TMI Blog1978 (12) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... does not manufacture such ampules but purchases them. After those ampules are properly washed and subjected to sterilisation, the injectible liquid medicine is poured into them without touch of human hand. The tops of the ampules are thereafter automatically sealed. This entire integrated process of manufacture of injectible liquid medicine and filling and scaling it in glass ampules takes place in the plant of the assessee under expert supervision because extreme care has to be taken to ensure against any contamination. During the assessment period from 1st April, 1971, to 31st March, 1972, the assessee purchased glass ampules worth Rs. 12,174.44 against certificates in form 19. In the course of proceedings for the assessee's assessment to sales tax, the Sales Tax Officer held that, contrary to the certificate, certain percentage of the glass ampules purchased by the assessee was used for another purpose, namely, for manufacture of non-taxable goods, since the manufactured product (injections) to the extent of that percentage, was not sold within the State but it was sold on consignment basis outside the State. The Sales Tax Officer thereupon levied purchase tax under section 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeded to consider the question whether the glass ampules can be treated as consumable stores. According to the Tribunal, consumable stores, properly so-called, are goods which are consumed in the process of manufacture of the finished product. Therefore, the finished product in the instant case not being the injection along with the ampule but only the injectible liquid medicine, the glass ampules could not be considered to be consumable stores. The Tribunal appears to have been of the view that in order that the injectible liquid medicine manufactured by the assessee could be properly preserved and conveniently transported and properly marketed, ampules were absolutely necessary. However, on that account they could not be categorised as consumable stores because "ampules are used after the manufacture of injectible liquid medicine is complete which is ready for filling in and the ampules are used for filling in such injectible liquid medicines", which showed that "ampules are used after the manufacture of the finished product is complete". It is on the basis of this approach and reasoning that the Tribunal arrived at the decision which it reached. Purchase tax is leviable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The expression 'in the manufacture of goods' should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judgment, fall within the expression 'in the manufacture of goods'." Giving an illustration based on the manufacture of cotton textiles, it was observed as follows: "For instance, in the case of a cotton textile manufacturing concern, raw cotton undergoes various processes before cloth is finally turned out. Cotton is cleaned, carded, spun into yarn, then cloth is woven, put on rolls, dyed, calendered and pressed. All these processes would be regarded as integrated processes and included 'in the manufacture' of cloth. It would be difficult to regard goods used only in the process of weaving cloth and not goods used in the anterior processes as goods used in the manufacture of cloth." Having given the aforesaid illustration, the Supreme Court proceeded to make the following further o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing activity might not be commercially expedient. It would all depend on the facts and circumstances of each case and the question will necessarily be decided on the evaluation of the part played by the goods in question in the process of manufacture as understood according to the test laid down in J.K. Cotton S. W. Mills Co. Ltd.'s case[1965] 16 S.T.C. 563 (S.C.). From these two decisions, one principle clearly emerges and it is that the phrase "use in the manufacture" is not to be given a narrow and constricted meaning and that it would take in the entire process carried on by a manufacturer with a view to converting raw materials into finished goods and that if any particular process is so integrally connected with or related to the ultimate manufacture of goods that without that process or activity, manufacture, even if theoretically possible, would be commercially inexpedient, goods required in that process would fall within the expression "goods used in the manufacture of goods". Applying the aforesaid test for the resolution of the question herein, namely, whether glass ampules could be said to have been used in the manufacture of injections, the only answer which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served, the injectible liquid medicine cannot possibly leave the plant unless it is poured and sealed into a glass ampule. If this be the role which glass ampules play in the manufacture of injections, they can be properly classified as raw materials used in the process of manufacture of injections. It requires to be recapitulated in this connection that though glass ampules are manufactured elsewhere and they are purchased by the assessee, they are subjected to the process of washing and sterilisation so as to immunise them against atmospheric contamination and that the glass ampules so processed are fed into the plant so that the injectible liquid medicine gets poured into them and they are automatically sealed without the touch of human hand. Having regard to the process to which glass ampules have to be subjected before their use and the actual role which they play in the manufacture of injections, we are of the view that they can be properly treated as raw materials used in the manufacture of injections. The Tribunal in taking the contrary view fell into a basic error, namely, that it treated the injectible liquid medicine itself as the finished product. In taking this view, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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