Component part test under sales tax law excludes copper wire used as a manufacturing material for transformers.

Copper wire used in manufacturing electrical transformers is not a component part of the finished goods for concessional tax treatment under section 5(3) of the Kerala General Sales Tax Act, 1963. The provision applies only where the sold goods are included in the First Schedule and are sold for use as a distinguishable and identifiable component of other scheduled goods to be manufactured in the State for sale. The reasoning draws a distinction between a true component part, which leaves the finished product incomplete without it, and a mere raw material or manufacturing constituent. Copper wire remains a material used in production and does not acquire the commercial identity of a transformer component.

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Issues: Whether copper wire used in the manufacture of electrical transformers is a component part of electrical goods so as to attract the concessional rate under section 5(3) of the Kerala General Sales Tax Act, 1963.

Analysis: The concessional rate under section 5(3) applies only where the goods sold are included in the First Schedule and are sold for use as a component part of other scheduled goods intended to be manufactured inside the State for sale. A component part must be a distinguishable and identifiable part of the finished product, and the finished product must be incomplete without it. The reasoning distinguishes component parts from mere raw materials or constituents used in manufacture. Copper wire, though necessary in the manufacture of transformers, remains only a material used in production and does not acquire the commercial identity of a separate component part of the transformer.

Conclusion: Copper wire is not a component part of electrical transformers, and the assessee was not entitled to the concessional rate under section 5(3).

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