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TMI Blog1992 (6) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments wherein the benefit of the concessional rate of tax was extended to the appellant, the assessing authority opined that the appellant had misused the declaration and, therefore, proceedings were initiated under section 5(3-B) of the Act. According to the assessing authority the article in question was not a component part of plywood. The notices under section 5(3-B) were issued by the Assistant Commissioner of Commercial Taxes (Appeal). The appellant responded by pointing out that formaldehyde was necessary in the manufacture of the plywood and that it was an identifiable constituent in plywood, by chemical test. The appellant also filed affidavits of experts in this regard. However, the authority did not accept the explanation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71 (Mad.) (R.M. Krishnaswamy Naidu Sons v. State of Madras); though groundnut oil undergoes transformation resulting in the product called vanaspathi, it was held that groundnut oil was identifiable by a chemical process in vanaspathi and, therefore, it was a component part of vanaspathi. This was the view taken earlier also by a learned single Judge of the said court in Mettur Chemical and Industrial Corporation v. Commercial Tax Officer [1964] 15 STC 734. The question also came up before the Supreme Court in the appeal filed by the State of Madras against the decision in Krishnaswamy Naidu's case [1965] 16 STC 671 (Mad.) and the decision of the Madras High Court was affirmed in State of Madras v. R.M. Krishnaswami Naidu [1970] 26 STC 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n water). Thus, in the formaldehyde solution purchased by the company, 37 per cent is formaldehyde content and 63 per cent is water. This solution is mixed with phenol and also a catalyst and the resultant item is only an aqueous solution, which is syrupy in nature. This syrupy solution has limited shelf or pot-life and is not a durable substance." Thereafter he explains as to how the syrupy solution is spread by the spreaders and how the layers of coated veneers are brought together and laid between two aluminium sheets and subjected to specified temperatures and states that in this process a resin is formed by a chemical change during the manufacture of plywood. The affidavit brings out the fact that the mixture of formaldehyde with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of plywood can be done by any of the following methods: (1) Process developed by D.C. Roy, (Miss) Sarbani Chowdary and (Miss) Sunanda Chaudhari published in Volume 3, Nos. 2 and 3, Indian Plywood Industries Research Institute Journal 1973, pages 88 to 95. (2) Process developed by D.C. Roy and Sarbani Chowdary, Volume 5 No. 2 July-December 1975 pages 64 to 66. (3) By process developed, i.e., technique of infrared spectophotometry and micro chemicals analysis by J.J. Dibus and F.J. Shelton, Reichold Chemicals Inc. Tacoma, Wash, in paper presented at session 14, Glues and Gluing of the 20th Annual meeting of the Forest Products Research Society on July 21, 1966, in Minneapolis Minn." Additional Deputy Commissioner of Commercial Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be taken as an identifiable constituent; in other words it will be an identifiable component part. In fact the subsequent amendments made in the relevant provisions in the Tamil Nadu General Sales Tax Act, 1959 and Kerala General Sales Tax Act actually highlight the principle stated by the Supreme Court, by adding certain explanation to the relevant provisions subsequently. In those two legislations, it was stated that component part means an article which forms an identifiable constituent of the finished product which along with others go to make up the finished product and which is identifiable visually or by a mechanical process and not by a chemical process. Obviously these amendments were made to get over the principle stated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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