NEMAT ENTERPRISES P.LTD, V. ACIT CIR 4(3),

MA 17/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6433 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: RA JEEV WAGLAY

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI D. K.AGARWAL (JM) AND SHRI RAJENDRA SI NGH(AM) MA NO.17/M/2011 ITA NO.7423/M/2010 ASSESSMENT YEAR 2007-08 M/S.NEMAT ENTERPRISES PVT. LTD. THE ACIT CIR.4(3), MUMBAI 43, DEOKARAN MANSION AAYAKAR BHAVAN, M.K.MARG, PRINCESS STREET, MUMBAI 400 002. MUMBAI 400 020. PAN : AABCN 9520 A APPELLANT RESPONDENT ASSESSEE BY : SHRI RAJEEV WAGLAY REVENUE BY : SHRI S.K. SINGH ORDER PER RAJENDRA SINGH (AM) THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY T HE ASSESSEE REQUESTING FOR RECTIFICATION OF THE ORDER DATED 23.12.2010 OF THE TRIBUNAL IN ITA NO.7423/M/2010 ON GROUND OF SOME APPARENT MISTAKES. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IC(2)(A)(II) IN RESPECT O F ATTARS PRODUCED BY IT IN THE UNDERTAKING AT SOLAN. DEDUCTION UNDER SECTION 80IC IS AVAILABLE ONLY IN RESPECT OF MANUFACTURING A PRODUCT AND THERE IS FURTHER RES TRICTIONS THAT THE PRODUCTS SPECIFIED IN PART B OF SCHEDULE 13 WHICH INCLUDES O RGANIC CHEMICALS ARE NOT ELIGIBLE FOR DEDUCTION. THUS IN ADDITION TO SATISFY ING THE CONDITION THAT THE ASSESSEE SHOULD BE ENGAGED IN MANUFACTURING A PRODU CT, IT IS ALSO TO BE SEEN 2 THAT THE PRODUCT MANUFACTURED IS NOT ORGANIC CHEMIC ALS. IN THIS CASE THE ASSESSEE WAS PRODUCING ATTAR WHICH IS A MANUAL MIXT URES OF AROMATIC CHEMICALS AND ESSENTIAL OILS. CIT(A) HELD THAT THE RAW MATERIALS I.E AROMATIC CHEMICALS AND ESSENTIAL OILS WERE ORGANIC CHEMICALS WHICH ON MIXING DID NOT UNDER GO ANY CHEMICAL REACTIONS TO GIVE A DIFFERENT PRODUCT AND THEREFORE THE ATTARS HAVE SAME CHARACTER AND QUALITIES AS THE ORI GINAL INGREDIENTS. THUS THE FINAL PRODUCT REMAINED ORGANIC CHEMICALS AND THERE WAS NO NEW PRODUCT MANUFACTURED. THE ASSESSEE HAD PRODUCED A REPORT FR OM VJTI A TECHNICAL INSTITUTE IN WHICH AROMATIC CHEMICALS WERE REFERRED TO AS ORGANIC CHEMICALS AND ATTAR WAS DESCRIBED AS MIXTURE CARRIED OUT ON THE B ASIS OF EXPERIENCE AND FINAL APPEAL. THERE WAS THEREFORE NO CLEAR FINDING WHETHE R ATTARS WERE ORGANIC CHEMICALS OR NOT. THE AUTHORITIES BELOW HAD THEREFO RE DISALLOWED THE CLAIM. 2.1 BEFORE THE TRIBUNAL ALSO THE ASSESSEE RELIED ON THE VJTI REPORT AND ALSO REFERRED TO SEVERAL JUDGMENTS IN RELATION TO COMMON PARLANCE TEST AND IRREVERSIBLE PROCESS TEST, CLARIFICATION MADE UNDER CENTRAL EXCISE ACT TO FIND OUT WHETHER THE PROCESS WAS MANUFACTURING OR NOT. THE T RIBUNAL CONSIDERED ALL THOSE JUDGMENTS AND ALSO WENT THROUGH THE VJTI REPO RT. THE TRIBUNAL NOTED THAT THE REPORT HAD ONLY STATED THAT ATTAR WAS DELIBERAT E MIXTURE CARRIED OUT ON THE BASIS OF EXPERIENCE AND FINAL APPEAL. THERE WAS NO CLEAR FINDING WHETHER ATTAR WAS AN ORGANIC CHEMICAL OR NOT. THE TRIBUNAL OBSERV ED THAT THIS WAS A TECHNICAL ISSUE WHICH COULD BE EASILY FOUND OUT BY SPECIALIZE D INVESTIGATION WHETHER ATTAR WAS AN ORGANIC CHEMICAL OR NOT OR WHETHER THE PROCE SS OR REACTION WAS IRREVERSIBLE OR NOT. THE TRIBUNAL OBSERVED THAT IN A MANUFACTURING PROCESS ORIGINAL INGREDIENTS ARE SUBSUMED IN THE FINAL PROD UCT WHICH WAS SUBSTANTIALLY DIFFERENT FROM THE ORIGINAL INGREDIENTS WHICH COULD BE EASILY FOUND OUT BY THE TECHNICAL REPORT. THE TRIBUNAL