISSUE WHICH WOULD CALL FOR AN INQUIRY IS AS TO WHETHER CORRECT TESTS HAVE BEEN APPLIED AFTER FINDING THE FACTS ON RECORD. THE TESTS TO ASCERTAIN WHETHER AN ACTIVITY AMOUNTS TO MANUFACTURE OR PRODUCTION OF AN ARTICLE OR THING HAVE BEEN LAID DOWN AND REITERATED BY VARIOUS DECISIONS OF TH E APEX COURT AND THIS HIGH COURT. BROADLY, THE REQUIREMENT IS THAT THE RAW MAT ERIAL MUST BE, IN THE FIRST INSTANCE, SUBJECTED TO A PROCESS OF SUCH A NATURE T HAT IT CANNOT BE TERMED TO BE THE SAME AS THE END-PRODUCT AFTER THE RAW MATERIAL UNDERGOES THE PROCESS OF MANUFACTURE. IN OTHER WORDS, THE GOODS PURCHASED AS RAW MATERIAL SHOULD GO IN AS INPUTS IN THE PROCESS OF MANUFACTURE AND THE RES ULT MUST BE MANUFACTURE OF OTHER GOODS. THE ARTICLE PRODUCED MUST BE REGARDED BY THE TRADE AS A NEW AND DISTINCT ARTICLE HAVING AN IDENTITY OF ITS OWN, AN INDEPENDENT MARKET AFTER THE COMMODITY IS SUBJECTED TO THE PROCESS OF MANUFACTUR E. THE NATURE AND EXTENT OF THE PROCESS WOULD VARY FROM CASE TO CASE, AND IN A GIVEN CASE, THERE MAY BE ONLY ONE STAGE OF PROCESSING, WHILE IN ANOTHER CASE, THE RE MAY BE SEVERAL STAGES OF PROCESSING, AND PERHAPS, A DIFFERENT KIND OF PROCES S AT EVERY STAGE. THAT WITH EVERY PROCESS, THE COMMODITY WOULD EXPERIENCE A CHA NGE, BUT ULTIMATELY, IT IS ONLY WHEN THE CHANGE, OR A SERIES OF CHANGES, BRING ABOUT A RESULT SO AS TO PRODUCE A NEW AND DISTINCT ARTICLE, THAT IT CAN BE SAID THAT THE COMMODITY USED AS RAW MATERIAL HAS BEEN CONSUMED IN THE MANUFACTUR E OF THE END-PRODUCT. TO PUT IT DIFFERENTLY, THE FINAL PRODUCT DOES NOT RETA IN THE IDENTITY OF THE RAW MATERIAL AFTER IT HAS UNDERGONE THE PROCESS OR PROC ESSES OF MANUFACTURE. [CIT VS. PRABHUDAS KISHORDAS TOBACCO PRODUCTS (P) LTD. ( 2006) 201 CTR (GUJ) 312 : (2006) 282 ITR 568 (GUJ)]. 12. APPLYING THE AFORESAID TESTS TO THE FACTS FOUND BY THE TRIBUNAL, IT IS NOT POSSIBLE TO COME TO THE CONCLUSION THAT ANY LEGAL I NFIRMITY EXISTS IN THE IMPUGNED ORDER OF THE TRIBUNAL SO AS TO GIVE RISE TO SUBSTAN TIAL QUESTION OF LAW. THE COURT IS ALSO OF THE OPINION THAT IN A CASE WHERE THE SUB JECT MATTER INVOLVES TECHNICAL ISSUE AND OPINION OF TECHNICAL EXPERTS IN THE FIELD HAS BEEN PLACED ON RECORD, UNLESS AND UNTIL SUCH OPINION OF AN EXPERT IS DISLO DGED BY PLACING ON RECORD A CONTRARY OPINION AND GIVING AN OPPORTUNITY TO THE E XPERT TO DEAL WITH SUCH CONTRARY OPINION, AND THEREAFTER EXAMINING THE EXPE RT ON THE SAID ISSUE, IT WOULD NOT BE CORRECT TO DISCARD SUCH AN OPINION SUMMARILY . IN FACT, THE COURT AND THE TRIBUNAL, OR ANY OTHER FORUM FOR THAT MATTER, WOULD BE WHOLLY ILL-EQUIPPED TO DEAL WITH SUCH TECHNICAL OPINION ON MERITS AND SHOU LD REFRAIN FROM UNDERTAKING SUCH AN EXERCISE WITHOUT FOLLOWING THE AFORESAID PR OCEDURE. THE TRIBUNAL HAS IN THE CIRCUMSTANCES RIGHTLY, WHILE RECORDING MAJORITY OPINION, GIVEN DUE CREDENCE TO THE OPINION OF THE TECHNICAL EXPERTS OF THE FIEL D. ITA NO.835/AHD/ 2005 M/S.CHANDRAVADAN K. BAGADIA ASST.YEAR -2001-02 - 7 - 13. ACCORDINGLY, THE APPEAL IS DISMISSED IN ABSENCE OF ANY SUBSTANTIAL QUESTION OF LAW. THE ABOVE DECISION WAS FOLLOWED BY THE HON'BLE GUJA RAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. NATIONAL LAMINATI ON INDUSTRIES (2009) 22 DTR (GUJ) 169. 7. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF TH E JURISDICTIONAL HON'BLE GUJARAT HIGH COURT, WE CONFIRM THE ORDER OF THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) AND DISMISS THE APPEAL OF THE R EVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON 21.10.2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 21/10/2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD