IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26.02.2008 CORAM: THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIAN AND THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN Tax Case(Appeal) No.104 of 2008 Commissioner of Income Tax, Chennai .. Appellant -vs- Shri Swasan Chemicals (M) Pvt. Ltd 39 Hunters Road Chennai 600 112. ..Respondent TAX CASE APPEAL filed under Section 260 A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Appellate Tribunal, Madras 'C' Bench, dated 06.07.2007 in ITA No.2511/Mds/2005 against the order of the commissioner of Income Tax (Appeals) V, Chennai in ITA 300/03-04 dated 26.3.05 and against the order of the Asst. Commissioner of Income Tax, company circle VI (2), Chennai dated 31.10.03 in PAN/GIR No. AABCS 4990 D. For Appellant : Mrs.Pushya Sitaraman J U D G M E N T (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN,J) The Assessee Company is engaged in manufacturing plastic powder out of plastic granules. During the relevant assessment year is 2002- 03, the assessee company claimed deduction under section 80IB of the Income Tax Act, 1961, on the premise that the goods produced by the Assessee company is a product of manufacturing activities, which was rejected by the Assessing Officer on the ground that the activities undertaken by the Assessee in producing the plastic powder would not amount to manufacture. On appeal, the Commissioner of Income Tax Appeals, after elaborately considering the process carried out by the assessee/appellant in producing the end product plastic Alloy powder has held that the assessee is entitled to the benefit of Sec.80IA as the goods produced by the assessee/appellant is the outcome of the manufacturing process. The appeal filed by the Revenue before the Tribunal is ended in dismissal. The correctness of the same is now canvassed before this Court on formulating the following question of law:- https://hcservices.ecourts.gov.in/hcservices/ "Whether in the facts and circumstances of the case, the Tribunal was right in holding that conversion of polymer granules into powder amounts to manufacture entitling the assessee to the benefit of Sec.80IB?" 2. We heard the Senior Standing Counsel for the Revenue. 3. The ultimate fact finding authority, the Tribunal has recorded a finding that the assessee is manufacturing various products of polymer powders. The polymer powders were manufactured using the combination of various polymers like LDPE, LLDPE, HDPE, EVA of different technical parameters viz., Melting point, MFI (Specific gravity etc.) along with speciality chemicals. The products manufactured by the assessee are not plastic powders, but they are specialised polymer alloys in powder form. The manufactured polymer alloys has been used in different industries. Each product is different in nature, character and use and technically different and could be used only in a specific application. The raw materials used for the above product were of different grades, specifications and are having different melting point, specific gravity etc. The raw materials used could not be characterised as a single product as plastic granules. Plastic granules were generic term and only imply the form of the material. The assessee used various polymers as their raw material with specialised chemicals for producing the polymer alloy powder. In manufacturing process, different materials in different ratios and proportions, based on the scientific formulations and specifications, requirement, usage and application were put to manufacture along with special chemicals. The manufacturing process of each product is designed to avoid agglomeration and also to maintain technical parameters required for the finished products like bulk density, moisture content, micron size etc. Pulverising is only one of the many processes of manufacture. The products pass through mechanical meshes and seivers which are provided based on the end use for which the product is required. The finished products are completely different from the raw materials. The technical aspects viz., basic polymer, melting point, MFI, Specific gravity, etc., of the finished products are different from that of the raw material. The product range itself is wide and the products carry different technical nomenclature and even in common parlance, they bear different names like fishing powder, micro dot powder, scatter powder, low profile additives, upfilter filtration media. The process employed is a complex one and not merely limited to pulverisation or crushing. Having regard to the process employed and the finished product which is stated to be completely a different one than the raw material and after taking the aid of the Supreme Court decisions right from the case of CIT VS. N.C.Budharaja and Co. And Another (204 ITR 412), Bongaigaon Refinery and Petrochemicals vs. CIT (251 ITR 323) to that of Aspinwall and Co. Ltd. vs. CIT (2001) 251 ITR 323 and the decisions of this Court in the case of CIT VS. Taj Fire Works Industries (2007) reported in 288 ITR 92 (Mad.) and in the case of CIT VS. Premier Tobacco Packers P. Ltd., reported in 284 ITR 222 has held in favour of the assessee. https://hcservices.ecourts.gov.in/hcservices/ 4. From the facts narrated, we find that the Tribunal has come to the correct conclusion which regards no interference in this appeal and as such the appeal is dismissed. Sd/ Asst. Registrar /true copy/ Sub Asst.Registrar rg To 1. The Asst.Registrar, Income Tax Appellate Tribunel, Madras 'C' Bench, III Floor, Rajaji Bhavan, Besant Nagar, Chennai. 2. The Commissioner of Income Tax, Chennai. 3. The Asst.Commissioner of Income Tax, Company Circle VI (2), Chennai. +1 cc to M/s.Pushya Sitaraman, Advocate, SR.No.10783. Kgk (Co) krd / 12.03.08 T.C(A)No.104 of 2008 https://hcservices.ecourts.gov.in/hcservices/