Whether profits derived from export of cut and polished dimensional blocks, granite or other rocks is eligible for deduction under section 80HHC
1. The deduction under section 80HHC is available, as at present, in respect of “cut and polished minerals and rocks including cut and polished granites” with effect from 1-4-1991 by virtue of insertion of item ( x) in the Twelfth Schedule to the Income-tax Act, 1961. The export of dimensional blocks of granite is presently ineligible for the benefit of section 80HHC in view of CBDT Circular No. 693, dated 17-11-1994. (Sl. No. 556)
2. On the representation made by Granite Association and CAPEXIL, the issue has been reconsidered. The representation basically brings to light that rough granite is cut to dimensional blocks in uniform colour and dimension and export proceeds are realised on volume and dimensional basis. Thus, the dimensional blocks of granite are exported only after going through a mechanical process, involving substantial value addition to rough granite.
3. The Board is, therefore, of the view that while granite can alone be considered as mineral, any process applied to granite would deprive the quality of rough mineral from the dimensional blocks of granite, which is a value added marketable commodity. When rough granite is cut to dimensional blocks of uniform colour and size, it not only undergoes mechanical process of cutting, but also certain amount of dressing and polishing is involved to remove various natural flaws such as colour variations, grain variations, joints, fissures, moles, patches, hair line cracks, etc. The profits derived from the export of such granite dimensional blocks would, accordingly, be eligible for deduction under section 80HHC of the Act.
Circular : No. 729, dated 1-11-1995.
