JUDGMENT 1. - In this special appeal, a short but interesting question that arises for consideration is whether the blending of different types of tea by the assessee amounts to production of a thing or an article by an industrial undertaking within the meaning of the expression as used in section 80-IB of the Income-tax Act, 1961, though it may not amount to manufacture of goods in the sense of bringing into existence altogether a new and different thing as known differently in the commercial parlance in the market where tea is transacted. 2. The appellant-assessee has set up a small-scale industrial unit in the backward industrial area of Banswara. The appellant’s case is that it purchased tea leaves powder/granules and these tea leaves are collected by marking the name of the garden and lot number. The samples of available quality are dispatched to the “blend master” who after going through his own process, suggests the mixing ratio and process of mixing for making the perfect blend of tea. The activity of blending of different types of leaves obtained from different gardens in a definite ratio results in production of a commodity having its own identity and though may not amount to manufacture, it amounts to production, which is a word of wider connotation. Therefore, it being an industrial undertaking set up in the backward industrial area and fulfilling all other conditions, is entitled to avail of the benefit of deduction equal to 100 per cent. of its profits derived from its business of producing and trading of in blended tea under the specific brand name of “Maa Betee Tea”. 3. The Assessing Officer has found that the assessee purchases different types of tea, blends them in different proportion and thereafter sells the tea. The mixing of different types of tea in no way can be said to be manufacture or production of article or thing for the purpose of claiming benefit of deduction under section 80-IA/80-IB of the Income-tax Act of 1961. The activity of the assessee does not involve any manufacturing but only a processing. There is no element of manufacture in this case. The commodity continues to remain in its original identity even after blending of different kinds of tea in a certain proportion. The activity of the assessee does not involve any manufacturing but only a processing. There is no element of manufacture in this case. The commodity continues to remain in its original identity even after blending of different kinds of tea in a certain proportion. The assessing authority placed reliance on Deputy CST (Law), Board of Revenue (Taxes) v. Pio Food Packers [1980] 46 STC 63 (SC) , for holding that even after blending, tea remained tea and blending does not bring about a distinct marketable commodity and it does not amount to manufacture. 4. The assessee before preferring an appeal against the order of assessment dated December 4, 2003, relating to the assessment year 2001-02 had approached this court by way of a writ petition being S.B. Civil Writ Petition No. 161 of 2004 (D.D. Shah and Bros. v. Union of India [2005] 278 ITR 572) . He has relied on a decision of this court in the case of Dhunseri Tea Industries v. State of Rajasthan [2001] 1 Tax Update 235 (S.B. Civil Writ Petition No. 3102 of 1999, decided on August 31, 2001) which had arisen under the Rajasthan Sales Tax Act, wherein this court has held that the process of blending tea amounts to manufacture and has held M/s. Dhunseri Tea Industries eligible to avail of the benefit of the incentive scheme under the Rajasthan Sales Tax Act, 1954. He has also relied on a circular of the Government of India under the Department of Industries, dated November 20, 1996, wherein the industries engaged in manufacture of made tea or in the process of packing or repacking were held to be eligible for registration under the Small Scale Industries Development Scheme. 5. The learned single judge dismissed the writ petition on the ground of availability of alternative remedy and noticed that after the filing of the writ petition, the petitioner has also filed an appeal before the Deputy Commissioner of Income-tax (Appeals) which was still pending. 6. 5. The learned single judge dismissed the writ petition on the ground of availability of alternative remedy and noticed that after the filing of the writ petition, the petitioner has also filed an appeal before the Deputy Commissioner of Income-tax (Appeals) which was still pending. 6. Ordinarily, we would have also agreed with the learned single judge in not interfering at the stage of passing of the assessment order, but during the course of hearing, at the admission stage, learned counsel for the appellant stated that he shall not press any issue except on the question whether blending or processing of tea amounts to manufacture/production and the said question being of recurring nature and likely to affect the successive assessment years as well as other dealers engaged in the like business the said issue requires to be settled by this court to minimise litigation on this issue. Considering the aforesaid circumstances, it appears to us to be a fit case in which availing of alternative remedy may not be considered a ground for not examining the issue on the merits, thus, we admitted the special appeal. 7. Section 80-IB, under which the assessee has claimed deduction, was substituted for section 80-IA vide the Finance Act, 1999, with effect from April 1, 2000. Prior to its enactment, section 80-IA was inserted in the Act of 1961 vide the Finance (No. 2) Act, 1991, with effect from April 1, 1991. Section 80-IA, as it was originally enacted, provided that where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking or an enterprise of any eligible business as stated in sub-section (4) of section 80-IA, the assessee was entitled to avail of deduction equal to 100 per cent. of the profits and gains derived from such industrial undertaking for ten consecutive assessment years. Section 80-IA, in its original incarnation envisaged “where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking, etc., carrying on eligible business, he would be allowed, in computing the total income, a deduction from such profits and gains of an amount equal to the percentage specified in sub-section (5) and for such number of assessment years as is specified in sub-section (6)”. The condition which an industrial undertaking was required to fulfil for availing of the benefit was that it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India. 8. In the case of an industrial undertaking located in the industrially backward State, it was entitled to claim 100 per cent. deduction of its profits and gains. However, by the insertion of section 80-IB as aforesaid, its application was confined to an enterprise carrying on the business of developing, maintaining and operating any infrastructure facility or scientific and industrial research and development or providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service or network of trunking and electronic data interchange services, any undertaking which develops and operates or maintains an infrastructure facility or an undertaking which is set up in India for generation or distribution of power or starts transmission or distribution by laying new lines of transmission. 9. Section 80-IB, which is applicable to the assessment year in question envisaged that where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections as the eligible business and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. 10. The bone of contention is the condition precedent which the industrial undertaking is required to fulfil before it avail of the aforesaid benefit. It is not in dispute before us that if the condition, to which we shall presently refer, is fulfilled by the assessee, he is entitled to avail of 100 per cent. 10. The bone of contention is the condition precedent which the industrial undertaking is required to fulfil before it avail of the aforesaid benefit. It is not in dispute before us that if the condition, to which we shall presently refer, is fulfilled by the assessee, he is entitled to avail of 100 per cent. deduction of the profits and gains derived from the business of such undertaking under clause (iii) of sub-section (2) of section 80-IB, which reads as under : “(iii) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India : Provided that the condition in this clause shall, in relation to a small scale industrial undertaking or an industrial undertaking referred to in sub-section (4) shall apply if the words ‘not being any article or thing specified in the list in the Eleventh Schedule’ had been omitted.” 11. Learned counsel for the appellant contends that the Legislature has specifically used two expressions, namely, “manufactures” or “produces” any article or thing, therefore, the expressions “manufactures” and “produces” are not the same thing. The expression, “produces” cannot be identical and synonymous with the expression “manufactures”. The expression “produces” has a wider connotation than the expression “manufactures”. Bringing into existence altogether a new and distinct commodity than the raw material on which the manufacture process is applied is not an essential condition to be fulfilled to fall within the province of the expression “produce”. A thing which is not manufactured may still be produced. He relies for that purpose on the decision in the case of CIT v. N.C. Budharaja and Co. [1993] 204 ITR 412 (SC) . On the same premise, learned counsel placed reliance on a Bench decision of the Karnataka High Court in the case of Brooke Bond Lipton India Ltd. v. State of Karnataka [1998] 109 STC 265 , and on a decision of the Calcutta High Court in the case of G.A. Renderian Ltd. v. CIT [1984] 145 ITR 387 for the purpose of holding that blending of tea by the process as stated by the appellant amounts to production of tea of specified quality and strength. Learned counsel also relied on a Supreme Court decision in the case of Chowgule and Co. Learned counsel also relied on a Supreme Court decision in the case of Chowgule and Co. P. Ltd. v. Union of India [1981] 47 STC 124 , in which the decision of the Bombay High Court in the case of Nilgiri Ceylon Tea Supplying Co. v. State of Bombay [1959] 10 STC 500 , was partially overruled. 12. Learned counsel for the Revenue, on the other hand, urged that blending of tea of different grades and making it a mixture of tea of different grades for giving it a brand name for marketing neither amounts to “manufacture” of tea in the ordinary sense, as no new and distinct commodity than the tea which has gone into the process has come into existence nor does it amount to production of any thing or article so as to be considered production, because tea as a thing is already in existence when the blending takes place. The blended mixture remains the same as is known commercially and is not distinct from any other tea. He places reliance on a decision of the Calcutta High Court in the case of Appeejay P. Ltd. v. CIT [1994] 206 ITR 367 and a decision of the Bombay High Court in the case of J.B. Advani and Co. P. Ltd. v. CIT [1992] 193 ITR 781 . He contended that blending of different tea may amount to process and process simpliciter does not result in “manufacture” or “production” of tea which is an essential condition for claiming relief under section 80-IB by any industrial undertaking. He also relies on a decision of the Supreme Court in the case of Chowgule and Co. P. Ltd. v. Union of India [1981] 47 STC 124 , which is also relied on by learned counsel for the assessee. 13. Learned counsel further places reliance on Deputy CST (Law), Board of Revenue (Taxes) v. Pio Food Packers [1980] 46 STC 63 (SC) wherein food processing for the purpose of selling pineapple in tins was held not to be manufacture because no new commercially distinct commodity comes into existence. 14. The first question we have to consider is whether there is a difference between the expressions “produce” and “manufacture” or they are exactly synonyms. The words “manufacture” or “production” have not been defined in the Income-tax Act, therefore, have to be accepted in their ordinary meaning as part of the statute. 14. The first question we have to consider is whether there is a difference between the expressions “produce” and “manufacture” or they are exactly synonyms. The words “manufacture” or “production” have not been defined in the Income-tax Act, therefore, have to be accepted in their ordinary meaning as part of the statute. The expressions “manufacture” and “produce/production” have definite connotations in the judicial vocabulary and have been held to be not an expression of art. The expression “manufacture” has been explained in Black’s Law Dictionary as under : “The process or operation of making goods or any material produced by hand, by machinery or by other agency ; anything made from raw materials by the hand, by machinery, or by art. The production of articles for use from raw and prepared materials by giving such materials new forms, qualities, properties or combinations, whether by hand labour or machine”. 