Cotton waste classification prevails where processed fibre by-product retains its commercial identity despite further industrial use.

A by-product consisting of short fibres separated during processing of cotton seeds was held to be cotton waste for sales tax purposes because it answered that commercial and functional description, even though it could later be used as raw material for rayon manufacture. Its possible further industrial use did not convert it into a distinct commodity liable to tax as general goods under the Andhra Pradesh General Sales Tax Act. The assessment on the footing that it was general goods could not stand.

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Issues: Whether the commodity obtained after processing cotton seeds and separating the fibres adhering to the seeds was "cotton waste" or was taxable as general goods.

Analysis: The commodity was examined in the light of the statutory scheme under the Andhra Pradesh General Sales Tax Act, including the entries dealing with cotton and cotton waste. The Court accepted the substance of the expert opinion and the commercial understanding of cotton waste, noting that material emerging as a by-product in the process of separating fibres from seeds did not cease to be cotton waste merely because it could be put to other industrial uses after further processing. The fact that the product could serve as raw material for rayon manufacture did not make it a distinct commodity liable to tax as general goods under section 5(1).

Conclusion: The commodity was cotton waste and not general goods.

Final Conclusion: The revisions succeeded and the assessment could not stand on the footing that the commodity was taxable as general goods.

Ratio Decidendi: A by-product consisting of short fibres separated in the course of processing cotton seeds remains cotton waste for sales tax purposes if, in commercial and functional sense, it answers that description, notwithstanding its possible use after further processing.

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