K.N. Saikia, C.J.
1. The question to be decided in this petition is whether wax candles are goods distinct and different from wax for the purpose of the Assam Sales Tax Act, 1947. If wax candles are distinct goods it will be taxable under the Assam Sales Tax Act; if it is wax it will be taxable under the Assam (Sales of Petroleum and Petroleum Products, including Motor Spirit and Lubricants) Taxation Act, 1955, shortly, 'the Petroleum Taxation Act'.
2. The petitioner, M/s. Modern Candle Works, is a partnership firm carrying on the business of sale and supply of wax and wax candles since 1971. It purchases wax in bulk, makes candles out of it and sells. The firm is registered now as a dealer under the Assam Sales Tax Act, 1947, hereinafter called 'the Act'. The Superintendent of Taxes, Gauhati, hereinafter called 'the Superintendent', by his notice dated 27th July, 1971 issued under Section 10 of the Act directed the petitioner to apply for registration as a dealer under the Act, but the petitioner submitted that it was not obliged to register itself as dealer under the Act as the wax candle being a petroleum product was taxable under the Petroleum Taxation Act. The Superintendent having insisted, the petitioner submitted its application on 1st September, 1972 and the latter was issued Certificate of Registration, No. GAU 3880, with effect from 1st April, 1967 under Section 10 of the Act and the petitioner was directed to submit returns.
3. The books of accounts of the petitioner were seized and verified by the Enforcement Branch of the Sales Tax Department and those were forwarded to the Superintendent before whom the petitioner stated that the firm itself having come into existence with effect from 1st April, 1971, no return could be submitted for periods prior to that date; and that wax candle was nothing but wax and hence not taxable under the Act. However, the Superintendent by the impugned order dated 5th March, 1973 held that wax candle was a manufactured product quite distinct and different from wax and that wax candle with wick was itself a commercial commodity capable of being sold or supplied in course of business and as such taxable as 'other goods' under the Act.
4. The petitioner therefrom moved a revision petition before the Commissioner of Taxes, Assam, shortly 'the Commissioner', under Section 31(2) of the Act, contending, inter alia, that a wax candle was simply a long cylindrical mass of wax containing a loose twisted cotton and it could not be regarded as an article made of but different from wax inasmuch as in making a candle out of wax, the essential character of wax does not change and hence the candle should not be treated as a commodity different from wax. The Commissioner rejected the contention holding that wax and wax candle were two different marketable commodities and consequently dismissed the revision petition and confirmed the Superintendent's order dated 5th March, 1973. Hence this petition.
5. Dr. B. P. Saraf, learned counsel for the petitioner, submits, inter alia, that under Section 3(vii) of the Petroleum Taxation Act 'all other products obtained as derivatives of petroleum and/or natural gas' are taxable under that Act; and there is no dispute that the petitioner paid tax on purchase of wax; that under Section 6(1) of the Act the provisions of the Act shall not apply to the sale of goods taxable under the Petroleum Taxation Act and hence wax candles being the same as wax, the candles are not taxable under the Act; that under Section 3(4) of the Petroleum Taxation Act, the tax under Sub-section (1) thereof shall be levied at the stage of first sale of the taxable goods in Assam; and that there is no dispute that the petitioner paid tax when wax was first purchased. Counsel relies on [1954] 5 STC 365 (Assam) (Kapildeoram Baijnath Prosad v. J. K. Das), [1960] 11 STC 827 (SC) (Tungabhadra Industries Ltd. v. Commercial Tax Officer), [1967] 19 STC 24 (SC) (Stale of Gujarat v. Sakarwala Brothers), [1967] 20 STC 430 (SC) (Devi Doss Gopal Krishnan v. State of Punjab) and [1953] 4 STC 129 (Assam) (Mohanlal Jogani Rice and Aita Mills v. State of Assam).
6. Mr. D. P. Chaliha, learned Government Advocate, Assam, refutes the contentions, submitting, inter alia, that wax candles though manufactured out of wax are a separate and distinct commercial commodity and is taxable under the Act; that the process of manufacture of candles produces a distinct marketable commodity which comes under the definition of 'goods' and as such taxable-under the Act.
