Cotton rags remain cotton fabrics for tax exemption when their essential character as fabric is still retained.

Cotton rags collected from tailor shops and households are treated as "cotton fabrics" for exemption under Item 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act, 1957, because that entry adopts the meaning of cotton fabrics under the Central Excises and Salt Act, 1944. The decisive test is whether the material retains its character as cotton fabric; it does not lose that character merely because it is worn, torn, cut into rags, sold in pieces, or intended for use as paper-mill raw material. The attempted distinction between mill-made fabric and used rags was treated as immaterial to classification, so the exempt entry applies.

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Issues: Whether cotton rags collected from tailor shops and households fall within the expression "cotton fabrics" in Item 5 of the Fourth Schedule to the Andhra Pradesh General Sales Tax Act, 1957, so as to be exempt from tax.

Analysis: Item 5 of the Fourth Schedule adopts the meaning assigned to "cotton fabrics" in Item 19 of the First Schedule to the Central Excises and Salt Act, 1944, namely, all varieties of fabrics manufactured wholly or partly from cotton. The decisive test is whether the material remains a cotton fabric, not whether it is new, usable as clothing, sold in pieces, or intended for use as raw material in paper manufacture. Cotton fabrics do not lose their character merely because they are worn, torn, cut into rags, or otherwise reduced in size. The distinction sought to be made between mill-made pieces and used rags was rejected as immaterial to classification.

Conclusion: Cotton rags continue to be cotton fabrics and are within the exempt entry; the assessee succeeds.

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