Timber consumed in manufacture when it loses identity and becomes packing cases, attracting sales tax liability.

Timber purchased by a packing-case manufacturer was treated as consumed in manufacture for sales tax purposes because the logs were cut into planks and transformed into packing cases, losing their identity as timber. The court held that even on a narrow meaning of "consume," the material was used up in the manufacturing process once it became a different commercial product with a different use. Section 7-A of the Tamil Nadu General Sales Tax Act, 1959 therefore applied, and the assessee's contrary contention failed.

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Issues: Whether timber purchased by a manufacturer of packing cases was consumed in the manufacture of packing cases so as to attract section 7-A of the Tamil Nadu General Sales Tax Act, 1959.

Analysis: Timber was purchased in logs, cut into sizes and planks, and then converted into packing cases. The expression "consumes" in section 7-A was urged to mean only "devouring" and not mere use, but even on that restricted meaning the timber lost its identity in the manufacturing process. Once the timber was transformed into a different commercial product with different use, it could not retain its character as timber. The reasoning in the earlier decision relied upon by the assessee supported the view that where goods lose their identity in manufacture, they are consumed in that manufacture.

Conclusion: Timber was consumed in the manufacture of packing cases, and section 7-A was rightly applied. The contention of the assessee failed.

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