Manufacture and sealed-container tests under sales tax law favoured the assessee on cashew-nut classification.

Frying and salting cashew-nuts did not amount to manufacture under the Bombay Sales Tax Act because the process did not produce a commercially different commodity; the nuts remained cashew-nuts, so the assessee's treatment activity was not manufacture. Fried and salted cashew-nuts sold in heat-sealed packets were also held not to be goods in a sealed container, because the packing was found to be a wrapper that could be opened and closed again without destroying the fastening; the sales therefore fell outside the sealed-container entry and within the alternative schedule entry. The Tribunal's factual findings on both classification questions were sustained.

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Issues: (i) Whether frying and salting cashew-nuts amounted to manufacture under section 2(17) of the Bombay Sales Tax Act, 1959. (ii) Whether fried and salted cashew-nuts sold in heat-sealed packets were covered by entry 6 of Schedule E or by entry 5 of Part I of Schedule D to the Bombay Sales Tax Act, 1959.

Issue (i): Whether frying and salting cashew-nuts amounted to manufacture under section 2(17) of the Bombay Sales Tax Act, 1959.

Analysis: Manufacture under the Act requires that the activity result in a commercially different commodity. Frying and salting may amount to processing or treating, but that is not enough unless the result is a new commercial article. On the facts found by the Tribunal, the fried and salted cashew-nuts continued to be cashew-nuts and did not become a different commercial commodity. That factual conclusion was supported by the material on record and could not be disturbed in the reference.

Conclusion: The activity did not amount to manufacture, and the finding was upheld in favour of the assessee.

Issue (ii): Whether fried and salted cashew-nuts sold in heat-sealed packets were covered by entry 6 of Schedule E or by entry 5 of Part I of Schedule D to the Bombay Sales Tax Act, 1959.

Analysis: The applicable test for a sealed container is whether access to the contents is impossible without breaking the fastening. Although the packets were described as heat-sealed, the Tribunal found on the evidence that the packing material was a wrapper and not a sealed container, and that it could be opened and closed again. Those findings of fact governed the reference. On that basis, the sales could not fall within the entry applicable to sealed containers.

Conclusion: The sales were not covered by entry 6 of Schedule E and were covered by entry 5 of Part I of Schedule D, in favour of the assessee.

Final Conclusion: The reference was answered against the Commissioner and the Tribunal's view on both classification questions was sustained.

Ratio Decidendi: For sales tax purposes, manufacture exists only when processing produces a commercially different commodity, and goods are sold in sealed containers only when access to the contents is impossible without breaking the fastening.

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