7. To decide the question whether wax candles are goods distinct from wax, it is necessary to decide precisely if and when wax in the course of production of wax candle out of it ceases to be wax and the candle becomes a separate and distinct goods.
8. The decisions cited at the Bar can be classified into two categories, namely, production of different varieties of the same edible article, e.g., chira and muri from rice, patasa and alchidana from sugar, vanaspati from groundnut oil and the like; and production of goods out of some raw materials like timber, iron and the like. From these decisions some precise conditions and circumstances may be culled out. They cannot, however, be said to be exhaustive. Each decision must, therefore, depend on the facts and circumstances of the case particularly the nature of the original article, the process of its transformation or manufacture and the nature of the article produced and its recognition as a distinct article in common parlance. The process of manufacture or transformation is an important factor but by itself may not always be a decisive factor. The simplicity or complexity of transforming or manufacturing processes, whether it is done by manual labour or mechanical means, whether some other commodity has been mixed or added to it or not will no doubt be important but again not always be decisive so that the factors which enable a decision in one case may not apply equally to a decision in another case.
9. In Mohanlal Jogani Rice and Atta Mills v. State of Assam [1953] 4 STC 129 (Assam), the question that arose was whether khudi was a form of rice and bhushi or rice bran was included in the word 'cereals' and on that account exempt under item 1 of Schedule III of the Act. This Court has held that khudi is nothing but broken rice and comes within item 1 of Schedule III of the Act which excludes from assessment all cereals and pulses including all forms of rice except when sold in sealed containers; and khudi not sold in sealed containers is exempt from assessment. Similarly, this Court has held that cereal as defined in Webster's Dictionary, the inner coat of the rice would come within the definition of 'cereal' and that bhushi or rice bran may be considered to be included in the word 'cereal' in item 1 of Schedule III of the Act and is exempt from assessment. In that case both bhushi and khudi could be said to be by-products, in production of rice. There was, therefore, no production of any distinct commodity from rice.
10. In Kapildeoram Baijnath Prosad v. J.K. Das [1954] 5 STC 365 (Assam), the question was whether chira and muri would be exempt under item 1, Schedule III entry--'all cereals and pulses including all forms of rice', and it has been held that as long as a thing continues to be cereal and retains its form as such, although it may have undergone some simple processes of boiling or parching, it cannot be held that it will not be covered by the exemption provided by item 1 of Schedule III. Chira and muri do not cease to be cereals merely because rice or paddy has undergone the process of being flattened or fried in assuming the form of chira and muri. To all intents and purposes chira and muri are cereals and have not lost their character of cereals by any process of transformation so as to make them being called by any other name and they are, therefore, exempt from sales tax. Thus in this case the principle was whether rice lost its character in course of transformation into chira and muri by the processes of flattening and frying respectively. It was also held that all exemptions from taxation must be strictly construed and must not be extended beyond the express requirements of the language used. The taxation laws are not in the nature of penal laws; they are substantially remedial in their character and are intended to prevent fraud, suppress public wrong and promote the public good. They should, therefore, be construed in such a way as to accomplish those objects. It was further observed that if the cereal or rice has been so mixed up with other ingredients or so transformed as not to be reasonably called by that name, the position would be different. Even boiled rice may be described as a cereal though cooked rice of every description may not be described as cereal. 'Pulao' is one instance of cooked rice which it would be difficult to describe as a cereal. Thus, whether some other articles are mixed with it and whether the original article has lost its identity in course of transformation into the resultant product are important points in deciding the question.
