Commercial meaning of yarn governs sales tax classification of woollen carpet kati, which was treated as unclassified goods.

Woollen carpet kati was treated as unspun fibre and not as "yarn" under the sales tax notifications, because "yarn" must bear its ordinary commercial meaning as a spun strand used for weaving, knitting or rope-making, and the material was not used in weaving. It also was not "woollen goods", since it was only a raw material for carpets and not a finished woollen product. The note further states that an item outside the specific notification entries could be taxed as an unclassified item under the general charging provision at the applicable general rate.

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Issues: (i) Whether woollen carpet kati was covered by the term "yarn" or "unspun fibre used in weaving" under the relevant sales tax notifications; (ii) Whether woollen carpet kati fell within the expression "woollen goods" under the other notification.

Issue (i): Whether woollen carpet kati was covered by the term "yarn" or "unspun fibre used in weaving" under the relevant sales tax notifications.

Analysis: The term "yarn" was not defined and had to be construed in its ordinary commercial sense. In that sense, yarn is a spun strand primarily meant for weaving, knitting, or rope-making. Woollen carpet kati was found to be unspun fibre and, on the facts found by the taxing authorities, it was not used in weaving. The process of looping or knotting the tufts by hand was distinct from weaving, which involves the interlacing of warp and weft.

Conclusion: Woollen carpet kati was neither "yarn" nor "unspun fibre used in weaving" under the notifications; the finding was against the revenue.

Issue (ii): Whether woollen carpet kati fell within the expression "woollen goods" under the other notification.

Analysis: Woollen carpet kati was only a raw material used in the manufacture of carpets and not a finished woollen good. The lower-rate notifications for yarn and unspun fibre used in weaving showed that a mere component or raw material could not be treated as finished woollen goods for taxation at a higher rate.

Conclusion: Woollen carpet kati did not fall within "woollen goods"; the finding was against the revenue.

Final Conclusion: The article was liable to be treated as an unclassified item taxable at 2 per cent under the general charging provision, and the appeals failed.

Ratio Decidendi: Where a tariff entry uses the expression "yarn" without definition, it must be understood in its ordinary commercial sense, and an unspun fibre that is not used in weaving cannot be brought within that entry merely because it is employed as a raw material in a different manual process of manufacture.

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