M. C. DESAI, C. J.

( 1 ) THIS is a reference under Section 11 (1) of the U. P. Sales Tax Act made by the Judge (Revisions) referring the following question for this Courts opinion : whether crushed and sieved tobacco was exempt from sales tax under the U. P. Sales Tax Act by virtue of exemption granted under Section 4 (1) (a) of the Act under Notification No. S. T. 119-X-928-1948, dated 7th June, 1948, item No. 9.

( 2 ) THE same question has been referred in the connected reference. The reference has been made at the instance of the applicants who are dealers in tobacco. No tax under the Act is payable on the sale of goods which are notified by the State Government in the Official Gazette. The State government have issued a Notification No. S. T. 119-X-928- 1948, dated 7th June, 1948, notifying the goods which are exempt from the payment of sales tax, and item No. 9 of the notification is : tobacco leaves, whether green or dried, not having been subjected to any process of manufacture.

( 3 ) THE applicants deal in "crushed and sieved" tobacco. Crushing and sieving consists of crushing dried tobacco leaves and passing the crushed tobacco through a sieve. The applicants claim that crushed and sieved tobacco is covered by item No. 9 of the notification and that they are exempt from payment of tax on sale of it. Their contention is that crushing and sieving is not a process of manufacture at all.

( 4 ) TOBACCO in any form, whether cured or uncured and whether manufactured or not, and including the leaf, stalk and stem of the tobacco plant is an excisable commodity within the meaning of the Central Excises and Salt Act No. 1 of 1944. "manufacture" is denned in the Act [see Section 2 (f)] to include "any process incidental or ancillary to the completion of a manufactured product" and, in relation to tobacco, it includes "the preparation of cigarettes, cigars, cheroots, bins, cigarette or pipe or hookah tobacco, chewing tobacco or snuff. " Excise duty is payable on tobacco produced or manufactured in India at the rates set forth in the First schedule to the Act. Different rates of excise duty are prescribed for different kinds of un-manufactured tobacco and for different kinds of manufactured tobacco. Tobacco flue cured for use in the manufacture of cigarettes, smoking mixtures for pipes and cigarettes is treated as un-manufactured tobacco. All excisable goods stored in the premises of a licensee are to be stacked in an orderly manner, so as to permit of actual counting and, if the Collector so requires, packages containing goods of the same kind and with the same quality in each are to be kept together in separate lots and the goods are to be arranged in separate rows, each containing the same number of packages of uniform size and weight: see Rule 223 of the Central Excise manual. The applicants contend that tobacco leaves are crushed and sieved in order that their storage is in conformity with the above rule. It is not possible to store tobacco leaves as such ; they must be crushed and separated from dust through sieving. Because crushing and sieving is done in order to comply with the rule regarding storage, it is contended on their behalf, that it does not amount to subjecting the tobacco leaves to a manufacturing process. It was also contended that crushing and sieving tobacco leaves does not amount to manufacturing within the meaning of the Act, because crushing and sieving is not incidental or ancillary to the completion of a manufactured product. According to the definition of "manufacture" an act does not amount to manufacturing unless it is incidental to the completion of a manufactured product. Crushing and sieving may be necessary as preliminary processes for bringing into existence a manufactured product, but further processes are required to be done and, therefore, they cannot be said to be incidental or ancillary to the completion of a manufactured product. The other processes which are required to be done in order to

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