Case Law Details
RELEVANT PARAGRAPH
2. The short question that arises for consideration is whether blending and packing of tea for export in the industrial unit in the Special Economic Zone amount to manufacture or production of an article qualifying for exemption under Section 10A of the Act, that is, during the period prior to introduction of “blending” as “manufacture” with effect from 10.2.2006.
There is no dispute on facts in as much as assessee is admittedly engaged in purchase of tea produced in various estates from various auction centres and in me industrial unit they blend the tea so procured into various grades of blended tea, repack in their name and export it to various countries. The Development Commissioner, Special Economic Zone has issued permanent registration certificate to the assessee declaring mat the assessee is engaged in manufacture and export of blended tea (in balk, in consumer packs and tea bags). The case of the department is mat unless the item exported is treated as a product manufactured in the industrial unit of the assessee, the assessee is not entitled to exemption. On the other hand, the assessee’s case is that every unit in the Special Economic zone enjoys income tax exemption on the profit derived on the export of their products. Prior to the passing of the Special Economic Zone Act, 2005, the assessee’s industry was located in the Zone previously known as the Cochin Export Proressing Zone which is a Free Trade Zone covered by Section 10A of the Act Since assessee’s eligibility for exemption has to be considered under Section 10A, the relevant portion of the said Section is extracted hereunder for easy reference:
“S.10A Special provision in respect of newly established undertakings in free trade zone, etc.-(l) Subject to the provisions of this section, a deduction of such profits and gains as are derived by an undertaking from the export of articles or things or computer software for a period often consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee.
Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to deduction referred to in this sub-section only for the unexpired period of the aforesaid ten consecutive assessment years:
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