15. The aforesaid explanation has been given as noun. 16. Black’s Law Dictionary defines “manufacture” as the making of goods or wares by manual labour or by machinery, especially on a large scale, has expanded as workmanship and art have advanced, so that now nearly all artificial products of human industry, nearly all such materials as have acquired changed conditions or new and specific combinations, whether from the direct action of the human hand, from chemical processes devised and directed by human skill, or by the employment of machinery, are commonly designated as “manufactured”. 17. Correspondingly, the expression “manufacturer” has been defined to mean one who by labour, art or skill transforms raw material into some kind of a finished product or article for trade. 18. In contrast, the expression “produce” as a verb and as a noun has a multifarious meanings depending on the context in which it is used, like to produce witnesses, to bring forward, to bring into view or notice, to present a play, etc. Firstly, “produce”, as a noun means the product of natural growth, labour or capital. Articles produced, or grown from or on the soil, or found in the soil. As a verb, in the context, it is stated to mean “to make, originate, or yield, as gasoline. To bring to the surface, as oil”. 19. The expression “production” has been defined as under : “Process or act of producing. That which is produced or made ; i.e., goods. As a verb, in the context, it is stated to mean “to make, originate, or yield, as gasoline. To bring to the surface, as oil”. 19. The expression “production” has been defined as under : “Process or act of producing. That which is produced or made ; i.e., goods. Fruit of labour, as the productions of the earth, comprehend ing all vegetables and fruits ; the productions of intellect, or genius, as poems and prose compositions ; the productions of art, as manufactures of every kind”. 20. Thus, production not only includes expression manufacture of articles or things by applying labour or process on the existing raw material but also bringing to surface a natural produce of soil like agricultural product, horticultural product, production of fruits and vegetables and excavation of minerals and mineral oil from the product of plants which are grown by the cultivators, agriculturists through labours and other plant products as well as exploitation of other natural resources like mines. Thus, learned counsel for the assessee is right when he says that the word “produce” or “production” has a wider connotation than the term “manufacture”. 21. The expression “produce” in the context of producing any thing or article has been assigned its meaning in the Oxford Dictionary as under : “3b. Of an animal or plant ; To generate, bring forth, give birth to, bear, yield (offspring, seed, fruit, etc.) ; d. To work up from raw material, fabricate, make, manufacture (material objects) ; e. To produce the goods, money, results.” 22. Apparently, the expression used in the provision with which we are concerned relates to “produce”. 23. In contrast, the word “manufacture” has been defined to mean : “1b. The action or process of making articles or material (in modern use, on a large scale) by the application of physical labour, or mechanical power. 1. To work up (material) into forms suitable for use.” 24. These definitions denote one inherent property of the term “manufacture” that is, existence of raw material which is subjected to a certain process, whether manually or by machine or by chemical treatment and as a result of which it undergoes a change and brings about a new commodity known to the commercial world. Thus, manufacture is an activity which is applied to an existing product known as raw material for altering its face to something else. 25. Thus, manufacture is an activity which is applied to an existing product known as raw material for altering its face to something else. 25. However, the question still arises whether the expression “produce” is wide enough to cover even a process which though makes the commodity more marketable does not result in bringing into existence any article or thing which did not earlier exist or brought out as a commercial commodity which may amount to production. 26. In Pio Food Packers [1980] 46 STC 63, the Supreme Court was considering the expression “manufacture” used in the Kerala General Sales Tax Act, 1963. The question has arisen in the context of an activity carried on by Pio Food Packers of processing the fruit pineapple into slices for the purpose of being sold in sealed cans. The provision with which the Supreme Court was concerned related to charge of purchase tax. The contention of the dealer before the Supreme Court was that the tinned fruit and fresh fruit are two different commodities and, therefore, the petitioner was engaged in manufacturing of tinned fruits, therefore, on purchase of pineapple he was not liable to pay purchase tax. The Supreme Court dealt with the meaning of “manufacture” and quoted with approval the following passage from Anheuser-Busch Brewing Association v. United States [1907] 52 L. Ed. 336, 338 (page 66) : “Manufacture implies a change, but every change is not manufacture, and yet every change in an article is the result of treatment, labour and manipulation. But something more is necessary . . . There must be transformation ; a new and different article must emerge, ‘having a distinctive name, character or use’.” 27. The court further held that in processing the raw pineapple into slices by pealing off its kernel, the fruit was not consumed as was the requirement of the Kerala Act. The ratio of the decision is primarily in the context of the provision of the Kerala Act which required consumption of the fruit in the process before it could be termed as manufacture. The court said (page 66) : “There is no essential difference between pineapple fruit and the canned pineapple slices. The dealer and the consumer regard both as pineapple. The court said (page 66) : “There is no essential difference between pineapple fruit and the canned pineapple slices. The dealer and the consumer regard both as pineapple. The only difference is that the sliced pineapple is a presentation of fruit in a more convenient form and by reason of being canned, it is capable of storage without spoiling. The additional sweetness in the canned pineapple arises from the sugar added as a preservative. On a total impression, it seems to us, the pineapple slices must be held to possess the same identity as the original pineapple fruit.” 28. In coming to this conclusion, the court referred to yet another decision from the United States in East Texas Motor Freight Lines v. Forzen Food Express [1995] 100 L Ed 917 where the United States Supreme Court held that dressed and frozen chicken was not a commercially distinct article from the original chicken. It was pointed out (page 66) : “killing, dressing and freezing a chicken is certainly a change in the commodity. But, it is no more drastic a change than the change which takes place in milk from pasteurizing, homogenizing, adding vitamin concentrates, standardising, and, bottling . . . . There is hardly less difference between cotton in the field and cotton at the gin or in the bale or between cottonseed in the field and cottonseed at the gin, than between a chicken in the pen and one that is dressed. The ginned and baled cotton and the cottonseed, as well as the dressed chicken, have gone through a processing stage. But, neither has been ‘manufactured’ in the normal sense of the word.” 29. In a recent case of Aman Marble Industries (P.) Ltd. v. CCE [2005] 1 SCC 279 ; [2003] 58 RLT 595 (SC) , the Supreme Court has held that cutting of marble block into marble slabs or tiles does not amount to manufacture as in both the forms marble remains marble. However, for the present context, the principle which emerged from the Supreme Court case is that the manufacture is essentially the process applied to existing raw material which transforms the raw material into a commercially distinct article. 30. The Supreme Court in Deputy Commissioner of Agrl. IT/ST v. Palampadam Plantations Ltd. AIR 1969 SC 930 ; [1969] 24 STC 231 (SC) had considered this issue in a slightly different context. 30. The Supreme Court in Deputy Commissioner of Agrl. IT/ST v. Palampadam Plantations Ltd. AIR 1969 SC 930 ; [1969] 24 STC 231 (SC) had considered this issue in a slightly different context. It was considering the meaning of the term “produce” used in the Kerala General Sales Tax Act, 1963. The expression used was “the person who sells goods produced by him by manufacture, agriculture, horticulture or otherwise”. The question has arisen whether spontaneously grown plants which were cut by the assessee and sold in the market as timber was a person who had produced timber. The principal question was whether spontaneous growth of plantation resulting in providing timber to the dealer amounted to production of timber by him. 31. The court, said (page 233) : “ . . .The context in which the word ‘produced’ appears in the definition can only mean ‘to bring forth, bring into being or existence - to bring (a thing) into existence from its raw materials or elements . . . ” 32. Thus, the expression “produced” was given a wider meaning than the word “manufacture” pointing out that the word “produced” will include an activity of manufacturing the materials by applying human endeavour on some existing raw material, but the word “produce” may include securing certain produce from natural elements, for example, by growing plants on soil, or by operating mines and the like or for example, by milching the cow the milkman produces milk though he has not applied any process on any raw material for the purpose of bringing into existence the thing known as milk. 33. In CIT v. N.C. Budharaja and Co. [1993] 204 ITR 412 , the question has arisen before the Supreme Court for interpreting the like provision contained under section 80HH of the Income-tax Act, 1961, as is contained in section 80-IB with which we are concerned. Under section 80HH, one of the conditions for availing of the benefit of deduction under section 80HH was prescribed under sub-section (2) which was couched in the same language as is the provision of section 80-IB(2)(iii) with which we are concerned. The assessee had claimed that the foundation for superstructures on which the dam is to be constructed is an article manufactured by the assessee. 34. The assessee had claimed that the foundation for superstructures on which the dam is to be constructed is an article manufactured by the assessee. 34. The court referring to its earlier decision in Pio Food Packers [1980] 46 STC 63 (SC), reiterated the difference as under (page 423) : “Commonly, manufacture is the end result of one or more processes through which the original commodity is made to pass. The nature and extent of processing may vary from one case to another, and indeed there may be several stages of processing and perhaps a different kind of processing, at each stage. With each process suffered, the original commodity experiences a change. But, it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity, but instead is recognised as a new and distinct article that a manufacture can be said to take place.” 35. Coming to expression “production”, the court added (page 423) : “The word ‘production’ or ‘produce’, when used in juxtaposition with the word ‘manufacture’ takes in bringing into existence new goods by a process which may or may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods.” 36. In the case of manufacture, the original commodity transforms into a new commodity as per the illustrations we have seen earlier. The cultivation of crops, operation of mines for getting minerals from the sub-soil or for getting milk by milching the cow or say by producing meat by slaughtering animals, making milk of different grades by pasteurizing, homogenizing, adding vitamin concentrates, standardising and bottling, or applying process to the original chicken by converting into a dressed or frozen, does not amount to an act of manufacture or production as it does not bring into existence a new commodity. About the third thing in the context, the court said the manufacture or produce an article or thing refers to bringing into existence a movable thing or article and construction of the building or dam cannot be construed as an activity of manufacture for bringing a thing or article into existence. 37. The ratio of this decision clinches the issue. About the third thing in the context, the court said the manufacture or produce an article or thing refers to bringing into existence a movable thing or article and construction of the building or dam cannot be construed as an activity of manufacture for bringing a thing or article into existence. 