Judgment

SABYASCHI MUKHARJI, J :- Special leave granted.

2. This is an appeal against the judgment and order of the High Court of Kerala dated 10th of November, 1986. By the impugned judgment the High Court has dismissed the Tax Revision Case filed at the instance of the Sales Tax authority. The assessee-respondent herein had purchased fresh frog legs and after removing the skin, washing and removing dirt etc. and freezing it for the purpose of avoiding decomposition and decay, the said frog legs were exported. The assessee claimed that they were entitled to the benefit of Section 5(3) of the Central Sales Tax Act, 1956.

3. In order to appreciate the question it is necessary to refer to the findings of the Tribunal. The Tribunal found that what was purchased by the assessee was fresh frog legs and, after freezing it for the purpose of avoiding decomposition and decay, it was exported. It was, therefore, held by the Tribunal that what was purchased as fresh frog legs was exported by the assessee. It was contended on behalf of the State that what was purchased was fresh frog legs and the same was not exported as such without freezing it. The Tribunal held that only frozen frog legs were exported. Therefore, it followed that what was purchased and exported was one and the same commodity. The frozen frog legs did not undergo, any material change in character. The identity of the frog legs remained unchanged as such. In that view of the matter the Tribunal held that the assessee was entitled to the benefit of Section 5(3) of the aforesaid Act. The High Court accepted this view.

4. In our opinion the question is concluded by a decision of the this Court in M/s. Sterling Foods v. State of Karnataka, (1986) 3 SCC 469. That was a decision of a Bench of three learned Judges rendered on 21st July, 1986. There the Court was concerned with shrimps, prawns and lobsters locally purchased for complying with export orders and after the process of cutting their heads and tails, peeling, deveining, cleaning, freezing and packing, exported these outside India under prior contract of sale. It was held that after such processing shrimps, prawns and lobsters retained their original identity and did not become different commodities. It was, therefore, held that the assessee was entitled to exemption from tax under Section 5(3) of the Central Sales Tax Act, 1956 in respect of purchase turnover of shrimps, prawns and lobsters, the purchases being of the same commodities which were exported. There, the question was whether shrimps, prawns and lobsters subjected to processing like cutting of heads and tails, peeling, deveining, cleaning and freezing ceased to be the same commodity or become different commodity for the purpose of the Central Sales Tax Act. This Court expressed the view that the test applied for the purpose of determining whether a commodity subjected to processing retained its original character and identity is as to whether the processed commodity is regarded in the trade by those who deal in it as distinct in identity from the original commodity or it, is regarded, commercially and in the trade as same as the original commodity.

5. Every processing does not bring about a change in the character and identity of the commodity. The nature and extent of processing may vary from one case to another and indeed there may be several stages of processing and perhaps different kinds of processing at each stage. With each process suffered, the original commodity experiences change. But it is only when the change or a series of changes take the commodity to the point where commercially it can no longer be regarded as the original commodity but instead is recognised as a new and distinct commodity that it can be said that a new commodity, distinct from the original, has come into being. The test is whether in the eyes of those dealing in the commodity or in commercial parlance the processed commodity is regarded as distinct in character and identity fro