TMI Blog1964 (8) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... Rolling Mills Private Limited) produced a running account for such supply of scrap and delivery of brass discs and sheets. The nature of the supply, the manner in which the running account is maintained, and the way in which the contract between the vessel merchant and the rolling mills is performed, are more clearly described in an affidavit which was filed before us by the assessee. In the course of the hearing of the revision cases, a copy of this affidavit was supplied to the learned Government Pleader. The facts stated in the affidavit are not now in controversy. The procedure adopted in this business, as revealed by the affidavit appears to be this: The assessee sends scrap of copper and brass to the Nellai Metal Rolling Mills Private Limited for being converted into discs or sheets as required by him. When the scraps are received, the receipts are entered by the mills in "own conversion account", and the name of the metal as also its weight are shown in the entry. In the assessee's folio also they are shown to the credit of the assessee. There is no sale of scrap at this stage. No price or consideration or even the value of the scrap supplied is entered in the books of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ically and resolved about the rate of rebate to be allowed consequent on the addition of zinc required for melting copper scrap into brass sheets, for which the credit notes are given to the merchants who supply copper scrap. The department has picked out the occasions in the respective assessment years where the vessel merchant has supplied copper scrap only and treated such deliveries of copper scrap as sales for consideration, the consideration being the value of brass discs and circles plus manufacturing charges as well as the rebate just now referred to for the addition of zinc made during the process of melting. So far as deliveries of brass scrap are concerned, the department, relying upon the decision of this Court in South India Metal Works and Rolling Mills v. State of Madras [1960] 11 S.T.C. 507., has exempted them from assessment. In both the years of assessment, copper scrap and brass scrap as well as zinc scrap have been supplied. But as mentioned above, only the deliveries of copper scrap have been picked out for assessment and treated as sales, and this is the subject-matter of the dispute before us. The Sales Tax Appellate Tribunal was of the opinion that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crap supplied up to that date are given to the vessel merchant. An amount is debited for manufacturing charges. A rebate is granted for delivery of copper alone by the vessel merchant for the excess quantity of zinc supplied by the manufacturer besides the manufacturing charges. The said running account must be construed as establishing a contract for the manufacture and delivery of brass sheets and discs in lieu of the brass scrap or copper scrap, periodically supplied by the vessel merchant to the manufacturer, after levying certain justifiable charges for the purpose. Such a transaction came up before this Court in Raju Chettiar and Brothers v. State of Madras [1955] 6 S.T.C. 131. It is a case where the plaintiff-firm carrying on business as jewellers and merchants in gold and silver bullion, supplied from time to time silver to manufacturers of silverware and silver jewellery at Kumbakonam, and in the accounts, the Kumbakonam merchants were debited with the weight of such silver in tolas. And when finished articles were received from the Kumbakonam manufacturers, they were credited with the weight of the finished articles. The manufacturers were credited with the wages or mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scrap. The Bench observed that if there was no purchase of the scrap by the assessee and no acquisition of property in the scrap metal, it was a little difficult to understand the basis for the view that, when the sheets and rings were made over to the customer, there was a sale involving an element of transfer of property. That was a case, of course, where the assessee was the manufacturer and not the vessel merchant, as in this case. But the principle expressed in that decision will be the same whether we consider it from the point of view of the merchant who delivers the scrap on the one hand and the manufacturer, who periodically delivers to him the finished sheets and discs after melting the scrap in his rolling mills, on the other. There is another decision of this Court in Indian Metal and Metallurgical Corporation v. State of Madras [1963] 14 S.T.C. 788., where also the assessee was the rolling mill and not the vessel merchant. It was a case of assessment for delivering of brass sheets and discs supplied by the rolling mills, against the copper scrap supplied by the vessel merchants. Venkatadri, J., who delivered the decision of the Bench, pointed out that while supp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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