The main legal point established in the judgment is that the process of centrifuging latex results in a commercially different product from raw latex, qualifying as a finished product under the Kerala General Sales Tax Act.

K.K. Usha, J.

The question for consideration arising in this original petition is whether the product obtained at the end of the process of latex concentration by using the methods of centrifuging is commercially a different product from the latex in its form as taken directly from the tree.

2. The petitioner is engaged in the processing and sale of centrifuged latex among other activities. Normal latex collected from the rubber tree is purchased by the company from rubber growers and the same is amoniated, preserved and later centrifuged with the aid of chemicals and centrifuging machines. The end product is used for manufacture of foam rubber and other industrial products and it is marketed in barrels. The petitioner had purchased empty drums for the purpose of storing centrifuged latex. It had issued in Form No. 18 declarations to the effect that the drums were for marketing the Company's finished products and by virtue of the provisions contained under S.5(7) of the Kerala General Sales Tax Act, sales tax is chargeable only at the concessional rate. The respondent had issued a notice on 26.06.1984 directing to show cause why penal action should not be initiated for misusing Form No. 18 declaration during the period 1982-83. Respondent had taken a stand that centrifuged latex is not finished products coming under the ambit of S.5(7) of the Kerala General Sales Tax Act. Thereafter a penalty was imposed on petitioner under S.45 A of the Act for improper use of the Forms. The above order was under challenge before this court in OP. No. 7711 of 1985.

3. For the assessment years 1983-84 to 1986-87 also the respondent issued notice to the petitioner alleging misuse of Form No. 18 in the matter of purchase of empty drums. Ext. P3 is the copy of the notice. Petitioner gave a reply Ext. P4 pointing out that centrifuged latex is entirely different from normal latex. Reliance was also placed on a notification issued by Government of India (Ministry of Finance) in exercise of its powers under sub-rule 1 of R.8 of the Central Excise Rules, exempting preserved latex, latex concentrate, smoke rubber sheet, crepe rubber and crump rubber under item No. 68 of the First Schedule to the Central Excise and Salt Act, 1944 from the whole of the duty of excise leviable thereon under S.3 of the said Act. It was contended that under S.3 duty is leviable on excisable goods which are produced or manufactured in India. Since centrifuged latex is an item manufactured or produced, in the normal course it would have been exigible to excise duty. It was under these circumstance, the notification dated 8.7.1983, copy of which is produced as Ext. P1 along with the original petition was happened to be issued.

4. It is contended by the petitioner that the two units belonging to the petitioner where centrifuged latex is carried on are registered as Small Scale Industrial Units as is evidenced by Exts. P5 and P6 Certificates. These certificates would also show that manufacturing process is carried on in these units, the product manufactured being latex concentrates and raw material latex.

5. It was contended on behalf of the petitioner that the principles laid down in the decisions interpreting the term 'manufacture' in connection with the provisions contained under Sales Tax Act; are directly applicable in the present case also so as to examine whether centrifuged latex would amount to finished products. On the basis of such contention, reliance was made by the petitioner on several decisions of the Supreme Court as well as other High Courts. In Ujagar Prints v. Union of India and others (1989) 170 ITR page 317, a Constitutional Bench of Supreme Court had occasion to consider the question whether the processes of bleaching, dyeing, printing, sizing, shrink-proofing etc., carried on in respect of cotton or man-made "grey fabric" amount to "manufacture" for purpose, and within the meaning of S.2(f), of the Central Excise and Salt Act, 1944 before and after