TMI Blog1990 (9) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... lves, inter alia, on the ground that there was abuse of the form inasmuch as it could not be said that molasses form identifiable component of the end-product ethyl alcohol manufactured by the assessee. Aggrieved by such imposition of penalty for abuse of the form, the assessee preferred an appeal before the Deputy Commissioner of Commercial Taxes. By a common order dated February 16, 1981, the Additional Deputy Commissioner of Commercial Taxes (Appeals), Bangalore City Division, Bangalore, set aside the imposition of penalty by the assessing authority, inter alia, on the ground that no penalty could have been imposed under section 5(3-B) as there was no abuse of the form in obtaining molasses and consuming it for production of ethyl alcohol as molasses did form a component of such end-product. The assessee demonstrated before the appellate authority by production of a certificate issued by the Chief Chemist of the assessee-company that molasses were chemically identifiable in the end-product. Acting on such demonstration, the appeals came to be allowed and the orders of penalty for the relevant assessment years were set aside. Therefore, the Commissioner of Commercial Taxes, respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority. Explanation.-For the purpose of this sub-section, 'component part' means an article which forms an identifiable constituent of the finished product and which along with others goes to make up the finished product." A plain reading of the sub-section leaves no doubt in our mind that a concessional rate of tax is available to a purchaser of any goods specified in the Second Schedule to the Act, if such goods are used as component parts in the production of other goods meant for sale in the State. Such concessional rate depends upon the rate prescribed under section 5 of the Act. The explanation under the section is no more than an attempt to define with some degree of precision the expression "component part". Whether that has been achieved or not is a matter which should be decided by our pronouncement. Mr. Dattu, learned Government Pleader, appearing for the respondent-Commissioner of Commercial Taxes, has contended strenuously that a very restricted meaning must be given having regard to the explanation to the expressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of this case, the appellate authority whose order came to be revised by the Commissioner proceeded on the basis of the certificate given by the chemist of the assessee-company that molasses as a component part could be identified by chemical tests conducted on the end-product, viz., ethyl or industrial alcohol. Under such circumstances, the Commissioner could have had a second opinion from an independent source as to the correctness or otherwise of the certificate issued by the chemist of the assessee-company. Even otherwise, we are of the view that having regard to the purpose with which the amendment was brought about, i.e., to benefit a class of manufacturers or producers of such goods with a lower rate of taxes on the component parts used in their manufacturing process, it is difficult to see how sodium silicate used in the soap manufactured would stand on a different footing than the molasses used in the manufacture of ethyl or industrial alcohol. No doubt, it is true in the case of a motor vehicle, the component parts are easily identifiable as tyres, gear box, engine, window, steerings, wheels, radiator, dynamo, etc., etc. But, everything manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he naked eye when so used, because in the sub-section under consideration, there is no classification made of manufacture of the end-products into any class as producing goods which are of such a nature where the component parts are visible and manufacture of goods where such component parts are not made visible parts of the end-product. As long as the goods purchased is found in the Second Schedule (molasses, the item found in the Second Schedule at the relevant time), the purchaser of it for producing something else would normally attract the benefits under the provision. Merely because the use of that as a component part or constituent part it is not visible, it does not mean that the benefit should disappear. In fact, we have had the advantage of using or seeing the meaning of the word "component" in the Condensed Chemical Dictionary-Tenth Edition -Revised by Gessner G. Hawley, and it reads as follows: "One of the minimum number of substances required to state the composition of all phases of a system. In the absence of chemical reaction, any of the substances in a mixture. See also constituent." The above illustrates that the word "component" is capable of giving very fl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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