TMI Blog1960 (7) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... the State. T.C. Nos. 49 to 53, 56, 67, 79 and 80 of 1960 came up before us for orders as to admission, that is, whether notice should issue to the respondent. The questions that arise for determination by us are the same in the case of each of the assessees-petitioners. T.C. Nos. 62 and 65 of 1959 preferred by the same assessee, Bell Mark Tobacco Co., relate respectively to the assessment years 1955-56 and 1956-57. They are applications to revise the orders of the Tribunal rejecting the appeals preferred by the assessee. The assessee preferred applications to the Tribunal to review its appellate judgments, but they were dismissed. Against these orders the assessee preferred T.C. Nos. 49 and 50 of 1960. Similarly T.C. Nos. 63 and 64 of 1959 preferred by another assessee were against the appellate orders of the Tribunal with reference to assessment years 1955-56 and 1956-57. T.C. Nos. 79 and 80 were applications to review the orders of the Tribunal declining to review the appellate judgment in those cases. T.C. Nos. 32 to 34 of 1960 preferred by the same assessee Md. Ibrahim related respectively to the assessment years 1955-56, 1956-57 and 1957-58. With reference to the same t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eems clear to us that what is brought to tax under clause (vii) is the sale of manufactured products of tobacco while clause (viii) provides for the levy of tax on sale of raw tobacco, whether cured or uncured, that is, tobacco which has not been subjected to any manufacturing process. Cigars, cheroots, bidis and snuff referred to in clause (vii) are obviously products manufactured from tobacco. After enumerating these items and chewing tobacco, clause (vii) takes within its scope "any other product manufactured from tobacco". In our opinion, even had there been nothing else, the expression "manufactured from tobacco" would have to be read distributively with reference to each of the enumerated items, including chewing tobacco. The expression "any other product" following the enumerated items also seems to call for such an interpretation, that the expression "manufactured from tobacco" has to be read distributively. The proviso to sub-clause (viii), in our opinion, makes the position even clearer. The expressions in the proviso are "goods included in clause (vii)" and "the manufacture of such goods". They emphasise the distinction between clauses (vii) and (viii). As we said, cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subjected to any manufacturing process, it could fall only under clause (viii) and not under clause (vii). To isolate chewing tobacco alone among the items enumerated in clause (vii), divorce it from its setting in clause (vii) and construe that expression independent of clause (vii) and in accordance with what the petitioner's counsel claimed to be the commercial usage, is not, in our opinion, justified either by the language of clause (vii) or by the scheme that underlies clauses (vii) and (viii) of section 5. The findings of the Tribunal with reference to which we have to answer the question were (1) what the assessees purchased was not a manufactured product of tobacco; the tobacco at that stage had not been subjected to any process of manufacture; and (2) what the assessees sold was a manufactured product of tobacco; the tobacco they had purchased was subjected to manufacturing process before it was sold by them in packets. If these findings stand, what we have said above, that clause (vii) applies to manufactured products, should suffice to sustain the order of the Tribunal, that on the sale of that manufactured product the assessees were liable to pay sales tax. It was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in a fit condition for sale. The main process to which the tobacco is subjected at that stage is that it is soaked in jaggery water, dried in shade and subjected periodically to the process of bulking we have mentioned above. We see no reason to differ from the Tribunal, that the process of bulking and desanding to which the tobacco was subjected before the assessee purchased it did not amount to manufacturing process. What the assessee purchased was certainly not raw tobacco in the sense that it was straight off the field. It was cured tobacco. But then clause (viii) of section 5 takes within its scope both cured and uncured tobacco, which constitutes raw material for the manufacture of the products to which section 5(vii) applies. What however is excluded from section 5(viii) is tobacco which has itself been subjected to a manufacturing process. Whether, if tobacco which has been subjected to a manufacturing process is again subjected to a further manufacturing process by the purchaser it will fall under section 5(vii) does not arise for consideration in this case, and we express no opinion of ours on that question. Factually the position was that what the assessee purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the tobacco the assessee purchased had not been subjected to any manufacturing process prior to that purchase. As we said, once the findings of the Tribunal are accepted, it should be clear that the sales effected by the assessee fell within the scope of section 5(vi) of the Act. The turnover of these sales was rightly included by the Tribunal in the taxable turnover of the assessee. The next question is, whether the Tribunal was right in including in the taxable turnover of the assessee the cost of the packing material they used when they effected sales of chewing tobacco. It was common ground that the requirements of rule 5(1)(g)(ii) of the Turnover and Assessment Rules were not satisfied. The assessee did not specify the charges and charge separately for packing. The liability to have the cost of packing materials, estimated if necessary, included in the taxable turnover under such circumstances is really concluded by the earlier decisions of this Court, which were reviewed in United Bleachers Ltd. v. State of Madras[1960] 11 S.T.C. 278., and by the last of our decisions (unreported) in T.C. No. 20 of 1958*. The Tribunal was right in sustaining the inclusion of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom his licenced warehouse to be subjected to the manufacturing process to which we have adverted before it was eventually sold either in packets or otherwise. Therefore, as a person who stored goods in a warehouse he was one on whom rule 7 cast a liability to pay the excise duty. Until he paid the excise duty he could not remove the tobacco. So it was in discharge of a tax liability imposed on him in the prescribed manner, that is by rule 7, that the assessee paid the excise duty. Rule 144 specifically provides that no goods shall be removed from any warehouse that is, a licensed warehouse, except on payment of the duty. Rule 140 regulates licensing of warehouses. That each of the assessees had a licensed warehouse in which he stored tobacco was never in issue. Rule 19 may also be referred to. "The duty shall become chargeable as soon as products have been cured and are in a fit state for sale or where the manufacture precedes sale, for manufacture................." In this case the duty was charged and paid at the stage when the tobacco was fit for manufacture, that is, it was taken out of the warehouse for the purpose of manufacture. Rule 29 provides: "Where the curer sells ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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