Identifiable constituent test for concessional sales tax: chemical analysis can prove a plywood ingredient even if not visually discernible.

Formaldehyde used in plywood manufacture was treated as an identifiable constituent of the finished product, so concessional purchase treatment under the Karnataka Sales Tax Act could apply where the ingredient could be established by chemical analysis. The note states that visual identification is not necessary if the nature of the product and manufacturing process permit identification by appropriate scientific test. It also states that the revisional authority erred in treating the material as merely a remote ingredient and in disregarding expert evidence.

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Issues: Whether formaldehyde used in the manufacture of plywood was a component part of plywood and, if identifiable by chemical test, entitled to concessional purchase under the Karnataka Sales Tax Act, 1957.

Analysis: The exemption and concessional rate depended on whether the article purchased formed an identifiable constituent of the finished product. The material on record, including affidavits of technical experts, showed that formaldehyde was mixed in the manufacturing process and could be identified in the finished product by chemical analysis. The controlling principle was that visual identification was not necessary where the nature of the product and the process permitted identification by chemical or other appropriate test. The revisional authority applied an incorrect test in treating formaldehyde as merely a remote ingredient and in ignoring the evidence placed by the appellant.

Conclusion: Formaldehyde was held to be an identifiable component part of plywood, and the revisional order was set aside in favour of the assessee.

Final Conclusion: The appeals succeeded, and the assessee's entitlement to the concessional treatment was restored.

Ratio Decidendi: An article is a component part for concessional sales tax purposes if it forms an identifiable constituent of the finished product, and such identification may be established by chemical test even where it is not visually discernible.

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