Fiscal incentive schemes can cover marketable by-products where the term "product" is broadly construed to include separate commercial outputs.

A fiscal incentive scheme for new industrial units may treat a commercially distinct and marketable by-product as a "product" where the governing order does not define the term or confine the benefit to the principal output alone. Cotton waste arising in the spinning process was considered separate from the raw material, commercially saleable, and taxable in its own right, so it fell within the scope of the incentive. The practical effect was entitlement to sales tax deferral on the sale of the by-product.

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Issues: Whether cotton waste, arising as a by-product in the manufacture of yarn, is a "product" within the meaning of G.O.P. No. 92 dated 22.02.1991 so as to entitle the assessee to sales tax deferral on its sale.

Analysis: The term "product" was not defined in the Government Order and the incentive scheme was intended to encourage new industries in backward taluks. Cotton waste emerged at different stages of the spinning process and was commercially distinct from the raw material. Since the Government Order contemplated products manufactured by the unit and did not confine the benefit to the principal product alone, the expression was construed broadly to include by-products that are separate, marketable commercial commodities and are themselves subjected to sales tax.

Conclusion: Cotton waste was held to be covered by the expression "product" under the Government Order, and the assessee was entitled to sales tax deferral on its sale.

Ratio Decidendi: In a fiscal incentive scheme intended to promote new industrial units, the word "product" may include a commercially distinct and marketable by-product unless the scheme expressly restricts the benefit to the principal product alone.

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