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TMI Blog1991 (6) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... International Electronics Manufacturing Company, a registered partnership firm, carrying on manufacturing of emergency mobile power pack unit. The firm is duly registered as a small-scale unit with the Directorate of Cottage and Small-scale Industries for the purpose of manufacturing, inter alia, emergency mobile power pack unit. The manufacturing activity in the said certificate has been indicated in the following manner: "Mobile trolley fitted with mini generator for emergency lighting (generator to be procured from local market), known as mobile power pack unit." The process of manufacture of the said unit is by way of assembling and fitting a generator with lights, fans and wheels on a trolley. The wheels are fitted in order that the said unit can be moved from one place to another. The said unit serves as a composite unit for not only production of electricity but also distribution thereof. The firm started manufacturing the said unit on and from February 17, 1983 and its first sale took place on February 18, 1983. The applicant thereafter applied for registration as a wholly manufacturing dealer before the Commercial Tax Officer, Bally Circle on March 15, 1983. In the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is merely a manufacturer of trolley simpliciter and reseller of generator, since the latter is an integral part of the said mobile power pack unit, which he is actually manufacturing. On the basis of averments to this effect the applicant had asked for registration as a manufacturer of mobile power pack unit on and from April 18, 1983 and issue of declaration forms for purchase of raw materials for such manufacture. He has also asked for issue of eligibility certificate in respect of sales of emergency mobile power pack unit instead of trolley already issued to him. 4.. The respondents have opposed the application on the ground that the Commercial Tax Officer has to satisfy himself that the application for registration is in conformity with the statute before allowing registration. In this case by examining the nature of the activity of the applicant the said Commercial Tax Officer came to a finding that the applicant was only manufacturing trolley as he was putting a generator, purchased by him, on a trolley, which actually he has been manufacturing through labour employed by a contractor. He was, therefore, treated as a reseller of generator and a manufacturer of trolley. Mount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the applicant that the Commercial Tax Officer should have accepted the information furnished in the application and granted registration accordingly is not, therefore, tenable. 6.. Rule 7 further provides that certain items including the nature of business shall be described in the registration certificate in the same terms as are used by the dealer in his application form, as far as may be consistent with the Act and the Rules. Shri Chakrabarti argued that the nature of business had been described as manufacture of emergency mobile power pack unit in the application form and the same should have been endorsed accordingly in the registration certificate. We are unable to accept this argument. The Commercial Tax Officer is competent to describe the nature of business in the way he considered it consistent with the Act and the Rules and he was duly exercising the statutory power conferred on him when he issued registration for manufacture of trolley. Whether his order was correct or not is, of course, another matter. 7.. The main issue for decision in this case is whether the applicant is a manufacturer of emergency power pack unit, of which the generator is an integral p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with an enquiry in the matter of registration as a dealer under the Bengal Finance (Sales Tax) Act, 1941. This report, annexed to the affidavit-in-opposition filed by the respondents, describes the mode of production in the factory. This is reproduced below: "The factory receives Honda generators of different models some fitted with frames, some fitted with nothing. The dealer manufactures frames from iron tubes and fits wheels to the frames which then is called trolleys. The generators then are set inside the frames with wheels (the generators which are received with frames are fitted with wheels only). After that the dealer fixes one wooden board fitted with three switches and three/two sockets and wires with the trolley. Further the dealer welds one rod with the trolley to which tubelight fittings (bracket and starter) are fixed. Now, the entire thing is called 'emergency mobile power pack unit'. It was learnt that the workers working in the dealer's factory are employed by the contractor who is paid by the above dealer." It was also emphasized by the learned State Representative that the ratio between the cost of generator and that of trolley was 9:1 and the trolley manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity, characteristics or use. 12.. It is, however, well-settled that in the context of sales tax legislation, manufacture implies the emergence of a different commercial commodity as a result of application, whether manual or mechanical, of certain processes to the original commodity, raw materials or intermediates. The end-product must be something, having distinct characteristics and uses, which can ordinarily come to the market to be bought and sold. It is against this background that the above definition is to be construed. 