1989 (8) TMI 338

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....acts and in the circumstances of the case, the Tribunal was right in holding that mere cutting of the trimmings, that is, 'chindies' of the compressed woollen felts, into different shapes and sizes, which, in commercial circles, are known as compressed felt components, amounts to manufacture, as defined in section 2(j) of the M.P. General Sales Tax Act, 1958 and a commercial commodity different from the compressed woollen felts is produced and are, therefore, liable to tax and that these cease to be 'cloth' in terms of entry 6 of Schedule I to the M.P. General Sales Tax Act, 1958, so as to be exempt from sales tax? (2) Whether, the Tribunal was right in holding that the penalty of Rs. 150 imposed on the applicant under section 43(1) of t....

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....s 'cloth'. We are, therefore, of opinion that the Commissioner was perfectly right in his view that only those varieties of felt manufactured by the appellants, which satisfy the test of pliability, will constitute 'cloth' so as to fall within the scope of entry 6 of Schedule I of the Act." In view of the aforesaid decision of the Supreme Court, the question as to whether felt manufactured by the assessees can or cannot be held to be "cloth" is concluded. As held by the Supreme Court, only that variety of felt, which satisfies the test of pliability, can be held to constitute "cloth" so as to fall within the scope of entry 6 of Schedule I of the Act.   4. The question for consideration, however, is whether "chindies" or trimmings....

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....In the aforesaid case, the Supreme Court held that pineapple slices must be held to possess the same identity as the original pineapple fruit. In Commissioner of Sales Tax v. Paper Process Works [1986] 62 STC 317, the Bombay High Court held that the process of slitting paper did not amount to manufacture. In our opinion, "chindies" or trimmings of felt continue to remain felt and no new product distinct from felt comes into existence. 5.. As regards imposition of penalty under section 43 of the Act, we may refer to the decision of a Division Bench of this Court in Dadabhoy's New Chirimiri Ponri Hill Colliery Company Private Ltd. v. Commissioner of Sales Tax [1979] 44 STC 100, where it has been held that where the facts are fully and corr....