1. The short point which arises for consideration in this appeal is whether, on the facts, the said processing involves manufacture so as to enable the assessee to claim the relief under Section 80HH of the Income-tax Act, 1961.
2. The facts giving rise to this appeal, briefly, are as follows. In the manufacturing process, the raw seeds undergo various stages to make them a marketable lot. Stage one involves conveyance of the raw seeds through an elevator into the seed pre-cleaner. Stage two requires the seeds to come out of the pre-cleaner and into a machine which separates the stones from the seeds. Stage three involves fine cleaning of the seeds. Stage four involves the said seeds to go through the gravity separator machine which bifurcates the seeds according to specific weight. Stage five deals with post processing and certain tests to be carried out like physical testing, physiological testing and genetic testing. Stage six deals with assessing the intensity of a suitable dosage and seed treatment. It also involves use of chemicals whereas stage seven, which is the last stage, deals with the treated seeds which are weighed in an automatic weighing machine. The net ,result of the seven stages through which the raw seeds go is that the raw seeds which can be consumed by human beings and animals, after being subjected to the process, are no longer edible and can be used only for cultivation.
3. Mr. Desai, learned counsel appearing on behalf of the Department, vehemently urged that if one examines the various stages through which the raw seeds go and the final product, it is clear that there is no manufacturing process involved inasmuch as the seeds,-even after undergoing the process, remain seeds. In this connection, he has placed heavy reliance on the judgment of the Supreme Court in the case of CIT v. Relish Foods : [1999]237ITR59(SC) . That was a case in which the assessee claimed allowance under Section 80HH on the ground that it was an industrial undertaking which manufactured/produced articles. In that matter, the assessee purchased shrimps. Thereafter, they were peeled and frozen. On the facts, the High Court came to the conclusion that the above process did not amount to manufacture. This view was upheld by the Supreme Court, particularly in view of the fact that raw shrimps and prawns were subjected to the process of cutting of heads and tails, cleaning and freezing and the final output did not become a different commodity. In the present case, on the facts, the various stages indicate that the raw seeds which could be the subject-matter of human consumption, after undergoing the various process stages, ceased to be edible and the said seeds could only be used for cultivation. Even applying the commercial test, the Tribunal, on the facts, found that even in the market, the said final output was known to be used only for cultivation. In the circumstances, in the present case, on the facts, the Tribunal was right in coming to the conclusion that a different commodity emerged after the raw seeds underwent the above different stages. In this connection, reliance has been rightly placed by learned counsel for the assessee on the judgment of the Supreme Court in the case of State of Rajasthan v. Rajasthan Agricultural Input Dealers Association : AIR1996SC2179 . In that matter, food grains per se were found to be used as seeds for being sold, but in that form they retained the dual utility of being food grains as well as seeds. However, after it underwent the process of coating, it lost its basic character, viz., of being consumed as food by human beings and in the circumstances, the Supreme Court held that the final output ceased to be a food grain. That what emerged was an entirely different commodity and accordingly, the Supreme Court held that in that matter, the processing did amount to manufacture. This judgment of the Supreme Court also applies to the facts of the present case. In the present case also, the raw seeds were fit for consumption. However, after it underwent the various stages, it ceased to be fit for human consumption and it could only be used for sowing. In the circumstances, the Tribunal was right in granting relief to the assessee under Section 80HH of the Income-tax Act.
4. We do not see any reason to interfere with the said finding of fact. Appeal stands dismissed accordingly.