Cotton waste remains a distinct taxable commodity, even if used for low count yarn, and is taxed at first sale point.

Cotton and cotton waste were treated as distinct commodities in commercial parlance and under the statutory schedule, which separately taxed cotton at the last purchase point and cotton waste at the first sale point. The fact that cotton waste may be used to manufacture low count yarn did not justify classifying it as cotton or inferior cotton. On the facts found by the Tribunal, the assessee had purchased cotton waste, and only the turnover unsupported by material could be sustained. The assessment modification was upheld, and the commodity was held taxable as cotton waste at the first sale point.

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Issues: Whether waste cotton purchased for manufacture of low count yarn was a distinct commodity from cotton and, if so, whether it was liable to tax as inferior cotton at the point of last purchase or only as cotton waste at the first sale point.

Analysis: Cotton and cotton waste are distinct commodities in commercial parlance. The statutory schedule itself drew a clear distinction between cotton, taxable at the last purchase point, and cotton waste, taxable only at the first sale point. Merely because cotton waste may sometimes be used for manufacturing low count yarn did not justify treating it as cotton or inferior cotton. On the facts found by the Tribunal, the assessee had purchased cotton waste, and only that portion of the turnover for which the assessee failed to produce supporting material could be sustained.

Conclusion: The commodity purchased was not inferior cotton. It was cotton waste assessable only at the first sale point under item 16 of the First Schedule, and the Tribunal's modification of the assessment was upheld.

Ratio Decidendi: Where the statute and the commercial understanding distinguish cotton from cotton waste, cotton waste cannot be treated as cotton or inferior cotton merely because it may be used in the manufacture of low count yarn.

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