Tundu Tobacco being manufactured product held assessable.

SRINIVASAN, J.

In these cases a common question arises. It is whether the goods sold by the assessee, which is described as tundu tobacco, is "chewing tobacco" produced as a result of any manufacturing operations and assessable as a manufactured product. Under section 5(viii) of the Madras General Sales Tax Act, tax is leviable on sales of raw tobacco whether cured or uncured, only at the point of first purchase effected in the State of Madras by a dealer at the rate of six pies for every rupee on his turnover. Under clause (vii) of that section, the sale of cigars and cheroots at less than two annas per cigar or cheroot and beedies, snuff, chewing tobacco or any other product manufactured from tobacco shall be liable to tax only at the point of first sale effected in the State of Madras by a dealer but at the rate of six pies for every rupee on his turnover. There is a proviso to sub-clause (viii) which states that where a dealer has been taxed in respect of his turnover relating to goods included in sub-clause (vii) and has also paid tax on the purchase of the raw tobacco used in the manufacture of such goods under clause (viii) he shall be entitled to a rebate to the extent of the tax paid in respect of the raw tobacco so used. In these cases, the question arose before the Sales Tax Appellate Tribunal, whether the tundu tobacco sold by the assessees could be described as chewing tobacco manufactured from raw tobacco. The Tribunal called for a report from the Commercial Tax Officer asking that officer to report upon the details of the actual process employed by the assessee. The relevant part of the report was in these terms :

"As regards the process of manufacture which the dealer chooses to term as just cutting into pieces and selling, it is as follows. The tobacco taken out of the warehouses is unbundled and kept in a heap at the place where it is converted into pieces. There it is periodically sprinkled with palm jaggery water to keep it soft and wet. Otherwise, the dealers contend, the tobacco becomes brittle and not useful to cut into pieces. The tobacco so treated with palm jaggery water is taken out little by little and cut into pieces of two sizes one of big size each piece costing Re. 0-0-6, and the other small size each costing Re. 0-0-3. These two varieties are separately labelled, arranged and packed in bundles. These bundles are sold both in wholesale and in retail. About 3 or 4 boys are employed daily in the process of sprinkling, cutting, labelling, bundling and pressing. As regards the several processes of manufacture, the boys work in all, no particular work is being assigned to any particular person. They do not however add any ingredient other than palm jaggery water to the tobacco. They have not maintained day to day wage account. The process of sprinkling jaggery water is employed by all dealers in raw tobacco generally but the manufacturers do more often than those who sell the tobacco as it is ......" *

It appears from the report that the sprinkling of jaggery water on the tobacco is done both by dealers in raw tobacco and by manufacturers. This is apparently done with a view to keep the tobacco in a pliable condition and to prevent it from becoming brittle and breaking into pieces. On the basis of this report, the argument was advanced before the Tribunal that the so called process of manufacture relied upon by the department did not bring about any change in the tobacco purchased and that the mere cutting of the tobacco into pieces worth six pies and three pies was not sufficient to satisfy the test of a manufacturing process. The Tribunal was accordingly called upon to determine whether a manufacturing process was involved in the production of chewing tobacco. The Tribunal came to the conclusion that, though chewing tobacco, which is dealt with under section 5, clause (vii), has not been defined, the term "chewing tobacco" has come to be associated with a particular manufactured product d