11. In Tungabhadra Industries Ltd. v. Commercial Tax Officer [1960] 11 STC 827 (SC) it has been held that hydrogenated groundnut oil (commonly called vanaspati) is 'groundnut oil' within the meaning of Rule 18(2) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. The contention that processing of the oil in order to render it more acceptable to the customer by improving its quality would render the oil a commodity other than groundnut oil within the meaning of the rule which enable every registered manufacturer of groundnut oil to claim a deduction under Clause (k) of Sub-rule (1) of Rule 5 read with Rule 18(1) and (2) of the Turnover and Assessment Rules was rejected. It was accepted that exemption from the sale turnover under Rule 18(2) was on its terms applicable only to the sale of the oil in the form in which it was found when extracted out of the kernel and when raw groundnut oil was converted into refined oil, there was no doubt processing, but that consisted merely in removing from raw groundnut oil that constituent part of the raw oil which was not really oil. The elements removed in the refining process consisted of free fatty acids, phosphotides and unsaponifiable matter. After the removal of that non-oleic matter therefore the oil continued to be groundnut oil and nothing more. The matter removed from the raw groundnut oil not being oil could not be used after separation, as oil or for any purpose for which oil could be used. In other words( the processing consisted in the non-oily content of the raw oil being separated and removed, rendering the oily content of the oil 100 per cent and for that reason refined oil continued to be groundnut oil within the meaning of Rules 5(1)(k) and 18(2) notwithstanding that such oil did not possess the characteristic colour, or taste, odour, etc., of the raw groundnut oil. The analysis was that in case of hydrogenated oil which was prepared from refined oil by the process of passing hydrogen into heated oil in the presence of catalyst (usually finely powdered nickel), two atoms of hydrogen were absorbed. A portion of the oleic acid which formed a good part of the content of the groundnut oil in its raw state was converted, by the absorption of the hydrogen atoms, into stearic acid and it was this which gave the characteristic appearance as well as the semi-solid condition which it attained. In the language of the chemist, an intermolecular or configurational chemical change took place which resulted in hardening of the oil. Though it continued to be the same edible fat that it was before the hardening, and its nutritional properties continued to be the same, it had acquired new properties in that the tendency to rancidity was greatly removed, and was easier to keep and to transport. In that case both the Tribunal as well as the High Court held that the hydrogenated oil or vanaspati ceased to be groundnut oil by reason of the chemical changes which took place and which resulted in the acquisition of new properties including the loss of its fluidity, and hence vanaspati was not groundnut oil but a product of groundnut oil manufactured out of groundnut oil and therefore not entitled to the benefit of the deduction under Rule 18(2). Rejecting the contention, their Lordships held that the processing of the oil in order to render it more acceptable to the customer by improving its quality would not render the oil a commodity other than groundnut oil within the meaning of the rule. The removal of impurities by a chemical process of simple sedimentation did not render groundnut oil any the less a different commodity. The use of chemical process to harden the oil did not also render it a different commodity. Their Lordships, therefore, held that hydrogenated oil continued, even after the change, to be a groundnut oil. Since there was no change in its essential nature their Lordships observed that to be groundnut oil two conditions had to be satisfied, the oil in question must be from groundnut and secondly, the commodity must be oil. That the hydrogenated oil sold by the appellants was out of groundnut not being in dispute, the only point was whether it continued to be oil even after hydrogenation. Oil was a chemical compound of glycerine with fatty acids, or rather a glyceride of a mixture of fatty acids--principally oleic, linoleic, stearic and palmitic--the proportion of the particular fat varying in the case of oil from different oil-seeds and it remained a glyceride of fatty acids even after the hardening process, though the relative proportion of the different types of fatty acids underwent a slight change. In its essential nature therefore no change had occurred and it remained an oil--a glyceride of fatty acids--that it was when it issued out of the press.
12. In State of Gujarat v. Sakarwala Brothers [1967] 19 STC 24 (SC), the question was whether fatasa, harda and alchidana were included in 'sugar' and as such exempt from sales tax under the Bombay Sales Tax Act, 1959, Schedule A, entry 47. The Supreme Court decided in the affirmative observing that the word 'sugar' in entry 47 is intended to include within its ambit all forms of sugar, that is to say sugar of any shape or texture, colour or density and by whatever name it is called. The word 'form' would connote a visible aspect in which the thing exists or manifests itself. Sugar may manifest itself in the form of 'patasa' as a result of certain simple processes being carried out. It may similarly manifest itself in the form of 'alchidana' or small lumps of sugar or as 'harda'. If sugar so manifests itself, it cannot be said that sugar has ceased to be sugar merely because it takes a particular shape or form which appeals to certain class of people on festive occasions.
