TaxTMI 
TaxTMI 
1978 (12) TMI 167
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.... to be filled in glass ampules made of special glass. The assessee does not manufacture such ampules but purchases them. After those ampules are properly washed and subjected to sterilisation, the injectible liquid medicine is poured into them without touch of human hand. The tops of the ampules are thereafter automatically sealed. This entire integrated process of manufacture of injectible liquid medicine and filling and scaling it in glass ampules takes place in the plant of the assessee under expert supervision because extreme care has to be taken to ensure against any contamination. During the assessment period from 1st April, 1971, to 31st March, 1972, the assessee purchased glass ampules worth Rs. 12,174.44 against certificates in form 19. In the course of proceedings for the assessee's assessment to sales tax, the Sales Tax Officer held that, contrary to the certificate, certain percentage of the glass ampules purchased by the assessee was used for another purpose, namely, for manufacture of non-taxable goods, since the manufactured product (injections) to the extent of that percentage, was not sold within the State but it was sold on consignment basis outside the State. Th....
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....ls used in the manufacture of injections. The Tribunal then proceeded to consider the question whether the glass ampules can be treated as consumable stores. According to the Tribunal, consumable stores, properly so-called, are goods which are consumed in the process of manufacture of the finished product. Therefore, the finished product in the instant case not being the injection along with the ampule but only the injectible liquid medicine, the glass ampules could not be considered to be consumable stores. The Tribunal appears to have been of the view that in order that the injectible liquid medicine manufactured by the assessee could be properly preserved and conveniently transported and properly marketed, ampules were absolutely necessary. However, on that account they could not be categorised as consumable stores because "ampules are used after the manufacture of injectible liquid medicine is complete which is ready for filling in and the ampules are used for filling in such injectible liquid medicines", which showed that "ampules are used after the manufacture of the finished product is complete". It is on the basis of this approach and reasoning that the Tribunal arrived at ....
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....ontext, the Supreme Court made the following observation: "The expression 'in the manufacture of goods' should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would, in our judgment, fall within the expression 'in the manufacture of goods'." Giving an illustration based on the manufacture of cotton textiles, it was observed as follows: "For instance, in the case of a cotton textile manufacturing concern, raw cotton undergoes various processes before cloth is finally turned out. Cotton is cleaned, carded, spun into yarn, then cloth is woven, put on rolls, dyed, calendered and pressed. All these processes would be regarded as integrated processes and included 'in the manufacture' of cloth. It would be difficult to regard goods used only in the process of weaving cloth and not goods used in the anterior processes as goods used in the manufacture of cloth." Having given the aforesaid illustration, th....
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....an integral part thereof that in its absence the manufacturing activity might not be commercially expedient. It would all depend on the facts and circumstances of each case and the question will necessarily be decided on the evaluation of the part played by the goods in question in the process of manufacture as understood according to the test laid down in J.K. Cotton S. & W. Mills Co. Ltd.'s case[1965] 16 S.T.C. 563 (S.C.). From these two decisions, one principle clearly emerges and it is that the phrase "use in the manufacture" is not to be given a narrow and constricted meaning and that it would take in the entire process carried on by a manufacturer with a view to converting raw materials into finished goods and that if any particular process is so integrally connected with or related to the ultimate manufacture of goods that without that process or activity, manufacture, even if theoretically possible, would be commercially inexpedient, goods required in that process would fall within the expression "goods used in the manufacture of goods". Applying the aforesaid test for the resolution of the question herein, namely, whether glass ampules could be said to have been used in ....