13.. The Division Bench of the Bombay High Court in Commissioner of Sales Tax v. Dunken Coffee Manufacturing Co. [1975] 35 STC 493 interpreted the expression "manufacture" as defined in the Bombay Sales Tax Act, which is in pari materia with that in the West Bengal Act. There it was held that the mixing and blending of coffee powder with chicory powder so as to bring into being a different commercial product known as "French Coffee" was a process, which amounted to manufacture within the definition in the Act. We could not agree more with the following observations of Madon, J., in the said case: "..........for an activity to amount to manufacture it mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.K. Chakrabarti cited another case-Deputy Commissioner of Sales Tax v. Pio Food Packers [1980] 46 STC 63 decided by the Supreme Court. In that case it was concluded that when pineapple fruit is processed into pineapple slices for the purpose of being sold in sealed cans, there is no consumption of the original pineapple fruit for the purpose of manufacture. There is a provision in the Kerala General Sales Tax Act, 1963, for consumption of a commodity in the manufacture of another commodity. The goods purchased should be consumed, the consumption should be in the process of manufacture and the result must be manufacture of other goods. The Supreme Court applied the Generally prevalent tests to determine whether a commodity is consumed in the manufacture of another, such test being whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture. It was held that as there is no essential difference in identity between the original commodity and the processed article, it is not possible to say that one commodity has been consumed in the manufacture (as it is commonly understood) of another. It was, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Bhor Industries Ltd. v. Collector of Central Excise [1989] 73 STC 145 (SC); [1990] 184 ITR 129 decided by the Supreme Court. This was a matter under the Central Excises and Salt Act, 1944. He referred to the following observations made therein: In order to be goods as specified in the entry, the first condition was that as a result of manufacture, goods must come into existence. For articles to be goods these must be known in the market as such or these must be capable of being sold in the market as goods." He also referred to a few other cases, one decided by the Madras High Court and another by the Allahabad High Court. In F. Rose Mary Carpentry Works v. State of Madras [1964] 15 STC 924 (Mad.), the question was whether radio cabinet is a component part of a radio within the meaning of section 3(3) of the Madras General Sales Tax Act. "Component part " has been defined in the said Act as "an article which forms an identifiable constituent of the finished product and which along with others goes to make up the finished product". The main question was whether it was an accessory or a component part. It was held that a radio cabinet is a component part of a radio. In the other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as obtaining in the West Bengal statute during the relevant period it is essential that a different commercial commodity should emerge as a result of the process or processes undertaken. It is not necessary that the materials of the original articles must altogether lose their character or identity and become transformed in their basic or essential properties. We need not put too much emphasis on the concept of transformation of the original material or, in other words, its complete metamorphosis involving form, appearance, substance and character in the end-product. It is possible that component parts may retain their identity and characteristics without being merged in the new assembled product. It may, however, be noted that that this definition has undergone a sea change since April 1, 1985 as has been indicated before. We are here dealing with the position as obtaining prior to that date. 23.. Here it will be relevant to refer to a decision of the Allahabad High Court in Vijaya Cycle & Rickshaw Co. v. Commissioner of Sales Tax [1971] 27 STC 573 on which reliance had been placed by both the applicant and the respondents. In that case, in the absence of a statutory definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need not necessarily transform themselves into the new product. What is important is that the product brought into existence by the process of assembly and adaptation is a new commercial commodity having separate use, characteristics and market. Emergency mobile power pack unit is not just a generator; it is more than that, as it has numerous uses and satisfies specific needs of a certain group of customers. A customer wanting an ordinary generator will not go in for this product, which costs more. Similarly, a customer requiring this product will not go in for an ordinary generator, as his specific needs will not be met. The dealer by resorting to this process of assembly and adaptation is bringing into being or producing something in a form in which it is capable of being sold or supplied in the course of business. He is certainly not reselling as reselling presupposes selling it in the same form, in which it was purchased without in any way altering it. That the dealer has been selling the product in large numbers is indicative of the fact that the product has a distinct and separate market. It, therefore, fulfils all the requirements of the emergence and existence of a new com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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