13. In Alladi Venkateswarlu v. Government of Andhra Pradesh [1978] 41 STC 394 (SC), the question was whether rice included 'atukulu' (parched rice) and 'muramaralu' (puffed rice) within the meaning of entry 66(b) of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957, as rice in entry 66 was wide enough to cover both forms of rice. Section 5(1) of the Act levied tax on sales and purchases of goods. The First Schedule dealt with matters provided by Section 5(2)(a) containing entry 66 under which rice was taxable at the point of sale by the first wholesale dealer. It was held that it was not fair to so interpret a taxing statute as to impute an intention to the legislature to go on taxing what was virtually the same product in different forms over and over again and that such a result would be contrary to the basic axioms of taxation. Unless the language of the taxing statute was absolutely clear, it should not be given an obviously unfair interpretation against the assessee. Keeping in view the various provisions of the Act, together with the history of exemption of 'parched rice' and 'puffed rice' and its cancellation, it could not be the intention of the State Government suddenly to make the incidence of tax on 'parched rice' and 'puffed rice' so heavy by subjecting them to multi-point tax under Section 5(1). It was held that as there was no separate entries for rice, and rice reduced into an edible form by heating or parching without any addition of ingredients or appreciable changes in chemical composition, the term 'rice' was wide enough to include rice in its various forms whether edible or inedible. Rice in the form of grain was not edible while parched rice and puffed rice were edible but 'rice' in entry 68 was wide enough to cover both forms of rice.
14. The crucial question is whether one product has been manufactured out of another which is consumed in the process. The product that is consumed in the process is the raw material and the resultant product is a new commodity and taxable as such. The word 'manufacture' is derived from Latin words 'manus' and 'factura', literally, put together by hand. Now it means the process of making products by hand or machinery (United States v. Anderson, D.C. Cal. 45 F. Suppl. 943, 946). 'Manufacture' may, therefore, be defined as the making of goods or wares by manual labour or by machinery. As scale of production has expanded and workmanship and art have advanced, now nearly all artificial products of human industry, nearly all such materials as have acquired changed conditions or new and specific combinations, whether from the direct action of the human hand, from chemical and mechanical processes devised by human skill, or by the employment of machinery, are commonly called manufactured products. Any material produced by hand, by machinery or by other agency; anything made from raw materials by the hand, by machinery, or by any other device is manufactured article. 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 is manufacture.
15. Process is a stage in a series of stages in manufacture. The concept of manufacture has been applied in different cases. In Deputy Commissioner of Sales Tax (Law) v. Pio Food Packers [1980] 46 STC 63 (SC), where pineapple fruit was processed into pineapple slices for the purpose of being sold in sealed cans, it was held that there was no consumption of the original pineapple fruit for the purpose of manufacture and the case did not fall within Section 5A(1)(a) of the Kerala General Sales Tax Act, 1963. Although a degree of processing was involved in preparing pineapple slices from the original fruit, the commodity continued to possess its original identity, notwithstanding the removal of inedible portions, the slicing and thereafter canning it on adding sugar to preserve it. That section envisaged the consumption of a commodity in the manufacture of another commodity. The goods purchased should be consumed, the consumption should be in the process of manufacture, and the result must be the manufacture of other goods. It was held that there were several criteria for determining whether a commodity was consumed in the manufacture of another. The general prevalent test was whether the article produced was regarded in the trade, by those who dealt in it, as distinct in identity from the commodity involved in its manufacture. Commonly manufacture was the end result of one or more processes through which the original commodity was made to pass. The nature and extent of processing might vary from one case to another, and there might be several stages of processing and a different kind of processing at each stage. With each process suffered, the original commodity experienced a change. But it was only when the change, or a series of changes, took the commodity to the point where commercially it could no longer be regarded as the original commodity but instead was recognised as a new and distinct article that a manufacture could be said to take place. Where there was no essential difference in identity between the original commodity and the processed article it was not possible to say that one commodity had been consumed in the manufacture of another. Although it had undergone a degree of processing, it must be regarded as still retaining its original identity. Their Lordships analysing the cases observed that in each of them the same principle had been applied: 'Does the processing of the original commodity bring into existence a commercially different and distinct article ?'
