Identity of goods under section 11(2) depends on whether the same goods are despatched, despite polishing before shipment.

Unpolished stainless steel utensils were treated as marketable goods because the evidence, including purchase volume and contemporaneous descriptions, showed they were a recognised traded commodity; the finding of no marketability was unsupported. For section 11(2), polishing the utensils before despatch to outside-State principals did not change the identity of the goods or breach form 17, because the statutory test was whether the same goods purchased were despatched, not whether they remained in the same form. The processing step did not defeat the concession, and the benefit under section 11(2) remained available.

---

---

Issues: (i) Whether there was evidence to support the finding that the unpolished stainless steel utensils purchased by the assessee were not marketable goods. (ii) Whether, for the purpose of section 11(2), polishing the utensils before despatch to the outside-State principals altered the identity of the goods or constituted a breach of the declaration in form 17.

Issue (i): Whether there was evidence to support the finding that the unpolished stainless steel utensils purchased by the assessee were not marketable goods.

Analysis: The finding of no marketability rested only on the assumption that a domestic purchaser would not buy unpolished utensils. The volume of purchases and the contemporaneous documents describing the goods consistently showed that such utensils were traded as a recognizable commodity. A conclusion that the goods were not marketable could not be sustained merely because they were not suitable for small household purchases in the same condition.

Conclusion: The finding of no marketability was unsupported by evidence and was rejected.

Issue (ii): Whether, for the purpose of section 11(2), polishing the utensils before despatch to the outside-State principals altered the identity of the goods or constituted a breach of the declaration in form 17.

Analysis: Section 11(2) required despatch of the same goods purchased by the commission agent, but did not impose the stricter condition found in section 11(1) that the goods must be sent in the same form and without any act amounting to manufacture. Polishing was a process that might amount to manufacture in the wide sense of section 2(17), but it did not by itself change the identity of the utensils. Since the same stainless steel utensils were purchased and despatched to the principals, the statutory condition was satisfied.

Conclusion: Polishing did not break the identity of the goods and there was no contravention of section 11(2) or form 17.

Final Conclusion: The reference was answered substantially in favour of the assessee, with the impugned finding on marketability set aside and the statutory benefit under section 11(2) held available.

Ratio Decidendi: Under section 11(2), the decisive test is whether the goods despatched are the same goods as were purchased, and a processing step does not defeat the concession unless it changes the identity of the goods.

---