K. Ramaswamy, J. - (1.) This appeal by special leave is against the judgment of the Division Bench of the Kerala High Court dated -October 17, 1984 made in T.R.C. No. 73 of 1984. The respondent is a registered dealer under the Kerala General Sales Tax Act, (for short 'the Act). For the assessment year 1975-76 the respondent filed a return on taxable turnover of Rs. 39,376.32 as against the turnover of Rs. 58, 130/ - excluding a sum of Rs. 72,787.87, the value of coconut husks purchased by the assessee and converted into the coconut fibre. The respondent claimed that there is no manufacturing process involved in making fibre from coconut husk and, therefore, the purchase value is not exigible to tax under the Act. This was negatived by the Sales Tax Officer who assessed the purchased turnover on coconut husk at 4 per cent. under S. 5A of the Act, which was confirmed by the appellate authority. On revision, the Sales Tax Appellate Tribunal by Order dated July 26, 1983 relying upon the decision of the Kerala High Court in Dy. Commissioner of Sales Tax (Law) v. Pie Food Packers, (1978) 41 STC 364:1978 Tax LR 2104 (Ker), allowed the revision holding that no manufacturing process was involved in converting the husk into the fibre, therefore, the turnover was not includible to assessment. This was confirmed by the High Court. Thus this appeal.
(2.) The short question that arises for decision is whether coconut fibre is a separate entity from the husk in the commercial parlance. Admittedly, the coconut husk was purchased by the respondent. The process involved in making the coconut fibre from the coconut husk is as follows:- The green husks are soaked in saltish sea water for days together. After decomposition, it is again subjected to beating process either by mechanical or manual device and then the fibre is extracted. The fibre is used for making ropes, matting, etc.
(3.) The question, therefore, is whether any manufacturing process is involved in converting the husk into the fibre, and whether the fibre is different from the husk as a commercial commodity. The word 'manufacture' has not been defined under the Act, and therefore, we have to look into the meaning known in the commercial parlance. In Black's Law Dictionary, Fifth Edition, the word 'manufacture' has been defined as "the process or operation of making goods or any material produced by hand, by machinery or by other agency; anything made from raw materials by the hand, by machinery, or by art. The production of articles for use from raw or prepared materials by giving such materials new forms, qualities, properties or combinations, whether by hand labour or machine". Thus, by process of manufacture something is produced and brought into the' existence which is different from that out of which it is made in the sense that the things produced is by itself a commercial commodity capable of being sold or supplied. The material from which the thing or product is manufactured may necessarily lose its identity or may become transformed into the basic or essential properties. The Constitution Bench of this Court in Ujagar Prints v. Union of India, (1989) 3 SCC 488, held thus:- "The prevalent and generally accepted test to ascertain that there is 'manufacture' is whether the change or the series of changes brought about by the application or processes take the commodity to the point where, commercially, it can no longer be regarded as the original commodity but is, instead, recognised as a distinct and new article that has emerged as a result of the processes. The principles are clear. But difficulties arise in their application in individual cases. There might be borderline cases where either conclusion with equal justification be reached. Insistence on any sharp or intrinsic distinction between 'processing' and 'manufacture', we are afraid, results in an over simplification of both "and tends to blur their interdependence in cases such as the present one". ;