37. The ratio of this decision clinches the issue. In either case - manufacture or produce - brings into existence a new commodity either by altering the face of raw material, or by bringing into existence a new product from natural elements or process. It is immaterial whether the new product is a direct result or indirect result. 38. Illustratively, reference can be made to the Supreme Court decision in the case of Aspinwall and Co. Ltd. v. CIT [2001] 251 ITR 323 , wherein the court after noticing the nine processes through which the raw coffee is made to undergo before it ultimately results into coffee beans amounts to manufacture as the coffee beans have an independent identity distinct from raw material from which it was manufactured. A distinct change comes about in the finished product. 39. In another case of Sacs Eagles Chicory v. CIT [2002] 255 ITR 178 , the Supreme Court found that the process of making chicory powder from chicory roots does not amount to manufacture as no new commodity comes into existence. 40. Therefore, in each case it has to be found as a fact the process through which the end product is arrived at and whether it is a new product brought into existence through manufacture by applying the various processes on the original material as raw material or is derived by human endeavour from natural elements or other resources. There being no involvement of applying process to the raw material, the same may not amount to manufacture. In either case, in order to fall within the meaning of the term “manufacture” or “produce”, it must result in bringing into existence a thing or article which is new. 41. This brings us to consider the Supreme Court decision in Chowgule’s case [1981] 47 STC 124, on which reliance has been placed by both learned counsel. The court was considering the case of a dealer under the Central Sales Tax Act. 41. This brings us to consider the Supreme Court decision in Chowgule’s case [1981] 47 STC 124, on which reliance has been placed by both learned counsel. The court was considering the case of a dealer under the Central Sales Tax Act. The assessee was a private limited company carrying on the business of mixing iron ore and selling it in the export market after dressing, washing, screening and blending it. Under section 8(1)(b) of the Central Sales Tax Act, 1956, certain transactions in the course of inter-State trade or commerce are subject to lower rate of tax at 3 per cent. of the turnover. The condition is that the goods which are subject to inter-State trade or commerce must be those falling within the description referred to in sub-section (3). The court was concerned with clause (b) of sub-section (3) of section 8 which reads as under (page 127) : “8.(1) Every dealer, who in the course of inter-State trade or commerce - (a) sells to the Government any goods ; or (b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3) ; shall be liable to pay tax under this Act, which shall be 3 per cent. of his turnover. (3) The goods referred to in clause (b) of sub-section (1) - . . . (b) . . . . are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power.” 42. It may be noticed that mere processing of goods, which may not amount to manufacture, will entail application of a lower rate of Central sales tax. 43. The entire activity of the assessee was broadly divisible into seven different operations, one following upon the other. The last one was blending of ore from different stock piles with a view to produce iron ore of the required specifications and loading it into the ship by means of a “mechanised ore handling plant”. 44. 43. The entire activity of the assessee was broadly divisible into seven different operations, one following upon the other. The last one was blending of ore from different stock piles with a view to produce iron ore of the required specifications and loading it into the ship by means of a “mechanised ore handling plant”. 44. The questions that arose before the court were (i) Whether the blending of different qualities of ores whilst loading it in the ship by means of the “mechanised ore handling plant” constituted “manufacture” or “processing” of ore for sale within the meaning of section 8(3)(b) and rule 13 read with section 8(1)(b), and (ii) Whether the process of mining, conveying the mined ore from the mining site to the riverside, carrying it by barges to the harbour and then blending and loading it into the ship through the mechanical ore handling plant constituted one integrated process of mining and manufacture or processing of ore for sale, so that the items of goods purchased for use in every phase of this integrated operation could be said to be use of goods purchased in the course of inter-State trade intended to be used for manufacturing or processing of ore for sale falling within the scope and ambit of section 8(3)(b) and rule 13 so as to attract the lower rate of sales tax under section 8(1)(b). The court dealt with the two aspects separately. Firstly, to whether this amounts to manufacture, the answer was in negative. The court after referring to the test evolved by it in finding out whether any process results in manufacture of goods or not, said (page 130) : “The test that is required to be applied is : does the processing of the original commodity bring into existence a commercially different and distinct commodity ? On an application of this test, it is clear that the blending of different qualities of ore possessing differing chemical and physical composition so as to produce ore of the contractual specifications cannot be said to involve the process of manufacture, since the ore that is produced cannot be regarded as a commercially new and distinct commodity from the ore of different specifications blended together. What is produced as a result of blending is commercially the same article, namely, ore though with different specifications than the ore which is blended and hence it cannot be said that any process of manufacture is involved in blending of ore.” 45. Applying this test to the present case, it can be said that blending of different grades of tea may on blending result in bringing tea of a particular specification, but it cannot be held to involve the process of manufacture because the tea, which arrives as a result of the blending activity cannot be regarded as a commercially new commodity. What is produced as a result of blending is commercially the same article, namely, tea, though with different combinations than those which are blended, hence it cannot be said that any process of manufacture is involved in blending of tea. 46. Coming to the second aspect of the matter whether blending of different types of ore amounts to processing. The court held in favour of the dealer. While overruling the decision of the Bombay High Court in Nilgiri Tea Co. case [1959] 10 STC 500 the court said (page 131 of [1981] 47 STC) : “What is necessary in order to characterise an operation as ‘processing’ is that the commodity must, as a result of the operation, experience some change. Here, in the present case, diverse quantities of ore possessing different chemical and physical compositions are blended together to produce ore of the requisite chemical and physical compositions demanded by the foreign purchaser and obviously as a result of this blending, the quantities of ore mixed together in the course of loading through the mechanical ore handling plant experience change in their respective chemical and physical compositions, because what is produced by such blending is ore of a different chemical and physical composition. When the chemical and physical composition of each kind of ore which goes into the blending is changed, there can be no doubt that the operation of blending would amount to ‘processing’ of ore within the meaning of section 8(3)(b) and rule 13.” 47. When the chemical and physical composition of each kind of ore which goes into the blending is changed, there can be no doubt that the operation of blending would amount to ‘processing’ of ore within the meaning of section 8(3)(b) and rule 13.” 47. For the purpose of countermining the aforesaid contention of the assessee, the Revenue has relied upon the decision of the Bombay High Court in Nilgiri Tea Co.’s case [1959] 10 STC 500, wherein the Bombay High Court has held that blending of tea of different grades does not even amount to processing. 48. The Supreme Court recognised the close analogy between the facts of Nilgiri Tea Co.’s case [1959] 10 STC 500 (Bom), and the facts of the case before the Supreme Court, namely, blending of iron ore. By overruling the decision of the Bombay High Court, the court said (page 132 of [1981] 47 STC) : “When different brands of tea were mixed by the assessees in Nil giri Tea Co.’s case [1959] 10 STC 500 (Bom) for the purpose of producing a tea mixture of a different kind and quality according to a formula evolved by them, there was plainly and indubitably processing of the different brands of tea, because these brands of tea experienced, as a result of mixing, qualitative change, in that the tea mixture which came into existence was of different quality and flavour than the different brands of tea which went into the mixture.” 49. The assessee relied on the later part of the judgment of Chowgule and Co.’s case [1981] 47 STC 124, wherein the court equated the blending process of iron ore with the blending of different grades of tea. However, the court clarified that the process in either case does not amount to manufacture. In other words, it does not bring into existence a new commodity, commercially different from that which has gone into the blending. Thus, blending though not manufacturing of goods amounts to processing of goods in the sense that it brings some change in the goods, hence it was entitled to the lower rate of tax under the Central Sales Tax Act. However, we are not concerned with the expression “process” in juxtaposition with expression “manufacture”. The Legislature has clearly used “manufacture” and “produce” in juxtaposition of each other. 50. However, we are not concerned with the expression “process” in juxtaposition with expression “manufacture”. The Legislature has clearly used “manufacture” and “produce” in juxtaposition of each other. 50. We have noticed above the ratio of the decision of the Supreme Court in N.C. Budharaja’s case [1993] 204 ITR 412 that in either case bringing into existence a new commodity is of essence. The Supreme Court in Chowgule’s case [1981] 47 STC 124, drawing analogy between blending of iron ore and blending of tea, has held that it does not bring into existence a new commodity commercially distinct from tea. The Supreme Court in N.C. Budharaja’s case [1993] 204 ITR 412 has held that the result of manufacturing or producing must be bringing into existence a new commodity. The difference which was clearly noticed in N.C. Budharaja’s case [1993] 204 ITR 412 was also noticed by the 51. Supreme Court in its earlier decision in the case of Palampadam Plantations Ltd. [1969] 24 STC 231. The basic difference between the two is that while manufacturing is confined to applying process on an existing article termed as raw material and through the process applied manually or by machine, a change is brought into the raw material which makes it a commercially distinct commodity in the market. While producing a thing or article, which is a wider connotation, includes the process of manufacturing it is not confined to applying process to raw material for converting that raw material into a new commodity, but it can be a production of a thing or article from natural elements or other resources, as we have noticed herein above in illustrations of agricultural produce and mineral produce. 52. The expression article or thing is qualified by two adjectives ; manufacturing or producing. Thus, manufacturing or production must result in bringing into existence an article or thing as a distinct marketable commodity. Apparently, in view of the distinction drawn between the two expressions and the distinction being clear in Chowgule’s case [1981] 47 STC 124 (SC), the contention of the assessee that blending of tea amounts to process of production though it may not amount to manufacture cannot be accepted. Apparently, in view of the distinction drawn between the two expressions and the distinction being clear in Chowgule’s case [1981] 47 STC 124 (SC), the contention of the assessee that blending of tea amounts to process of production though it may not amount to manufacture cannot be accepted. We may notice here, in all fairness to either party that both the parties have been carried away by the facts stated by the assessee and the decision given by the assessing authority solely based on the decision in Pio Food Packers’ case [1980] 46 STC 63 (SC), which in our opinion deals with the term “manufacture” and was not dealing with the expressions “production” or “produce”. Moreover, it was more concerned with consumption of an article in manufacture of goods and finding that the fruit after it is cleared from its skin, sliced and put in preservatives does not result in consumption of the fruit so as to fall within the purview of the Kerala General Sales Tax Act with which the apex court was dealing. 53. “Manufacture” and “production” of tea : A perspective under the Tea Act, 1953. 54. It is to be noticed that tea is a natural product of a bushy plant. The Tea Act, 1953, was enacted by Parliament to provide for control by the Union of the tea industry, including the control, in pursuance of the International Agreement then in force, of the cultivation of tea in, and of the export of tea from, India and for that purpose to establish a Tea Board and levy a duty of excise on the tea produced in India. The Act defines “tea” to mean the plant camellia sinensis (L) O. kuntze as well as all varieties of the product known commercially as tea made from the leaves of the plant camellia sinensis (L) O. kuntze including green tea. Significantly, it uses the expression in the main provision of the Act more than once, “the manufacture of tea”. 55. Section 4 provides for establishment and constitution of the Tea Board. The Tea Board includes representatives of owners of tea estates and gardens and growers of tea and manufacturers of tea. The Act defines “manufacturer” under section 3(i) to mean manufacturer of tea. 55. Section 4 provides for establishment and constitution of the Tea Board. The Tea Board includes representatives of owners of tea estates and gardens and growers of tea and manufacturers of tea. The Act defines “manufacturer” under section 3(i) to mean manufacturer of tea. While Chapter III provides for control over the extension of tea cultivation, Chapter III-A deals with management or control of tea undertakings or tea units by the Central Government in certain circumstances. Section 16A(e) defines “tea undertaking” as an undertaking engaged in the production or manufacture, or both, of tea through one or more tea units and “tea unit” has been defined under section 16A(f) as a tea estate or garden including a sub-division thereof, which has a distinct entity for which accounts are kept and has a factory of its own for the production and manufacture of tea. 56. The expression “tea undertaking” engaged in production or manufacture, or both, of tea are two different connotations notwithstanding that the tea which comes in the market is in different form from the leaves which are plucked from the bush. Tea bushes are situated in a tea estate or garden or are grown by other persons and is a matter of cultivation, whereas, manufacturing is something different and that is the making of the natural tea leaves marketable and consumable because tea leaves in their natural form are neither consumable nor marketable as the same thing from which tea liquor could be procured. 57. Before noticing what is meant by manufacturing of tea as is known in the commercial world of tea business, it may be relevant here to notice some provisions of the Income-tax Act, 1961, which make the distinction between “manufacture” and “production” of utmost relevance. 58. As we have noticed, tea in the ordinary sense is a natural vegetable product. Under the Income-tax Act, agricultural income is not subject to charge. Under clause (1A) of section 2 “agricultural income” has been defined to mean the income derived from any rent or revenue derived from land which is situated in India and is used for agricultural purposes and any income derived from such land by agriculture or the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market. Therefore, agricultural income derived by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market is also not taxable. It is in this context, it has to be examined what is the impact of the expression “producer of tea” and “manufacturer of tea”. 59. Tea trade has three different stages. Firstly, producing of tea leaves by the owner of the garden, the second stage is manufacture of tea from green leaves plucked from the bushes, and lastly, sorting and grading tea, as it comes in different groups and different quantities not of uniform quality. The blending becomes an important part of tea marketing. Therefore, if the blending which comes after manufacture of tea is a part of the process of manufacture or making the tea marketable. 60. The question has to be viewed from different angles. If the entire process is done by the grower of tea then the entire income being an agricultural income derived from applying process to the goods to make them fit to bring them to market as per section 2(1A) is not taxable under section 10(1) and consequently, eligibility under section 80-IB does not arise. 61. Further, if this process is applied by different persons, the question may arise who manufactured tea. The manufacturer may not be absolved from the charge of income-tax as he is not a cultivator and for him it is not an agricultural income and in such case he is subject to tax. But, he may avail of the benefit of deduction under section 80-IB as an industrial undertaking engaged in manufacture of tea. If blending becomes an integral part of the manufacturing process, the activity may fall within the purview of section 80-IB. But, if a manufacturer of tea or a grower of tea after manufacturing tea brings sorted and graded tea to the market which is purchased by a trader, who after blending the teas of various varieties sells them in saleable packets for retail purpose or in loose form, such blending being a process for the purpose of marketing only may not amount to manufacture or production of tea. In such event, if we apply the test as has been applied by the Supreme Court in Chowgule’s case [1981] 47 STC 124 as well as in N.C. Budharaja’s case [1993] 204 ITR 412 (SC), since blending of tea does not bring into existence a new commodity which is so essential to avail of the benefit under section 80-IB, the same is not available to the assessee. Consequently, the mere activity of blending is not qualified for claiming deduction under section 80-IB. 62. Some foray into the tea trade will not be out of place here. The tea which reaches the consumer market begins its journey with the growing of tea as an agricultural product. The information that emanates from Encyclopaedia Britannica (Macropaedia Vol. 18) 1980 Edn., can be stated in brief as under : 63. Tea is made from young leaves and leaf buds of tea plant a specie of evergreen (camellia sinensis). It originated in China, as per the existing records according to legends about 2737 BC, in his writing dating back to 780 AD. Lu Tie, a Chinese scholar, said that there were a thousand and ten thousands teas. He described how the tea is used specifying that tea leaf be plucked during certain moms and clear weather, how it is to be manipulated in hands, dried and sealed. This signified that tea leaves as such are not used as a fresh green leaves but have to be brought by some process to usable condition. The growing operation as per scientific study undertaken since 1890 reveals that tea growing operations include seed production, clonal selection, tea nursery management, transplanting, development of bushes and subsequent pruning and plucking, soil management, and the ultimate replanting of the stand. With plucking of tea leaves, the agricultural or plant produce of tea comes in hand. But that is not marketable. It has to be subjected to process of preparing or making tea which can be brought to market. 64. The second stage is properly described as preparing or making or manufacturing of tea. The hand method for preparation of tea shoots consisting of young leaves and terminal leaf bud have their origin in antiquity. The prepared teas are designated broadly as black (fermented), green (unfermented) or oolong (semi-fermented). 65. 64. The second stage is properly described as preparing or making or manufacturing of tea. The hand method for preparation of tea shoots consisting of young leaves and terminal leaf bud have their origin in antiquity. The prepared teas are designated broadly as black (fermented), green (unfermented) or oolong (semi-fermented). 65. In its most simple form, the preparation of black tea has been described as under : “When black tea is made by the small producer, the leaf is plucked on a clear day after the dew is gone, exposed to the sun and air for at least an hour, then lightly rolled on a table to develop a red colour and an aroma. The leaves are heated in a hot iron pan, rolled, heated several additional times, and finally dried in a basket over a charcoal fire.” 66. The modernisation of tea preparation has introduced mechanised tea making. In India, when tea cultivation began, a new withering process was developed. In the new withering process, the leaves were spread on trays and left overnight, then rolled only once, and spread on the floor to ferment. Drying began in a hot iron pan and was finished on trays placed over a charcoal fire. Hand-rolling required the greatest amount of labour. 67. The modern method of producing CTC (crushing, tearing and curling) is now applied to most of tea forms in North India. The process is described as under : “Normally, withered leaf is given a short, light roll, then put through the machine. Two engraved metal rollers, one making 70 revolutions per minute (rpm) and the other, 700, distort the leaf in a fraction of a second. Other machines producing rapid and full leaf distortion have also been perfected. The unorthodox method is currently applied to 70 per cent. of the tea manufactured, in North East India, and the method is also prevalent in several other countries. The grades of tea produced are mainly dust and fannings, with some brokens. The tea is machine fired and on the following day it is sorted into grades. It is then stored in bins until a sufficient amount accumulates to make up an invoice of about 60 to 240 chests.” 68. Tea thus prepared and graded is brought to market through public auction houses. The tea is machine fired and on the following day it is sorted into grades. It is then stored in bins until a sufficient amount accumulates to make up an invoice of about 60 to 240 chests.” 68. Tea thus prepared and graded is brought to market through public auction houses. As noticed above, each accumulation of relatively smaller quantity makes it difficult to carry a uniform result in quality and chemical contents of different lots and tea carrying from different gardens, estates and grower and region. 69. That leads to preparing the uniform blends of different hue and colour to suit the market by tea traders. Tea bought at auctions are blended by the traders to suit their own markets. Each firm bases its bidding on information provided by the tea-taster, who notes the appearance of dry tea, the infused leaf and the infusion ; the aroma of both the dry tea and the infused leaf and the taste and flavour of the infusion. 70. Teas to be used for a blend are selected for the quality, flavour, strength, and body of the liquors and the size and style and density of the leaf. 71. Teas are blended by mixing the leaf in a machine consisting of a revolving drum fitted with veins. Satisfactory blending requires about 16 revolutions. 72. From the aforesaid narration of the Encyclopaedia Britannica, it can be inferred that the three stages through which the tea goes in the market are growing of tea in different estates or gardens by the growers of tea at a suitable place. Green tea leaves as plucked from the tea bushes are not directly usable as tea as we know. It has to undergo certain process, before it can be used as tea. That process is described as making or manufacturing of tea which results in bringing green tea leaves to the stage of usability as tea of different grades having different chemical contents and properties depending upon the process applied and the geographical region in which the tea is grown, the soil over which plantation has taken place and the period in which the leaves have been plucked and collected from the tea growing centre. The making and manufacturing of tea results in bringing into existence the tea which is brought to the market for selling. The making and manufacturing of tea results in bringing into existence the tea which is brought to the market for selling. However, as the tea is not a uniform product, different traders who purchase the tea brought to the market by different growers and manufacturers, resort to blending of tea to suit their own markets and consumers before they are sold loosely in retail or in branded packets to bring uniformity of taste and flavour for the buyers. 73. This process of tea trading is also evidenced in the book Tea written by T. Eden, who was the Director of Tea Research Institute, East Africa. In its second edition, he has described the entire gamut of tea in its cultural aspect and in its trading aspect. After describing the whole process of growing tea, he deals with the chemistry of tea leaves, its manufacturing and lastly, in the present context the tea trade and industry in separate chapters. 74. In Chapter XII, he describes the chemical composition of tea leaves, its inorganic constituents - the nitrogen compounds - carbohydrate and associate compounds - the polyphenols pigments - enzymes - vitamins which exist in different variants in green tea leaves. In this Chapter, he states that the most important chemical process is the oxidation of atmospheric oxygen with the help of oxidants. He describes in detail what change is brought by fermentation into the properties of tea leaves. 75. In Chapter XIII, Mr. Eden deals with the manufacturing process and which shows that the manufacturing process primarily refers to black tea as we have noticed above including plucking of tea leaves, withering, rolling, roll-breaking and green leaf sifting, fermentation, firing, grading and sorting. All these processes bring into existence the tea known to the market as black tea, CTC and as brought to the auction house in bulk for tea traders. 76. In Chapter XIV, he points out the process that is applied by traders when they purchase tea in bulk as manufactured or made from green tea leaves. He states that the tea industry does not produce a uniform product. The characteristics of an accepted grade such as broken orange pekoe vary to some extent from country to country, district to district and from estate to estate. Superimposed on these broad differences are others determined by the season of the year during which the leaf is harvested and manufactured. The characteristics of an accepted grade such as broken orange pekoe vary to some extent from country to country, district to district and from estate to estate. Superimposed on these broad differences are others determined by the season of the year during which the leaf is harvested and manufactured. The tea buyer takes all these factors into consideration. From long experience he knows the type of tea to be expected at any particular time from a particular locality and even from a particular estate, and in his operations his interest is centered on the individual estate or group of estates. When he buys, he is not buying in bulk but in a series of small lots some of which may be no greater than 600 lbs. Consequently, bearing in mind the multiplicity of estates, it will be readily appreciated that the marketing of tea is a very intricate business. 77. It is for the purpose of making a uniform grade out of the assorted product which is purchased by the traders that the process of blending takes place by tea traders. 78. Mr. Eden has dealt with some process held in the London tea auction in detail and that may be taken as illustration for other countries, the reason being obvious that at the time the book was published, the major tea trading took place at London and the traditional markets were at Calcutta, Colombo. 79. A similar view has been expressed by E. Jaiwant Paul in his recently published book The Story of Tea. He describes “Planting and Manufacture of Tea”, and “Tea Tasting and Blending” in two separate chapters. According to him also, as noticed above, bulk tea is sold by public auction, though the gardens could sell their tea to private buyers. It has been noticed that multinational tea companies like Brooke Bond own not only tea plantation companies in India, Sri Lanka and Africa, but also separate companies which blend, pack and market tea. The procedure for auction is described as under : “The procedure for the auction is virtually the same whether in Calcutta, Colombo or London. When the tea arrives from the gardens, it is stored in bonded warehouses. The brokers then inspect the tea, taste samples and value it. Full particulars are printed in the brokers’ sale catalogue. The procedure for auction is described as under : “The procedure for the auction is virtually the same whether in Calcutta, Colombo or London. When the tea arrives from the gardens, it is stored in bonded warehouses. The brokers then inspect the tea, taste samples and value it. Full particulars are printed in the brokers’ sale catalogue. The prospective buyers, who are generally the packet tea companies, consider the brokers’ idea of the likely price but, naturally, are not over-influenced by their indications. They in turn draw their own samples of tea, taste them and make their own valuation before the sale. After this, they decide which teas they are going to bid for. The senior tasters and blenders of the big tea companies are very highly paid men. As a result of astute buying and anticipation of market movement, these senior tasters can make huge profits for the blending and packing companies.” 80. Then it says : “For the buyers who have bought in bulk at the auctions, the next stage is blending of different teas in order to maintain the consistent quality and flavour of each blend. Teas from individual gardens vary not only throughout the seasons, but also from one season to the next due to local climatic conditions and also due to differences in manufacture. By blending the teas, the companies can create blends which maintain a constant quality . . . . It is only rarely that pure tea from an individual garden is marketed. This is for reasons of consistency in quality and the price factor discussed above. When a tea is labelled Darjeeling and Darjeeling blend, it may well be made up of 5 or 7 per cent. pure Darjeeling with the rest comprising price reducers - medium quality or even low quality teas which nevertheless achieve a pure Darjeeling flavour.” 81. This treatise also clearly makes out that marketing of tea could mean two things. First, there is disposal of tea from the estates in bulk through auctions or through private sale. Second, the marketing of tea in its branded packaged form to the consumer through the wholesale and retail network. Blending is really a part of the second stage of marketing by traders. It does not involve production or manufacture of tea. 82. First, there is disposal of tea from the estates in bulk through auctions or through private sale. Second, the marketing of tea in its branded packaged form to the consumer through the wholesale and retail network. Blending is really a part of the second stage of marketing by traders. It does not involve production or manufacture of tea. 82. We shall presently notice that manufacture of tea is subjected to excise duty by way of cess imposed under the Act which distinguishes between growing of tea, manufacturing of tea and marketing of tea. In short, the tea manufactured or made in different quality as stated above and in different grades is brought to the auction house where it is purchased by the traders in variable quantities. 83. About the blending of tea, Mr. Eden says that the grades into which tea is sorted in producers’ factories are not sold as such to consumers. Retail tea, whether sold loose, or more usually in the branded packet, is invariably a blend of different grades derived from a variety of estates and usually from more than a single country of origin. The blend may contain in various proportions twenty to forty different components. In blending tea, different components are chosen for their contribution to a number of desirable qualities in the brew, such as, colour, strength, pungency and flavour. The prescription for a blend is based on various tea-tasters’ reports on various teas. There are no quantitatively precise methods of evaluating quality and consequently, tea-tasting remains an art, rather than a science. The concerted opinion of a panel of tea-tasters provides a reliable evaluation of a tea’s worth. 84. It is true that blending the tea of different qualities by their purchaser, brings some qualitative change and a particular brand of tea carrying uniformity in its appearance, taste and chemical contents rules the market as a blend or mixture of tea. So far as making of tea from green tea leaves is concerned, it may amount to manufacture or production of tea. We have noticed above in two different decided cases that the expression “produce” or “production” has a wider connotation. The manufacture is invariably included in the expression “production”, but vice versa may not be true inasmuch as the basic difference is that in the former transformation of the existing commodity takes place. We have noticed above in two different decided cases that the expression “produce” or “production” has a wider connotation. The manufacture is invariably included in the expression “production”, but vice versa may not be true inasmuch as the basic difference is that in the former transformation of the existing commodity takes place. The existing commodity which after undergoing the process applied to it by the manufacturer undergoes such a change that it becomes a new commodity, a commodity different from the raw material as distinctly known in the commercial world from its raw material. Whereas, the expression “produce” or “production” may not necessarily mean conversion of raw material into a new commodity, but may be obtaining a new product from natural elements or by some other activity from different sources, for example, extracting mineral ore from mines, producing milk by milching the cow, securing latex or rubber from rubber trees ; every agricultural produce grown by cultivation in the fields are illustrations of things produced which does not amount to manufacture. 85. In that sense, the green leaves of tea bushes are produced by cultivation. That is the first stage. Since the green leaves are not consumable as such, using green leaves as raw material, the same is converted into made tea or manufactured tea and a consumable commodity is brought into existence. Such process amounts to manufacture of tea. After the tea is made by converting green leaves into consumable tea of different qualities in different lots and brought to the market, the buyers of different teas blend them into different specifications for convenient retail marketing through different brands. The process remains processing for bringing some qualitative change but not bringing into existence any distinct tea as a new article or thing. 86. Apparently, in the present case, the natural product through vegetation growth is the green tea leaves. Its subjection to income-tax depends on who brings it into the market, and at what stage. It is relevant to mention here that under the Income-tax Act, 1961, agricultural income is not taxable as the same is exempted under section 10(1) from the charge of tax. Its subjection to income-tax depends on who brings it into the market, and at what stage. It is relevant to mention here that under the Income-tax Act, 1961, agricultural income is not taxable as the same is exempted under section 10(1) from the charge of tax. Agricultural income has been defined under clause (1A) of section 2, which reads as under : “(1A) ‘agricultural income’ means - (a) any rent or revenue derived from land which is situated in India and is used for agricultural purposes ; (b) any income derived from such land by - (i) agriculture ; or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market ; or (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub-clause ; . . .” 87. It is to be noticed that agricultural income includes income derived from any such land by the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market. 88. In view of the aforesaid provision, if a grower of tea himself is performing activities which are essential for bringing the produce of tea to the market, for him it becomes agricultural income and not liable to tax. Obviously, in such case, section 80-IB would have no application. The income in the hands of a grower or cultivator of tea who applies the process of manufacturing of tea to make it marketable and without which it is not marketable remains an agricultural income fully exempted from liability of tax and, therefore, it is not included in the total income for which deduction can be claimed. If the cultivator manufactures or makes tea, in the sense we have noticed above, there is no difficulty in saying that it still remains an agricultural income. 89. If the cultivator manufactures or makes tea, in the sense we have noticed above, there is no difficulty in saying that it still remains an agricultural income. 89. However, different considerations arise when the cultivator or grower of green tea leaves sells the green tea leaves to the manufacturer, who sells the manufactured tea or made tea in the market to traders. In such case, a person other than the grower of tea makes the tea, as noticed by us above, to make the green leaves into marketable tea and the blending by the trader who has purchased the made tea from the market at the auction house or from the grower of tea his income ceases to be an agricultural income as exemption of agricultural income is available only to the grower and not to the person who independently after buying the agricultural produce applies one or more process to it and converts it into a different commodity or applies process for the purpose of marketing. In their hands the income is not agricultural income and is subject to tax under the Act of 1961. For such persons the produce purchased serves as raw material or the original material to which process is applied, if as a result of such process a new and distinct commodity comes into existence it becomes a production of new commodity by process of manufacture, but if it does not result into bringing a new commodity, it can neither be a production by the process of manufacture or a thing otherwise produced because in either case bringing into existence a new product is a condition necessary. 90. In these circumstances, a somewhat similar question had arisen before the Supreme Court in CST v. D.S. Bist [1979] 44 STC 392 under the U. P Sales Tax Act, 1948. 91. 90. In these circumstances, a somewhat similar question had arisen before the Supreme Court in CST v. D.S. Bist [1979] 44 STC 392 under the U. P Sales Tax Act, 1948. 91. Under the U.P. Sales Tax Act, 1948, the term “turnover” has been defined under section 2(i), which reads as under (page 393) : “‘Turnover’ means the aggregate amount for which goods are supplied or distributed by way of sale (or are sold), or the aggregate amount for which goods are bought, whichever is greater, by a dealer, either directly or through another, on his account or on account of others, whether for cash or deferred payment or other valuable consideration : Provided that the proceeds of the sale by a person of agricultural or horticultural produce, grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, or poultry or dairy products from fowls or animals kept by him, shall be excluded from his turnover.” 92. It may be noticed that no specific definition of “agricultural turnover from the agriculture or horticulture produce grown by himself or grown on any land” in which such person has interest was provided, yet the principle made explicit in the definition of “agricultural income” under the Income-tax Act, was read implicit in the expression of turnover of agricultural produce. It was held to include sale of agricultural produce after applying the process by the grower of agricultural produce to make it fit to bring it to the market. The question which fell before the Supreme Court for determination was that the assessee-respondent had owned some tea gardens in the State of U.P. He had sold the tea leaves grown by him in his garden in the market after being processed and packed. The stand taken on behalf of the assessee was that the tea leaves sold by him were agricultural produce grown by himself, therefore, the sales were not exigible to sales tax. The Revenue had not accepted the plea of the assessee. According to the Revenue, the assessee had made green tea leaves marketable and fit for consumption by the consumers. The process had resulted in leaves undergoing such vital change that they lost their character of being an agricultural produce and became a different commodity. Thus, the sales made by the assessee were exigible to sales tax. 93. According to the Revenue, the assessee had made green tea leaves marketable and fit for consumption by the consumers. The process had resulted in leaves undergoing such vital change that they lost their character of being an agricultural produce and became a different commodity. Thus, the sales made by the assessee were exigible to sales tax. 93. It may be noticed that in the case before the Supreme Court, the process by which green leaves were made marketable was undertaken by the grower himself and not by the buyer. 94. The High Court had taken the view that the tea leaves were plucked from the tea plants as green tea leaves. The tea leaves so plucked were not fit for consumption and were not sold in the open market. They were often purchased by big tea concerns from the owners of the gardens and after processing and packing them the buyer sells them in the market. Since in their case the proviso will not apply, the sales will be exigible to sales tax. But, when the producer himself does the same or similar kind of job, then the question arises whether it can be justifiably said that he also cannot take advantage of the proviso. The High Court noticing the 7 processes through which the leaves had gone through, which are very much the same as we have noticed above, even in the absence of the aforesaid provision under the U.P. Sales Tax Act, as enacted under section 2(1A) of the Income-tax Act, 1961, still, the same principle was applied. Affirming the judgment of the High Court, apex court said (page 395) : “It should be remembered that almost every kind of agricultural produce has to undergo some kind of processing or treatment by the agriculturist himself in his farm or elsewhere. In order to bring them to a condition of non-perishability and to make them transportable and marketable, some minimal process is necessary to be applied to many varieties of agricultural produce . . . But, there may be some other kinds of agricultural produce which required some more processing to make it marketable. In order to bring them to a condition of non-perishability and to make them transportable and marketable, some minimal process is necessary to be applied to many varieties of agricultural produce . . . But, there may be some other kinds of agricultural produce which required some more processing to make it marketable. In the case of such a commodity what one has to judge is to find out whether in relation to that agricultural produce the process applied was minimal or was it so cumbersome or long-drawn that either, in common parlance or in the market, or even otherwise, anybody would not treat the produce as an agricultural produce . . . ”. 95. With this background, the court said (page 395) : “Unlike many agricultural products tea leaves are not marketable in the market fresh from the tea gardens. Nobody eats tea leaves. It is meant to be boiled for extracting juice out of it to make tea liquor. Tea leaves are, therefore, only fit for marketing when by a minimal process they are made fit for human consumption. Of course, the processing may stop at a particular point in order to produce inferior quality of tea and a bit more may be necessary to be done in order to make it a bit superior. But, that by itself will not substantially change the character of the tea leaves, still they will be known as tea leaves and sold as such in the market . . . Withering, crushing and roasting the tea leaves will be surely necessary for preserving them. The process of fermentation or final roasting with charcoal for obtaining suitable flavour or colour and also the process of grading them with sieves were all within the region of minimal process and, at no point of time, it crossed that limit and robbed the tea leaves, the agricultural produce, of their character of being and continuing as such substantially.” 96. In coming to this conclusion, the Supreme Court quoted the meaning of “manufacture of tea” from Encyclopaedia Britannica volume 21 (1968 edition) as under (page 396) : “Then comes the sub-head ‘Manufacture’, which enumerates the categories of three classes of teas and then it is mentioned : Most stages of processing are generally common to the three types of tea. In coming to this conclusion, the Supreme Court quoted the meaning of “manufacture of tea” from Encyclopaedia Britannica volume 21 (1968 edition) as under (page 396) : “Then comes the sub-head ‘Manufacture’, which enumerates the categories of three classes of teas and then it is mentioned : Most stages of processing are generally common to the three types of tea. First, the fresh leaves are withered by exposure to the sun or by heating in trays until pliable (usually 18-24 hours). Next, the leaves are rolled by hand or machine in order to break the leaf cells and liberate the juices and enzymes. This rolling process may last up to three hours. Finally, the leaves are completely dried either by further exposure to the sun, over fires, or in a current of hot air, usually for 30-40 minutes.” 97. On this premise, the Supreme Court inferred that it would thus be seen that the tea leaves as plucked have got to pass through stages of processing of one kind or the other in order to make them fit for human consumption, as in the case of paddy and many other commodities, de-husking in the case of the former and some other kind of process in regard to the latter has got to be done in order to make them marketable and fit for consumption. 98. On these premises, the court affirmed the view of the High Court and it also affirmed the distinction between the case of process applied by the grower of tea leaves for making it marketable to be different from the case of buyer of green leaves from the grower and making it marketable. 99. The aforesaid decision fortifies us in our conclusion to which we have reached above that if the process of manufacture is applied by the buyer of green tea leaves, it loses its character as an agricultural income as defined under section 2(1A) as the process of making tea fit for marketing is not carried out by the grower of agricultural produce but has been applied by a trader or a dealer in tea, who is not an agriculturist. This also fortifies our conclusion that in such case, the manufacturer or producer of tea in the sense it makes it marketable by applying the process as popularly known as manufacturing or making of tea and it becomes chargeable to income-tax and the question of applicability of deduction under section 80-IB arises for consideration. 100. In the present case, obviously, the appellant purchased manufactured or made tea leaves powder/granules through auction or through the dealer and not directly from the grower. The samples of available qualities are dispatched to the “blend master”, who after going through his own process suggests the mixing ratio and process of mixing for making the perfect blend of tea. So, apparently, the assessee is not the producer of green tea leaves and he only applies the process to make made tea marketable tea, as noticed by us above. The circular to which the appellant has referred applies to made tea or manufacture of tea in the sense that green tea leaves themselves are not marketable and are subjected to the process by which they are converted into marketable tea. Annexure 2 dated November 20, 1996, refers to made tea and refers to a notification issued under the Small Scale Industries Development Scheme for registering an industry engaged in packing or repacking of made tea. It has nothing to do with the question whether the appellant is an industrial undertaking which manufactures or produces tea as an article or thing which is not included in Schedule 11 to the Act. As a matter of fact, the provisional registration of the appellant is only for tea packing. The registration is not for manufacture of tea. The appellant is only carrying out the blending of different grades and qualities of manufactured or made tea purchased by him from the auction house or from the dealer of tea, therefore, he is not a person who has directly purchased green tea leaves from the grower of tea and then applied to it the process of manufacture within the terms of the Tea Act where the grower and manufacturer of tea have been classified differently and he remains a trader in tea, who markets his merchandise in loose or packed form under the brand name. 101. 101. If the process is to be examined in the light of the principle enunciated in Chowgule’s case [1981] 47 STC 124 (SC) on which both the parties have relied, we are of the opinion that the appellant’s case does not go beyond the processing of tea for marketing and does not result in manufacturing or producing tea as an article or thing within the meaning of section 80-IB(2)(iii). 102. We have discussed in detail Chowgule’s case [1981] 47 STC 124 (SC) herein above. It has clearly made the distinction between the manufacture and process. The apex court was dealing with a case in which the lower rate of tax was applicable to a commodity which has been manufactured or processed. The Supreme Court has held the case of mixing of iron ore and mixing of tea as of proximate analogy. While coming to the fact of mixing of different qualities of iron ore, the Supreme Court made it clear that though blending of different qualities of ore possessing different composition so as to produce ore of contractual specification, the same cannot be said to involve the process of manufacture, since the ore that is produced cannot be regarded as a commercially new or distinct commodity from the ore which is blended and hence, it cannot be said that any process of manufacture is involved. One has to replace tea for ore in reaching the same conclusion. 103. We have no hesitation in coming to this conclusion that blending of different qualities of tea possessing different chemicals and physical composition so as to produce the specified blend of tea does not involve an act of manufacture of tea. What is brought about as a result of blending remains tea though of different specification than the tea which is blended. Therefore, it cannot be said to be manufacturing or producing of tea. We have already noticed that the appellant is not engaged in growing tea, so that he may be called a producer of tea, nor is he engaged in manufacturing of potable tea from green leaves, which cannot be used as otherwise potable drink. In such event, a different conclusion may be reached, depending upon whether the grower of tea himself undertakes the process of manufacturing tea as a marketable and usable commodity, resulting in agricultural income or a different person is engaged in such activity of producing taxable income. In such event, a different conclusion may be reached, depending upon whether the grower of tea himself undertakes the process of manufacturing tea as a marketable and usable commodity, resulting in agricultural income or a different person is engaged in such activity of producing taxable income. 104. So far as the emphasis laid by learned counsel for the appellant on overruling the decision in Nilgiri Tea Co.’s case [1959] 10 STC 500 (Bom), it may be noticed that the Supreme Court made it clear that though it is not manufacture, the question still remains whether ore blended in the course of loading it into the ship through the mechanical ore handling plant constitutes processing. In the light of the expression used in the Central Sales Tax Act, the question was examined and the court answered that blending does amount to processing which does result in some change in the commodity though it does not bring about a new article or thing into existence. 105. In examining Nilgiri Tea Co.’s case [1959] 10 STC 500 (Bom) the Supreme Court held that when different brands of teas were mixed by the assessee for the purpose of producing a tea mixture of a different kind and quality, according to the formula evolved by them, there was plainly and indubitably processing of different brands of tea because these brands of tea experienced, as a result of the mixing, qualitative change in that the tea mixture which came into existence was of different quality and flavour than the different brands of tea which went into the mixture. But the question whether the processing brings into existence any article or thing which may be said to be distinct from the article on which process has been applied had been answered in the negative while considering the analogical case of blending of iron ores. It was held that it is processing. 106. From the above conclusion, it is clear that where blending does not bring into existence a new and distinct commodity, it cannot be said that the process of manufacture has been applied. 107. But where the processing brings a clear change into an existing commodity to make it fit for the market it can be considered as producing the thing or article within the meaning of the provision. 108. 107. But where the processing brings a clear change into an existing commodity to make it fit for the market it can be considered as producing the thing or article within the meaning of the provision. 108. We have noticed above that blending is an essential part of tea trading and a part of the tea industry for the purpose of bringing into existence the marketable tea from the green tea leaves which are not consumable by themselves but made consumable by bringing about the change into its chemical properties to make it fit for consumption. Only then, it reaches the market as tea as a consumable commodity, commercially known as manufactured or made tea. The Supreme Court had noticed a close proximate analogy between blending of tea and blending of ore with which the court was dealing. Applying the analogy to tea, the blending of various teas to smoothen its marketability may amount to processing of tea, but does not amount to manufacture or production of a thing or article so as to fulfil the condition of availing of the benefit of deduction under section 80-IB. 109. We may briefly refer to some of the decisions which have been referred to by both learned counsel stating that they have a direct bearing on the case. 110. Firstly, we may refer to the decisions relied on by learned counsel for the appellant. The appellant heavily relied on a decision of the Karnataka High Court in Brooke Bond Lipton India Ltd.’s case [1998] 109 STC 265. It may be noticed, at the outset, that the Karnataka High Court was dealing with the issue arising under the provisions of the Karnataka Sales Tax Act, 1957, and notifications issued thereunder. The relevant notifications provide for exemption to industrial units engaged in “agro-food processing”, agrobased high-tech packaging units amongst other industries. These industries were listed as “thrust sector” industries. The incentive scheme issued vide notification dated June 19, 1991, under the Karnataka Act envisaged exemption in respect of goods manufactured and sold by new industrial units. The relevant notifications provide for exemption to industrial units engaged in “agro-food processing”, agrobased high-tech packaging units amongst other industries. These industries were listed as “thrust sector” industries. The incentive scheme issued vide notification dated June 19, 1991, under the Karnataka Act envisaged exemption in respect of goods manufactured and sold by new industrial units. Vide earlier notification dated July 25, 1990, which was published in the Karnataka Gazette dated March 7, 1991, provided for enhanced incentives and concessions for the thrust sector which was dealt with under annexure II under which “agro-food processing and agro based hi-tech packaging” industrial units were included for making them eligible for enhanced concession as a part of thrust sector industries. The Bench made it clear that they have referred to the above entry because one of the contentions debated at the Bar was as to whether the industrial unit of the petitioner has to be categorised as falling under the “thrust sector” being an agro-food processing and agro-based hi-tech packaging industrial unit. Apparently, a unit which is engaged in preparing blended tea can undoubtedly be said an agro-food processing industrial unit as held by the Supreme Court in Chowgule’s case [1981] 47 STC 124. The Tribunal rejected the claim of the assessee for exemption on the ground that no exemption is available because no manufacturing process is involved in such hi-tech packaging. The Karnataka High Court reached the conclusion that the industrial unit of the petitioner falls under the category of agro-food processing and/or agro-based hi-tech packaging industrial unit, and, therefore, as per the policy decision of the State Government pronounced in the first notification, the products of the industrial unit of the petitioner become entitled for all incentives including exemption from sales tax. The Karnataka High Court further held that there was no change in the industrial policy while issuing the second notification and the second notification was drafted in terms of the new industrial policy. The court reached the conclusion that the second notification is a part of the first notification and did not give overriding effect over the existing notification extending the benefit to “thrust sector” industries. 111. The court reached the conclusion that the second notification is a part of the first notification and did not give overriding effect over the existing notification extending the benefit to “thrust sector” industries. 111. Reaching these conclusions, the court made it clear that in view of the fact that the petitioner is an industrial unit engaged in agro-food processing and agro-based hi-tech packaging, it was not necessary to enter into the aspect whether blending amounts to manufacture or not, though it decided to embark initially by applying the Supreme Court decisions in Ujagar Prints’ case [1989] 179 ITR 317 and Empire Industries’ case [1986] 162 ITR 846 ; [1987] 64 STC 42, wherein the processes of bleaching, dying, sizing, printing, finishing were held to be manufacture and held blending and packing to be manufacture. Undoubtedly, the special leave petition against that judgment was dismissed. A question which is not decided, the observation about it cannot be read as ratio. 112. We may notice here that apart from the fact that the decision was rendered in the particular interpretation taken by the Karnataka High Court on the combined reading of the two notifications issued under the Karnataka Sales Tax Act, it refers to Chowgule’s case [1981] 47 STC 124 (SC) for supporting its conclusions while considering the question whether blending of different teas amounts to manufacture. The Karnataka High Court, with great respect, has not relied on Chowgule’s case [1981] 47 STC 124 (SC) and reached its conclusions in para. 29, in which it was said as under (page 276 of [1998] 109 STC 265 ) : “For the same very reason, it can conveniently be held that the blending of different kinds and varieties of tea to provide a balance in terms of flavour, strength and colour is only a processing of the tea to suit the demands of a particular class of consumers. Mere blending of the tea by itself cannot be characterised as manufacturing of a different commercial product.” 113. Mere blending of the tea by itself cannot be characterised as manufacturing of a different commercial product.” 113. Ironically, while reaching this conclusion that blending of different varieties of tea does not amount to manufacture within the meaning of the two notifications issued under the Karnataka Act, there has been no reference to Chowgule’s case [1981] 47 STC 124 (SC) in the judgment and the case has been founded on the principle laid down in Ujagar Prints’ case [1989] 179 ITR 317 (SC) dealing with textiles and the provisions of the Central Excise Act. 114. It is a settled principle that an expression used in different Acts cannot automatically have the same meaning. It has to be read in the context of the subject-matter of the Act. The principle has been clearly stated by the Supreme Court in another decision which has been relied on by learned counsel for the appellant in the case of Ashirwad Ispat Udyog v. State Level Committee [1998] 8 SCC 85 ; [1999] 112 STC 207 (SC) , wherein the court clearly said that the decisions construing the meaning of the word “manufacture” as used in other statutes do not apply unless the definition of that word in the particular statute under consideration is similar to that construed in the decision. 115. In Ashirwad Ispat’s case [1999] 112 STC 207 (SC) the court was considering the question whether treating of iron and steel scrap of considerable bulk by cutting it down by mechanical processes into pieces that may be conveniently utilised in rolling mills and foundries fall within the definition of “manufacture” or not. The court was considering the case in the light of the definition of “manufacture” given under section 2(j) of the M.P. General Sales Tax Act, 1958, which, inter alia, reads as under (page 208) : “2.(j) ‘manufacture’ includes any process or manner of producing, collecting, extracting, preparing or making any goods and in respect of trees which have been severed from the land or which have been felled, also the process of lopping the branches, cutting the trunks or converting them into logs, poles or ballies or any other articles of wood, but does not include such manufactures or manufacturing processes as may be prescribed.” 116. Apparently, the court was considering the aforesaid definition of such wide amplitude which not only included manufacture proper but any process or manner of producing, collecting, extracting or preparing of any goods. In the aforesaid context, the court said (page 210) : “The plain construction of the special definition of the word in a particular Act must prevail. In the special definition given in section 2(j) of the said Act, ‘manufacture’ has been defined as including a process or manner of producing, collecting, extracting, preparing or making any goods. There can be no doubt whatsoever that ‘collecting’ goods does not result in the production of a new article. There is, therefore, inherent evidence in the definition itself that the narrow meaning of the word ‘manufacture’ was not intended to be applied in the said Act. Again, the definition speaks of ‘the process of lopping the branches (of trees), cutting the trunks’. The lopping of branches and the cutting of trunks of trees also, self-evidently, does not produce a new article. The clear words of the definition, therefore, must be given due weight and cannot be overlooked merely because in other contexts the word ‘manufacture’ has been judicially held to refer to the process of manufacture of new articles.” 117. Consequently, the process adopted by the assessee was held to be eligible for exemption under the M.P. General Sales Tax Act, therefore, this case does not assist the appellant. 118. Likewise, the decision of learned single judge of this court in Dhunseri Tea Industries’ case [2001] 1 Tax Update 235, is also of little assistance. The learned single judge was considering the question of manufacture under the provisions of the Rajasthan Sales Tax Act, 1954, as it was existing at the relevant time, against the rejection of the application of the petitioner for grant of exemption eligibility certificate under the Rajasthan Sales Tax Act New Incentive Scheme. The “manufacture” as defined, in the Rajasthan Sales Tax Act, 1954, which was in force at the relevant time was pari materia with the definition of “manufacture” given in the M.P. General Sales Tax Act, which we have referred to above. Hence, the decision rendered under the Rajasthan Sales Tax Act with such wide definition of “manufacture” in the statute cannot be invoked in the present case. Hence, the decision rendered under the Rajasthan Sales Tax Act with such wide definition of “manufacture” in the statute cannot be invoked in the present case. The principle enunciated by the Supreme Court in Ashirwad Ispat’s case [1999] 112 STC 207, aptly applies to such cases, however, the same cannot be of any help to the petitioner while construing the meaning of “manufacture” or “produce” under the Income-tax Act which has been used in generic sense. 119. In Ujagar Prints’ case [1989] 179 ITR 317 (SC), the question had arisen in the context of fabric going through different processes before it results into an end product. The question had arisen before the Supreme Court whether the process which brings about a change in the commodity when it reaches the market can be held to be manufacture within the meaning of the Central Sales Tax Act. The apex court in Empire Industries’ case [1986] 162 ITR 846 has held that these processes through which the fabric goes amount to manufacture. Further, the court observed as under (page 341) : “The prevalent and generally accepted test to ascertain whether there is ‘manufacture’ is to find whether the change or the series of changes brought about by the application of processes takes the commodity to the point where commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the processes. The principles are clear. But, difficulties arise in their application in individual cases. There might be borderline cases where either conclusion with equal justification may be reached. Insistence on any sharp or intrinsic distinction between ‘processing’ and ‘manufacture’, we are afraid, results in an oversimplification of both and tends to blur their interdependence in cases such as the present one.” 120. But, difficulties arise in their application in individual cases. There might be borderline cases where either conclusion with equal justification may be reached. Insistence on any sharp or intrinsic distinction between ‘processing’ and ‘manufacture’, we are afraid, results in an oversimplification of both and tends to blur their interdependence in cases such as the present one.” 120. The court further observed that (page 341) : “On a consideration of the matter, we are persuaded to think that the view taken in the Empire Industries’ case [1986] 162 ITR 846 (SC) that ‘grey fabric’ after it undergoes the various processes of bleaching, dyeing, sizing, printing, finishing, etc., emerges as a commercially different commodity with its own price structure, custom and other commercial incidents and that there was in that sense a ‘manufacture’, within the meaning of section 2(f), even as unamended, is an eminently plausible view and is not shown to suffer from any fallacy. Indeed on this point, the referring Bench did not disagree or have any reservations either. It is to be noticed that if the amending law is valid, this aspect becomes academic.” 121. This clearly goes to show that accepting the general principle and the meaning of “manufacture” in the specific case of the Central Excise Act with its amending provision having retrospective effect, the court came to the conclusion that even under the unamended provision, the view taken in the Empire Industries case [1986] 162 ITR 346 (SC), did not require reconsideration. Therefore, no support can be drawn from the ratio laid down in Ujagar Prints’ case [1989] 179 ITR 317 (SC). 122. Similarly, the decision of the Supreme Court in CCE v. Tata Tea Ltd. [2002] 128 STC 331 is of little assistance to the appellant. It was a case under the Tea Act in which cess was levied on instant tea. We have noticed the provisions of the Tea Act which has drawn distinction between tea growers, tea manufacturer and tea trader. The manufacturing process we have already discussed above. The instant tea is not blending of tea after the tea is manufactured but is a kind of product which comes into existence after the green leaves are made into tea which can be used and, therefore, it was held to be amenable to cess as a different product of tea within the meaning of the Tea Act. The instant tea is not blending of tea after the tea is manufactured but is a kind of product which comes into existence after the green leaves are made into tea which can be used and, therefore, it was held to be amenable to cess as a different product of tea within the meaning of the Tea Act. It was not a case which was concerned with the blending of tea after it has left the producer’s factory as made or manufactured tea and has reached the trader through auction of made tea within the meaning of the Tea Act. 123. Similarly, the decision in G.A. Renderian Ltd. v. CIT [1984] 145 ITR 387 (Cal) is also of little assistance. This was a case in which the court was considering the merit of the expression “industrial company” as used in section 2(7)(c) of the Finance Act, 1978. Under the Finance Act, 1978, “industrial company” was defined to mean a company which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining. Apparently, the benefit of section 2(7)(c) in terms of the Finance Act, 1978, was also extended to the industrial company which was engaged in only processing of goods. Blending is processing of tea and thus there was no difficulty in reaching the conclusion to which the Calcutta High Court reached. But this judgment can be read as laying down blending as processing and not holding it to be manufacture or production of tea within the meaning of section 80-IB of the Income-tax Act, 1961. 124. Learned counsel for the appellant has also relied on a decision of the Kerala High Court in the case of CIT v. Tara Agencies [2000] 243 ITR 336 . The court was considering the meaning of small-scale exporter within the meaning of section 35B(1A) of the Income-tax Act, 1961, which, inter alia, defined, small-scale exporter to mean a person who exports goods manufactured or produced in any small-scale industrial undertaking or undertaking owned by him. The court was considering the meaning of small-scale exporter within the meaning of section 35B(1A) of the Income-tax Act, 1961, which, inter alia, defined, small-scale exporter to mean a person who exports goods manufactured or produced in any small-scale industrial undertaking or undertaking owned by him. With utmost respect, we are unable to agree with the conclusion reached by the Kerala High Court in interpreting the expression “manufacture” or “produce” by referring to the dictionary meaning of the word “process” and by ignoring the ratio of the Supreme Court decision in Chowgule’s case [1981] 47 STC 124 distinguishing “manufacture” and “process”. The term “process”, in our opinion, cannot be equated with “manufacturing” or “producing” in each and every case. 125. Lastly, reliance was placed by learned counsel for the appellant in this regard on the Supreme Court decision in the case of S.S. M. Bros. P. Ltd. v. CIT [2000] 243 ITR 418 ; [1999] 3 SCC 229 . Again, this was a case where the court was construing different provisions of the Income-tax Act. The question relevant was allowing development rebate where the machinery or plant is installed for the purpose of manufacturing of any one or more of the articles or things specified in the list in the Fifth Schedule. 126. Item 32 of the Fifth Schedule reads as under : “‘Textile’ (including those dyed, printed or otherwise processed) made wholly or mainly of cotton, including cotton yarn, hosiery and rope.” 127. Reading the two provisions together, the Supreme Court concluded that the production of textiles including those dyed, printed or otherwise processed is to be taken into account. The embroidered textiles, as they fall within the list of articles listed at entry 32 of the Fifth Schedule, were held to be eligible for the enhanced rate of development rebate. Apparently, the decision was given in the particular scheme of the provision giving out a different meaning of the expression “manufacture” in the context of the list of eligible articles production of which entitled higher rate of development rebate. The eligible articles included processed textiles, therefore, the same cannot be of any assistance to the appellant in this case. 128. Apparently, the decision was given in the particular scheme of the provision giving out a different meaning of the expression “manufacture” in the context of the list of eligible articles production of which entitled higher rate of development rebate. The eligible articles included processed textiles, therefore, the same cannot be of any assistance to the appellant in this case. 128. On the other hand, learned counsel for the respondent relied on the decision given by the Calcutta High Court in the case of Appeejay P. Ltd. v. CIT [1994] 206 ITR 367 and of the Karnataka High Court in the case of Brooke Bond Lipton India Ltd. [1998] 109 STC 265, wherein the courts held that blending and mixing of different types of leaves purchased from tea gardens and then packed to offer for sale to wholesalers does not amount to manufacturing. 129. Similarly, the Bombay High Court in the case of J.B. Advani and Co. P. Ltd. v. CIT [1992] 193 ITR 781 was considering the meaning of industrial company within the meaning of section 2(5)(a)(ii) of the Finance Acts, 1966 and 1967, and has distinguished the decision of the Calcutta High Court in the case of G.A. Renderian’s case [1984] 145 ITR 387. The Bombay High Court pointed out that the decision of the Calcutta High Court depended on industrial policy, given in the Finance Act, 1978, where the term “industrial company” was defined to include one which is engaged in processing of goods which is conspicuous by its absence in the Finance Acts, 1966 and 1967, in defining “industrial company”. In the absence of an extended meaning in the statute, the court has taken the view following Nilgiri Ceylon Tea Supplying Co. v. State of Bombay [1959] 10 STC 500 (Bom) that it does not amount to manufacturing activity though it may amount to processing of goods, as per Chowgule’s case [1981] 47 STC 124 (SC). 130. As a result of the aforesaid discussion, we have no hesitation in coming to the conclusion that the expression “manufacture” or “producing” any thing or article under section 80-IB(2)(iii) has been used in a generic sense and within its ambit it does not include any processing of goods, which does not bring out a new or commercially distinct commodity. 130. As a result of the aforesaid discussion, we have no hesitation in coming to the conclusion that the expression “manufacture” or “producing” any thing or article under section 80-IB(2)(iii) has been used in a generic sense and within its ambit it does not include any processing of goods, which does not bring out a new or commercially distinct commodity. In view of the clear distinction between the expressions “manufacture” and “producing” in N.C. Budharaja’s case [1993] 204 ITR 412 (SC), blending of different teas by a trader of tea who has purchased the tea from the auction house or the dealer does amount to processing of tea but falls short of manufacturing process and it does not amount to manufacturing or producing any article or thing within the meaning of section 80-IB of the Income-tax Act, 1961. 131. Consequently, the assessee cannot be held to have fulfilled the condition for availing of the benefit of deduction under section 80-IB of the Income-tax Act, 1961. 132. In the result, the appeal fails on the merits and is hereby dismissed. There shall be no order as to costs. *******