16. In Anwarkhan Mehboob Co. v. State of Bombay [1960] 11 STC 698 (SC), where raw tobacco was manufactured into bidi patti; A. Hajee Abdul Shuhoor and Co. v. State of Madras [1964] 15 STC 719 (SC), where raw hides and skins constituted a different commodity from dressed hides and skins with different physical properties; State of Madras v. Swasthik Tobacco Factory [1966] 17 STC 316 (SC), where raw tobacco manufactured into chewing tobacco; and Ganesh Trading Co., Karnal v. State of Haryana [1973] 32 STC 623 (SC), where paddy was dehusked into rice, it was held that a different commercial article had come into existence. On the other hand in Tungabhadra Industries Ltd. [1960] 11 STC 827 (SC), where hydrogenated groundnut oil was regarded as groundnut oil; and Commissioner of Sales Tax, U. P. v. Harbilas Rai & Sons [1968] 21 STC 17 (SC), where bristles plucked from pigs, boiled, washed with soap and other chemicals and sorted out in bundles according to their size and colour were regarded as remaining the same commercial commodity, pig bristles, it was held that although the original commodity had undergone a degree of processing it had not lost its original identity. Applying the above principles, it was held that there was no essential difference between pineapple fruit and the canned pineapple slices. The, dealer and customer regarded both as pineapple. The only difference was that the sliced pineapple was a presentation of fruit in a more convenient form and by reason of being canned it was capable of storage without spoiling. The additional sweetness in the canned pineapple arose from the sugar added as a preservative. Therefore on a total impression the pineapple slices were held to have possessed the same identity as the original pineapple fruit. Their Lordships referred to Anheuser-Busch Brewing Association v. United States 52 L Ed 336, 338, where the court said:
Manufacture implies a change, but every change is not manufacture, and yet every change in an article is the result of treatment, labour and manipulation. But something more is necessary.... There must be transformation; a new and different article must emerge, 'having a distinctive name, character or use'.
And further:
At some point processing and manufacturing will merge. But where the commodity retains a continuing substantial identity through the processing stage we cannot say that it has been 'manufactured'.
17. In Gael Industries (Pvt.) Ltd. v. Commissioner of Sales Tax, U. P. [1971] 28 STC 729 (All.), the question was whether ice was exempt under Section 4(1)(a) of the U. P. Sales Tax Act, 1948 Under Section 4(1)(a), the sale of water was exempt from tax. The assessee was engaged in the business of manufacture and sale of ice. The question, therefore, was whether ice and water were the same thing Allahabad High Court held that it was true that ice was manufactured from water without addition of any chemical or substance and that the chemical composition of ice and that of water was the same, but even then ice could not be regarded as water. It was a matter of common experience that while water was generally available free, ice was always sold in the market and unless so defined in the Act a term in the Sales Tax Act must be interpreted in a sense in which it was understood generally and in the commercial world and not in a technical sense. Chemically, ice and water might have the same composition, but in commercial and popular sense they were different commodities.
18. From the above decisions involving edible articles some of the criteria found are--whether the entry article is a genus of which the test article is a species; whether the essential characteristics of the entry article are still to be found in the new article; whether there has been addition of external agents thereby making it different; and whether there has been a process of transformation of such a nature and extent as to have resulted in the production of a new article as commonly understood in the market where it is dealt with. So long it does not result in a new article, the nature, duration and transformation of the original commodity would not be material.
In the other line of decisions involving articles which are not as such edible, we find that it is the concept of the consumption of the original commodity in the course of production of a new commodity as understood commonly by the people who use it would be material. The nature and extent of the process, whether the labour is manual or mechanical, whether the duration is short or long, whether the production requires expertise or not would no doubt be relevant but would not alone be decisive.
19. In Devi Dass Gopal Krishnan v. State of Punjab [1967] 20 STC 430, the Supreme Court observed that where goods purchased and the goods sold were not identical ones it could not be said that the same goods were taxed at two stages. Therefore, where there was a purchase tax on oil-seeds or steel scrap and steel ingots or cotton, and sales tax on oil and oil-cake or rolled steel sections or yarn after manufacture, it could not be said that the same goods were taxed at two stages, since the manufacture had changed the identity of the goods purchased and the goods sold. When oil was produced out of oil-seeds, the process certainly transformed raw material into different article for use and oil-seeds could therefore be said to be used in the manufacture of goods. The process whereby scrap iron lost identity and became rolled steel sections, a new marketable commodity, was manufacture. The stages through which the raw materials passed would not by itself be material.
