IMPORTANT POINT
The process of mustered seed extraction involves manufacture of mustard oil as also the manufacture of oil cake.

Headnote:(a) Words and Phrases – Finished goods – So long as the goods coming out is something identifiable as a result of undergoing a process of manufacture and is marketable and tradable as a commodity, being completely different and distinct from raw material as a product, and which was intended to be a definite product of manufacture; the product had to be considered as ‘finished goods’ from the industrial unit. (Para 7)
        (b) Judicial Review – What is contained in reference works/technical Journals, or well known in trade/ industrial circles, need not be established by independent ‘evidence’. (Para 9)
        (c) Words and Phrases – Manufacturing Process – The true test to ascertain whether a process is a manufacturing process producing a new and distinct article is whether the article produced is regarded in the trade, by those who deal in it, as a marketable product distinct in identity from the commodity/raw material involved in the manufacture. (Para 10)
       1980 Supp. (1) SCC 174; (1986) 3 SCC 469; 78 (1897) Federal Reporter 467; (1967) 3 SCR 557 –Relied upon
       Facts of the case:
        1. The appellant claimed that it has its industrial unit at Tinsukia, Assam engaged in manufacturing activity of crushing mustard seeds and producing two distinct products namely mustard oil and oil cake, as finished goods; and that it was registered under the transport subsidy scheme, after verification as provided in the Scheme. It was also claimed that crushing of mustard seeds yielded 30-34% mustard oil and 60-64% oil cake, each product having a separate identity and different markets.
        2. The appellant made several claims for grant of transport subsidy in respect of raw materials, oil cake and oil, from time to time. According to appellant, after giving credit to Rs.5,88,421/- released as subsidy, the amount due towards subsidy claim till August, 1993, was Rs.58,44,531/-.
        3. As there was inordinate delay in settling the claims, the appellant filed a writ petition in the year 1996.
        4. Consequently, Government of India sanctioned and released Rs.44,14,922 as transport subsidy as against the recommended claim of Rs.58,44,531. Government of India issued a clarification that the transport subsidy under the said scheme would not be applicable in regard to oil cake as it was only a by product.
        5. Appellant filed another writ petition for release of subsidy in respect of oil cake, as sanctioned by the State Level Committee. The writ petition was rejected.
       Finding of the Court:
        The process of mustered seed extraction involves manufacture of mustard oil as also the manufacture of oil cake.
       Result : Appeal allowed.

JUDGMENT

R.V. Raveendran, J.

1. Leave granted. Heard counsel.

2. By notification dated 23.7.1971 the Government of India formulated a ‘Transport Subsidy Scheme’ for grant of subsidy on the transport of raw materials and finished goods to and from certain selected areas with a view to promote growth of industries in such areas. Clause 6 contains the details of the Scheme. Sub-clause (i) thereof provided that “a transport subsidy will be given to the industrial units located in selected areas in respect of raw materials which are brought into and finished goods which are taken out of such areas.” Sub- clause (iv) specified the north-eastern region including the State of Assam as one of the selected areas to which the scheme was made applicable. Sub-clause

(xii) required the State Government to set up a Committee consisting of Director of Industries, a representative of the State Industries Department, a representative of the State Finance Department, and a nominee of the Central Government (Ministry of Industrial Development), to scrutinize and settle all claims for transport subsidy arising in the State. The said Committee was required to call upon the applicants for subsidy, to provide proof of raw materials imported into the State and finished goods exported out of the State by their industrial units, to decide their eligibility for transport subsidy. The Committee was also required to scrutinize and settle the claims in the manner indicated in the scheme. The words ‘industrial unit’, ‘raw material’ and ‘finished goods’ were defined in sub-clauses (a), (h) and (i) of clause (4) of the scheme, as follows :-

“(a) `Industrial Unit’ means an industrial unit where a manufacturing programme is carried on.

(h) ‘Raw material’ means any raw material actually required and used by an industrial unit in its manufacturing programme as approved by the Government of India and/or by the Government of State/Union Territory in which the industrial unit is located.”

(i) ‘Finished goods’ means the goods actually produced by an industrial unit in accordance with the manufacturing programme approved by the Government of India and/or the Government of the State/union Territory in which the industrial unit is located.”

3. The appellant claimed that it has its industrial unit at Tinsukia, Assam; that it was engaged in the manufacturing activity of crushing mustard seeds and producing two distinct products namely mustard oil and oil cake, as finished goods; and that it was registered under the transport subsidy scheme, after verification as provided in the Scheme. It was also claimed that crushing of mustard seeds yielded 30-34% mustard oil and 60-64% oil cake, each product having a separate identity and different markets.

4. The appellant made several claims for grant of transport subsidy in respect of raw materials, oil cake and oil, from time to time. According to appellant, after giving credit to Rs.5,88,421/- released as subsidy, the amount due towards subsidy claim till August, 1993, was Rs.58,44,531/-. As there was inordinate delay in settling the claims, the appellant filed a writ petition in the year 1996, seeking a direction for release of the said transport subsidy amount. The said writ petition was disposed of on 15.5.1996 with a direction to scrutinize appellant’s claim and if found eligible, disburse the amount. The State Government scrutinized and recommended to the Government of India, the release of Rs.58,44,531 as transport subsidy to the appellant. On 18.6.1997, the Government of India sanctioned and released Rs.44,14,922 as transport subsidy as against the recommended claim of Rs.58,44,531. On 14.7.1997 the Government of India issued a clarification that the transport subsidy under the said scheme would not be applicable in regard to oil cake as it was only a by product. Aggrieved by the disallowance of transport subsidy for oil cake, appellant filed another writ petition (C.R. No.376/1997) for release of subsidy in respect of oil cake

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2009 Supreme(SC) 908

2009(6) Supreme 604SUPREME COURT OF INDIAR.V.Raveendran and Harjit Singh Bedi, JJ.Jai Bhagwan Oil & Flour Mills —Appellant versus.Union of India & Ors. —RespondentsCivil Appeal No. 3169 of 2009 [Arising out of SLP(C) No.5861/2007]Decided on : 04-05-2009

IMPORTANT POINT The process of mustered seed extraction involves manufacture of mustard oil as also the manufacture of oil cake.

Cases Referred (2)

2009(6) Supreme 604
SUPREME COURT OF INDIA
R.V.Raveendran and Harjit Singh Bedi, JJ.
Jai Bhagwan Oil & Flour Mills —Appellant versus.
Union of India & Ors. —Respondents
Civil Appeal No. 3169 of 2009
[Arising out of SLP(C) No.5861/2007]
Decided on : 04-05-2009

IMPORTANT POINT
The process of mustered seed extraction involves manufacture of mustard oil as also the manufacture of oil cake.