THEREFORE HELD THAT THE MATTER SHOULD BE 3 EXAMINED AFRESH WITH THE ASSISTANCE OF SPECIALIZED SCIENTIFIC INSTITUTES SUCH AS CISR OR ANY OTHER REPUTED INSTITUTE AS THE REPORT O F VJTI WAS NOT CLEAR. THE TRIBUNAL ACCORDINGLY RESTORED THE ISSUE TO THE FILE OF AO. 3. THE ASSESSEE IN THE MISCELLANEOUS APPLICATION HA S SUBMITTED THAT THE TRIBUNAL HAD OMITTED TO CONSIDER THE SECOND PAGE OF THE REPORT PLACED AT PAGE 141 OF THE PAPER BOOK WHICH CONTAINED THE NOTINGS A TTACHED TO THE REPORT IN WHICH IT WAS MENTIONED THAT THE PROCESS WAS IRREVER SIBLE AND THAT THE ATTARS WERE NOT ORGANIC CHEMICALS. IT HAS ALSO BEEN MENTIO NED THAT THE VARIOUS JUDGMENTS STATED BY THE ASSESSEE WERE NOT PROPERLY APPRECIATED BY THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE PARTIES PERUSED THE RECOR DS AND CONSIDERED THE MATTER CAREFULLY. THE MAIN MISTAKE POINTED OUT BY T HE ASSESSEE IS THAT THE TRIBUNAL OMITTED TO CONSIDER THE NOTINGS APPENDED T O THE REPORT OF VJTI IN WHICH IT WAS MENTIONED THAT THE PROCESS OF PRODUCTION OF ATTAR WAS IRREVERSIBLE AND THAT ATTARS WERE NOT ORGANIC CHEMICALS. ON CAREFUL PERUSAL OF REPORT WE FIND THAT THE TRIBUNAL HAD MADE NO MISTAKE IN CONSIDERIN G THE REPORT OF VJTI. THE FINAL REPORT WHICH HAD BEEN SIGNED BY THE DIRECTOR OF THE INSTITUTE PLACED AT PAGE 140 OF THE PAPER BOOK ONLY MENTIONED THAT THE ATTARS WERE DELIBERATE MIXTURES CARRIED OUT ON THE BASIS OF EXPERIENCE AND FINAL APPEAL. THE REPORT DID NOT STATE WHETHER THE PROCESS WAS IRREVERSIBLE OR W HETHER ATTARS WERE ORGANIC CHEMICALS OR NOT. THE NOTE ENCLOSED WITH THE REPORT AND PLACED AT PAGE 141 OF THE PAPER BOOK HAD BEEN SIGNED BY SOME LOWER AUTHOR ITY AND OBVIOUSLY HAD NOT BEEN APPROVED BY THE DIRECTOR AS THE POINTS MADE IN THE NOTINGS HAVE NOT BEEN INCORPORATED IN THE FINAL REPORT. IT IS THE FINAL R EPORT SIGNED BY DIRECTOR WHICH HAS TO BE TAKEN INTO ACCOUNT AND NOTE PUT UP BY THE LOWER AUTHORITIES WHICH 4 DOES NOT FIND MENTION IN THE FINAL REPORT. THE FINA L REPORT NOT BEING CLEAR ON THE ASPECT RELATING TO PROCESS OF MANUFACTURING OR WHET HER THE ATTARS WERE ORGANIC CHEMICALS, TRIBUNAL HELD THE MATTER BEING TECHNICAL HAS TO BE CONSIDERED AFRESH AFTER MAKING REFERENCE TO SOME OTHER REPUTED INSTIT UTES ALSO. THE ASSESSEE HAD REFERRED TO SEVERAL JUDGMENTS IN RELATION TO THE TE ST OF IRREVERSIBLE PROCESS, COMMON PARLANCE TEST AND CLASSIFICATION UNDER THE E XCISE ACT WHICH HAD BEEN DULY CONSIDERED BY THE TRIBUNAL IN THE ORDER. AS TH E BASIC FACTS WHETHER THE CHEMICAL PROCESS WAS IRREVERSIBLE AND WHETHER ATTAR S WERE ORGANIC CHEMICALS BEING HIGHLY TECHNICAL WERE NOT CLEAR, THE TRIBUNAL RESTORED THE ISSUE FOR THE FILE OF AO FOR FRESH EXAMINATION. WE SEE NO APPARENT MI STAKE IN THE ORDER OF TRIBUNAL. THE TRIBUNAL CAN RECTIFY ONLY THE APPAREN T MISTAKES AND IT HAS NO POWER TO REVIEW ITS OWN DECISION. WE THEREFORE SEE NO MERIT IN THE MISCELLANEOUS APPLICATION AND THE SAME IS ACCORDING LY REJECTED. 5. IN THE RESULT THE MISCELLANEOUS APPLICATION OF T HE ASSESSEE STANDS REJECTED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 9.04.2011. SD/- SD/- ( D. K. AGARWAL ) (RAJENDRA SIN GH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 29.04.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR B BENCH, ITAT, MUMBAI 5 // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK