COMMISSIONER OF INCOME TAX Vs. CIGFIL P LIMITED

JUDGEMENT

(1.) THE Revenue is aggrieved by the finding of the Tribunal that cigarette filters manufactured by the assessee do not fall within the ambit of entry 2 of the Eleventh Schedule to the Income-tax Act, 1961, which reads as under :

(2.) SECTION 32A governs, if the manufactured goods are not covered by the entries in the Eleventh Schedule. The machinery used in the manufacture of such goods if installed in an industrial undertaking is to be given the benefit of investment allowance. It is not the case of the Revenue that cigarette filters are made out of tobacco. The fact that the filters are used in cigarettes does not make the filters also a product of tobacco. What is excluded by the second entry in the Schedule is tobacco in various forms and mixtures and not all items which are used in association with tobacco. For example pipe mixture is a product of tobacco, but the pipe in which it is smoked is not a product of tobacco, the pipe usually being made either of wood or wood and metal. The paper in which the tobacco is rolled to make cigarettes is not tobacco, though it is used along with tobacco to make the cigarettes. The foil in which the cigarettes are wrapped as also the cartons in which the cigarettes are sold are not made out of tobacco and are not excluded by this entry, even though they are used in association with and for the purpose of marketing a product of tobacco.