20. In State of Gujarat v. S. V. Motichand [1969] 23 STC 288 (Guj), the question was whether corrugated iron sheets was a form of iron or an article of iron and covered by entry 15 or 80 of Schedule B of the Bombay Sales Tax Act, 1953. Gujarat High Court held that corrugated iron sheets were merely 'iron' in another shape and form and they could not be regarded as articles or products manufactured or fabricated out of iron. Merely because iron was given the shape of sheet and was subjected to corrugation for the purpose of giving it rigidity and increased stiffness so as to make it acceptable to a particular class of persons who might want to use it in the form of iron sheet for roofing and walling, it did not cease to be iron; it merely assumed another form, namely, that of a wrinkled sheet but it still continued to retain the essential character of iron. Mehta, J., agreeing with Bhagwati, C. J., observed that 'iron' did not lose its essential character when it was put merely in the form of corrugated iron sheets, as it was merely an alteration of form or shape to make it more acceptable to the customer. It might be capable of independent use but that did not change it into a totally different manufactured product or a new fabricated article in which it could be said that iron or steel had lost its essential character. Divan, J., however, observed that the real test applicable to such cases was the test of possibility of substitution of the one for the other so far as consumers were concerned and if there was no such possibility it would be a new article and would no longer be a form of the original commodity. Corrugated iron sheet was not a form of iron or steel but was an article of iron or steel and was a distinct commodity. That is, it may be said that the distinctness between the original commodity and the distinct article manufactured out of it is one of degree rather than of kind.
21. In Porritts & Spencer (Asia) Ltd. v. State of Haryana [1978] 42 STC 433 (SC), the question was whether dryer felts made out of cotton or woollen yarn by process of weaving and commonly used as absorbents of moisture in paper manufacturing units were textiles and exempt from sales tax under the Punjab General Sales Tax Act. The Supreme Court answered it in the affirmative observing that dryer felts made out of cotton or woollen yarn by the process of weaving according to warp and woof pattern and commonly used as absorbents of moisture in the process of manufacture in paper manufacturing units fell within the ordinary and common parlance meaning of the word 'textiles' in item 30 of Schedule B to the Punjab General Sales Tax Act, 1948 and were exempt from tax. The word 'textiles' was interpreted according to its popular sense, meaning that sense which people conversant with the subject-matter with which the statute was dealing would attribute to it. That word had only one meaning, namely, a woven fabric, and that was the meaning which it had in the ordinary parlance. When yarn, whether cotton, silk, woollen, rayon, nylon or of any other description or made out of any other material was woven into a fabric, was 'textile' and it was known as such. The method of weaving adopted might be the warp and woof pattern, as was generally the case in most of the textiles, or it might be any other process or technique.
