Revenue Tax Briefing

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Revenue Tax Briefing Issue 41, September 2000

Supreme Court Decision

Whether company entitled to manufacturing relief


Patrick J. O’Connell (Inspector of Taxes) v Fyffes Banana Processing Ltd.

Decision made by:

The Supreme Court

Decision Date:

24 July 2000

Relevant Legislation:

Sections 39 and 41 Finance Act 1980 (now sections 443 and 448 Taxes Consolidation Act 1997, respectively)


The company was incorporated on 22 January 1991 and is a wholly owned subsidiary of Fyffes Plc. and its business is the provision of banana ripening services to other companies within the Fyffes group.

It had been held by the Supreme Court, in Charles McCann Ltd v S. O’Cualachain, Inspector of Taxes, (1998) IR 196, that the process of artificially ripening bananas was a manufacturing process. Following that decision section 39(5) Finance Act 1980, as inserted by section 41(1)(c) Finance Act 1990 provided that:

“ ... goods shall not, for the purposes of the definition of “goods” in subsection (1), be regarded as manufactured if they are goods which result from a process ... which consists primarily ...of applying methods of ... maturation or other similar treatment to any foodstuffs ...”

The company claimed that its eligibility to manufacturing relief is governed solely by the provisions of section 39(2) which provides that:

“Where a company carries on a trade which consists of or includes the rendering to another person of services by way of subjecting commodities or materials belonging to that person to any process of manufacturing, the following provisions shall apply for the purposes of relief under this Chapter –

  1. the rendering within the State of such services shall be regarded as the manufacture within the State of goods;
  2. any amount receivable in payment for services so rendered shall be regarded as an amount receivable from the sale of goods ...

It was contended, on behalf of the company, that this was a self contained provision which was unaffected by the 1990 amendment.

On behalf of Revenue, it was contended that the restrictions to the meaning of the word “goods” provided for in section 39(5) had effect throughout sections 39 and 41 and that the company was not entitled to the relief.

It was held by the Supreme Court that the Oireachtas had stated in clear and unambiguous language that goods such as bananas which are subjected to an artificial ripening process are not to be regarded as goods manufactured in the State for the purposes of section 41(2). The only effect of section 39(2) is to ensure that companies engaged in a manufacturing process are not deprived of the relief where the manufacturing process is carried out by way of service.

The Supreme Court decided that a company which is engaged in the activity of artificially ripening bananas belonging to another person was not entitled to manufacturing relief.

This summary is for reference only and readers are recommended to read the full text of the judgment.