Commissioner of Income-tax Vs. Indore Plastics P. Ltd. - Court Judgment

Excerpt:
- section 2(f): [dipak misra, k.k. lahoti & rajendra menon, jj] service tax - packaging and bottling of liquor whether amounts to manufacture within meaning of section 2(f) of central excise act 1944? finance act 932 of 1994), section 65 (76 b) (as amended on 16.6.2005) - held, the first limb of the inclusive definition of the manufacture under section 2(f) of central excise act has a very wide connotation. as the definition clause lays down an inclusive facet, the term manufacture has to be construed in a natural and plain manner and would include any process incidental or ancillary to the completion of a manufactured product. keeping in view the context in which the term manufacture has been used, it would take in its fold incidental and ancillary process in the manufacture or finishing of any manufactured product. it does not leave any room for doubt that an allied process should be integral and inextricable part of manufacture of completeness and presentability of the manufactured product. section 65(76b) of finance act used the words but it does not include. thus it is a definition which has the inclusive as well as exclusive facet. by virtue of the same it may include certain things and exclude others. it is well settled principle of law that a definition is not to be read in isolation and has to read in context of phrase which it defines, releasing that function of a definition is to give precision and certainty to the word or phrase which would otherwise be vague and uncertain. regard being had to the exclusionary fact in the finance act, though a limited one it would exclude the manufacturing process as defined under section 2(f) of the 1944 act. keeping in view the aforesaid dictionary clauses and circulars issued by the c.b.e.c. it is quite luminescent that would manufacture has to be understood in a broader sense and not to be confined or restricted to the excisable product in the act. it would include all processes which amount to manufacture whether or not the final product is an excisable product. in the process of manufacturing of country spirit, the over proof spirit which is not potable is reduced to issuable strength, which is potable. colouring and flavouring agents are added at the time of maturation. thereafter the liquor is supplied in sealed bottles to the retail contractors. this is the process of treatment given to over proof spirit in order to render it fit for human consumption in the form of country liquor. if the process is analysed there cannot be any scintilla of doubt that the process involves the manufacturing one under the provisions of section 2(f) of central excise act, 1944. as per the m.p. country spirits rules as well as clause 6 of the tender conditions it is mandatory for a distiller to supply country liquor in sealed bottles and not otherwise. therefore, packaging and bottling of liquor come within the ambit and sweep of manufacture within the meaning of clause (f) of section 2 central excise act, 1944 in view of the definition contained in section 65(76b) of the finance act especially keeping in view the exclusionary facet and further regard being had to the circular issued by central board of excise and customs.1. heard mr. r.l. jain, the learned counsel for the applicant-department, and mr. sanjay patwa, the learned counsel for the respondent-assessee.2. this is an application under section 256(2) of the income-tax act, 1961, as it stood before the amendment of 1999, praying for calling reference from the income-tax appellate tribunal, indore bench, indore, for resolution of the question, as extracted in para. 4 of the application, which is said to be a question of law.3. the dispute is regarding payments made to the assessee in instalments, by one shri r.c. khosla, in the relevant assessment year, amounting to rs. 2,31,390. apparently, shri khosla was the promoter and managing director of the respondent-company. according to the assessing authority as also the commissioner of income-tax (appeals), the said payment was in contravention of section 269ss of the income-tax act and the assessee was, therefore, liable to pay penalty. the penalty so imposed was, however, vacated in second appeal by the tribunal on the finding that the said payment was not by way of deposit or loan, but towards adjustments of the amount drawn by shri khosla, from the company's account. we find ourselves in full agreement with the tribunal that the aforesaid finding is a finding of fact, and, therefore, does not give rise to any question of law to be answered by this court.4. we, therefore, decline the prayer and dismiss the application.