22. In State of Orissa v. Titaghur Paper Mills Co. Ltd. [1985] 60 STC 213, the Supreme Court held that timber and sized and dressed logs were one and the same commercial commodity. Logs were nothing more than wood cut up or sawn and would be timber. Planks, beams and rafters would also be timber. Timber was defined in the Orissa Forest Act, 1972 to include trees fallen or felled and. all wood cut up or sawn. The Madras Forest Act, 1882 defined it as including 'trees when they have fallen or have been felled, and all wood, whether cut up or fashioned or hollowed out for any purpose or not'. Observing that the dictionary meaning largely coincided with the statutory meaning of the word 'timber', their Lordships held that planks, beams, rafters would also be 'timber'. Similarly, in Mukesh Kumar Aggarwal & Co. v. State of Madhya Pradesh 1988 I SWR T 7, the question was whether stacks of 'eucalyptus wood' sold by the Forest Department after separating the 'bailies' and 'poles' constituted and answered the description of 'timber' under entry 32A of Part II of Schedule II to the Madhya Pradesh General Sales Tax Act, 1958. It has been held that eucalyptus is a 'timber' tree. The next question was whether the subsidiary parts of the tree sold in heaps after the 'bailies' and 'poles' were separated, could be called 'imarathilakdi' or 'timber'. Their Lordships thought that it would be somewhat of a strain on the popular meaning of the expression 'timber' with the sense, size and utility implicit in the idea to call these wood-heaps 'timber' meant or fit for building purposes. Persons conversant with the subject-matter would not call these wood-heaps 'timber' whatever else the goods might, otherwise be. Their Lordships observed that no tests of general validity applicable to or governing all cases could at all be laid down. The point to note and emphasise was that all parts or portions of even a timber tree need not necessarily be 'timber'. Some parts were timber, some parts merely 'firewood' and yet others merely 'wood'. Having regard to the nature and description of the wood in that case, their Lordships observed that the 'wood-heaps' were not susceptible to be or admit of being called 'timber' with all the concomitants and associations of that idea. Perhaps different considerations might be applied if, say, the pieces of eucalyptus wood were of a long-length or of a higher girth. Differences of degree could thus bring about differences of kind.
23. From the above decisions it cannot be said that the same criterion should be equally insisted in all kinds of taxable commodities. The crucial question would always be whether there is a new product out of the , other as a result of a manufacturing process of any kind. For example, wax may be used as a raw material for production of a new article. Wax is consumed in production of wax candle. If artistic dolls are produced out of wax it may be reasonable to hold that the wax doll though made of a wax is a new commodity. As has been held if ice is produced out of water bringing it to the required temperature even though it is composed entirely of water, it can be regarded as a new commodity. In case of earthen vessels the new commodity is nothing but clay burnt at a certain temperature. Cups and saucers are produced out of china-clay and bricks are produced out of suitable clay. The fact that nothing more has been added and the process is simple and manual may not justify regarding the brick as only clay and nothing more. If gunny bags are woven out of jute they do not remain jute but transformed into a new product. In all the above cases the fact that the essential characteristics are not lost would not be material. What is material is whether a distinct article as understood by the people who commonly deal with it has come into being. In other words whether in the market it is regarded as a distinct article.
24. For the purpose of the law of patents a 'manufacture' must have some reference to trade or commerce and that it must be for, or have as its product, something of a material nature. These conditions, however, if necessary, are certainly not sufficient. One test for 'manufacture' is whether a vendible product is produced, improved, restored or preserved, and whilst this test is somewhat narrow, absence of a vendible product ordinarily negates patentability. Not all vendible products, however, are produced by manufacture, which is concerned only with the useful as distinct from the fine arts, and with industry as distinct from agriculture and other such applications of natural process. 'Manufacture' has been defined as a manner of adapting natural materials by the hands of a man or by man-made devices or machinery, and as the making of an article or material by physical labour or applied power; but the practice is to accept as 'manufacture' a wider range of industrial activities than such a definition would suggest. It includes articles made in situ as well as articles made in a factory.
25. For the purpose of purchase tax in England a manufacturer is a person who carries on in the United Kingdom a business of making goods or of applying any process in the course of the making of goods, so however that the making up of drugs according to a formula prescribed by reference to the needs of a particular patient shall not be regarded as the making of goods.
26. As defined in Section 2 of the Factories Act, 1948 'manufacturing process' means any process for--
(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal; or
(ii) pumping oil, water or sewage; or
(iii) generating, transforming or transmitting power; or
(iv) composing types for printing, printing by letterpress, lithography, photogravure or other similar process or book-binding;
(v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels.
It is difficult to define, and no precise test can be laid down whether a particular process constitutes a manufacturing process or not. It is to be judged on facts of each case, the nature of process employed, the results achieved, prevailing business and commercial notions of the people. The decided cases are the only guiding factors.
27. Grading and sorting can be labelled as manufacturing process if it is done in order to standardise goods of particular category or variety, otherwise grading or sorting is not a manufacturing process. Merely drying of potatoes to remove moisture, gathered during the course of cold storage cannot be termed as manufacturing process. Angre (Col. Sardar C. S.) v. State 1965 1 LLJ 214 (HC).
