The Supreme Court ruled yesterday that banana ripening is not a manufacturing process capable of attracting tax relief.

The court overturned a High Court decision that the appeal commissioners for taxation were correct in determining that Fyffes Banana Processing Ltd, a wholly-owned subsidiary of Fyffes plc, could obtain manufacturing relief on corporation tax in respect of banana ripening.

The appeal commissioners had allowed a claim by FBPL to the tax relief and the High Court had dismissed an appeal against that decision by the Inspector of Taxes. FBPL has described its business as the provision of "banana ripening services" to other companies within the Fyffes group.

Yesterday, the Supreme Court granted an appeal by the Inspector of Taxes against the High Court decision.

After an earlier determination by the Supreme Court that the process of artificial ripening of bananas constituted a manufacturing process for tax relief purposes, the Finance Act was amended to prohibit this benefit. Fyffes had argued in the High Court and the Supreme Court that it was still entitled to such relief under a different section of the 1980 Finance Act.

The Supreme Court rejected that argument yesterday. It said it seemed highly unlikely that the legislature, when making clear that banana ripening did not constitute a manufacturing process for tax relief purposes and thereby reversing the earlier Supreme Court decision on the matter, would have decided such relief would be available if, as Fyffes argued, the ripening was carried out by one company on bananas belonging to another company.

By virtue of the amending legislation, a company engaged in the artificial ripening of bananas was not engaged in the manufacturing of goods and, accordingly, not entitled to the relief.

It followed, therefore, that a company engaged in this activity on bananas belonging to another person was clearly not intended to be treated as a company engaged in the "the manufacture of goods" within the meaning of the 1980 Finance Act.

Delivering the court's decision, the Chief Justice, Mr Justice Keane, sitting with Mr Justice Murray and Mr Justice Hardiman, said the Oireachtas, in plain and unambiguous language, had said that goods such as bananas which were subject to an artificial ripening process were not to be regarded as goods manufactured in the State for the purpose of obtaining manufacturing relief. That relief was confined to a company carrying on a trade which included "the manufacture of goods".