28. 'Manufacture' is a very wide term which includes adaptation or modification introduced or effected in the article. Adaptation is taking place in the manufacture if the sweet toddy is converted into fermented toddy for sale. They possess different qualities. It is not material whether the process of change is with the help of machine or human agency. Thomas v. District Judge, Alleppey 1965 2 LLJ 369.
29. In State of Kerala v. V. M. Patel 1961 1 LLJ 549 (SC), the court held that the work of garbling pepper by winnowing, cleaning, washing and drying it on concrete floor and a similar process of curing ginger dipped in lime and laid out to dry in a warehouse were manufacturing processes. It is sufficient to say with regard to the decision in Col. Sardar C. S. Angre v. State AIR 1965 Raj 65 that the work of sorting and drying potatoes and packing and repacking them into bags was not held to be manufacturing process as the work done for the purpose of cold storage only and not for any of the purposes mentioned in Section 2(k)(i).
30. The definition of 'manufacturing process' is widely worded. The moisturing was an adaptation of the tobacco leaves. The stalks were stripped by breaking them up. The leaves were packed by building them up and putting them into gunny bags. The breaking up, the adaptation and the packing of the tobacco leaves were done with a view to their use and transport. All these processes are manufacturing processes. V. P. Gopala Rao v. Public Prosecutor AIR 1970 SC 66. The peeling, washing, etc., of prawns done at the premises intended for use or sale or otherwise disposal after it is peeled, washed, etc., and thereafter preserved at cold storage plant is 'manufacturing process'.
31. The question is whether wax candles can be said to be manufactured articles. Candle means a light, torch candere, to shine, be bright. In common parlance it means a taper, a cylindrical body of tallow, wax, spermaceti, or other fatty material, formed on a wick composed of linen or cotton threads woven or twisted loosely, and used for a portable light. According to Webster's Seventh New Collegiate Dictionary, candle means 'a long slender cylindrical mass of tallow or wax containing a loosely twisted linen or cotton wick that is burned to give light...'. In the Advanced Learner's Dictionary of Current English we find 'candle-round stick of wax, etc., with a wick through it, for giving light'. In the Concise Oxford Dictionary of Current English, 'candle' means 'a cylinder of wax, tallow, spermaceti, etc., enclosing wick, for giving light...'.
32. Candles are admittedly made by a simple process of moulding and putting a wick at the centre. It is then sold not as wax but as candle which has always been regarded as a distinct product in common parlance. It is not wax alone but wax put in cylindrical form with wick inside to facilitate burning. Dr. Saraf submits that the candle is only a piece of wax cut into reasonable size. We are unable to accept this submission. The production of candles is a manufacturing process, however simple it may be and it is not merely cutting a piece out of a mass of wax. The fact that manufacturing may be done by bare hands would also not be material. Bricks are produced by bare hands out of clay but that would not prevent those being regarded as a distinct product. The analogy of chira, muri, bhushi, khudi vis-a-vis rice is not applicable to this case inasmuch as here another material is used and the use is different. Similarly the use of hydrogenated groundnut oil is not essentially different from that of groundnut oil. So also use of patasa, alchidana and harda are not essentially different from that of sugar. That principle is, therefore, not applicable to the instant case. Dr. Saraf submits that the wax remains the same in the candle so that if the wick is removed only the wax remains. We are, however, of the view that wax is consumed in production of the candle and different form, utility and marketability are added to it, and as such, the wax cannot be said to have remained the same. Besides, candle may be made of different kinds o tallow and it has been accepted in common parlance as a marketable commodity. We, therefore, hold that the wax candle as commonly marketed is a distinct product manufactured out of wax and cannot be treated as simple wax. It is a distinctly marketable product and is so accepted in common parlance. Wax candles are, therefore, 'goods' for the purpose of the Assam Sales Tax Act.
33. We accordingly find no infirmity in the impugned order levying sales tax on wax candles and the revisional order upholding the same. This petition is, therefore, found to be without merit and is accordingly rejected. The rule is discharged. We leave the parties to bear their own costs. The interim order dated 21st July, 1975 stands vacated.
B.L. Hansaria, J.
I agree.