1. In these cases a common question arises. It is whether the goods sold by the assessee, which is described as tundu tobacco, is "chewing tobacco" produced as a result of any manufacturing operations and assessable as a manufactured product. Under Section 5 (viii) of the Madras General Sales Tax Act, tax is leviable on sales of raw tobacco whether cured or uncured only at the point of first purchase effected in the State of Madras by a dealer at the rate of six pies for every rupee on his turnover. Under Clause (vii) of that section, the sale of cigars and cheroots at less than two annas per cigar or cheroot and beedies, snuff, chewing tobacco or any other product manufactured from tobacco shall be liable to tax only at the point of first sale effected in the State of Madras by a dealer but at the rate of six pies for every rupee on his turnover. There is a proviso to Sub-clause (viii) which states that where a dealer has been taxed in respect of his turnover relating to goods included in Sub-clause (vii) and has also paid tax on the purchase of the raw tobacco used in the manufacture of such goods under Clause (viii) he shall be entitled to a rebate to the extent of the tax paid in respect of the raw tobacco so used. In these cases, the question arose before the Sales Tax Appellate Tribunal, whether the tundu tobacco sold by the assessees could be described as chewing tobacco manufactured from raw tobacco. The Tribunal called for a report from the Commercial Tax Officer asking that officer to report upon the details of the actual process employed by the assessee. The relevant part of the report was in these terms :

As regards the process of manufacture which the dealer chooses to term as just cutting into pieces and selling, it is as follows. The tobacco taken out of the warehouses is unbundled and kept in a heap at the place where it is converted into pieces. There it is periodically sprinkled with palm jaggery water to keep it soft and wet. Otherwise, the dealers contend, the tobacco becomes brittle and not useful to cut into pieces. The tobacco so treated with palm jaggery water is taken out little by little and cut into pieces of two sizes one of big size each piece costing Re. 0-0-6, and the other small size each costing Re. 0-0-3. These two varieties are separately labelled, arranged and packed in bundles. These bundles are sold both in wholesale and in retail. About 3 or 4 boys are employed daily in the process of sprinkling, cutting, labelling, bundling and pressing. As regards the several processes of manufacture, the boys work in all, no particular work is being assigned to any particular person. They do not however add any ingredient other than palm jaggery water to the tobacco. They have not maintained day to day wage account. The process of sprinkling jaggery water is employed by all dealers in raw tobacco generally but the manufacturers do more often than those who sell the tobacco as it is...

2. It appears from the report that the sprinkling of jaggery water on the tobacco is done both by dealers in raw tobacco and by manufacturers. This is apparently done with a view to keep the tobacco in' a pliable condition and to prevent it from becoming brittle and breaking into pieces. On the basis of this report, the argument was advanced before the Tribunal that the so-called process of manufacture relied upon by the department did not bring about any change in the tobacco purchased and that the mere cutting of the tobacco into pieces worth six pies and three pies was not sufficient to satisfy the test of a manufacturing process. The Tribunal was accordingly called upon to determine whether a manufacturing process was involved in the production of chewing tobacco. The Tribunal came to the conclusion that, though chewing tobacco, which is dealt with under Section 5, Clause (vii), has not been defined, the term " chewing tobacco " has come to be associated with a particular manufactured product different from raw tobacco. The Tribunal also referred to the fact that the product sold as "scented tobacco", the manufacture of which involved the mixing up of quantities of jaggery, cardamom and other spices and conversion into a pasty mass and sold to customers would be a manufactured product. The Tribunal also referred to the earlier cases which had come before it and concluded as a result that the tobacco sold by these assessees was a manufactured product assessable under Section 5(vii).

3. In T.C. Nos. 161 and 170 of 1959 relating to the assessment years 1955-56 and 1956-57 respectively, Pachiappa Mudaliar and Bros, is the petitioner. The turnovers in dispute in these cases are Rs. 50,956, and Rs. 32,924. T.C. Nos. 171 and 172 of 1959 relate to the assessment years 1956-57 and 1957-58 and the respective turnovers in dispute are Rs. 34,516 and Rs. 66,160. In these two cases, Sheik Batcha Saheb is the petitioner.

4. In a decision of this Court, in Bell Mark Tobacco Co. v. Government of Madras [1961] 12 S.T.C. 126, this very question of chewing tobacco arose and it fell to be determined whether the sales tax was leviable under Clause (vii) or clause (viii) of section 5 of the Act. Precisely in the same manner as in the present case, in the case dealt with in the above decision, the raw tobacco purchased by the assessees was subjected to soaking in jaggery water, dried in the shade and periodically subjected to the process of bulking. The same process was followed during the time when the tobacco was in the bonded warehouse. After the tobacco was taken out of the warehouse, it was again soaked in jaggery water. Thereafter certain processes were employed which do not obtain in the present case. Flavouring essences were added, leaf was shredded and the shredded tobacco was packed and labelled. The learned Judges agreed with the Tribunal that the latter part of the process amounted to a manufacturing process. The discussion in that case is of some importance. It was observed :

What the assessee purchased was certainly not raw tobacco in the sense that it was straight off the field. It was cured tobacco. But then clause (viii) of section 5 takes within its scope both cured and uncured tobacco, which constitutes raw material for the manufacture of the products to which Section 5(vii) applies. What however is excluded from Section 5(vii) is tobacco which has itself been subjected to a manufacturing process. Whether, if tobacco which has been subjected to a manufacturing process is again subjected to a further manufacturing process by the purchaser it will fall under Section 5(vii) does not arise for consideration in this case, and we express no opinion of ours on that question. Factually, the position was that what the assessee purchased had not been subjected to any manufacturing process, and, therefore, the sale of the tobacco, no doubt known even at that stage to the trade as chewing tobacco, did not bring that sale within the scope of Section 5 (vii). It was the sale of the manufactured product effected by the assessee, manufactured from the tobacco that he had purchased, that came within the scope of Section 5(vii). No doubt, soaking in jaggery water and the process of bulking were processes common both to the seller and to the assessee who purchased the tobacco. In other words, the assessee subjected the tobacco he had purchased to the same process. Had he stopped with that alone, it might be possible to contend that what he sold subsequently was not a manufactured product. Taking, however, the cumulative effect of the various processes to which the assessee subjected the tobacco before he sold it, it is clear that what was eventually sold by the assessee was a manufactured product, manufactured from the tobacco that the assessee had purchased. Soaking in jaggery water is not the only process to be considered. The addition of flavouring essences and shredding of the tobacco should establish that what the assessee sold was a product substantially different from what he had purchased.

5. It is clear from the above passage that sprinkling of jaggery water, drying the tobacco in the shade and subjecting it to a process called bulking do not convert the raw tobacco into some other product. These processes are invariably employed even in storing raw tobacco to prevent the tobacco from drying up, becoming brittle and powdery and no longer fit for sale as raw leafy tobacco. This decision is authority for the position that upto the stage of these processes no manufacturing of the raw tobacco into some other product is involved.

6. From the facts set out by the Tribunal, based on the report of the Commercial Tax Officer, it is beyond question that no ingredient of any kind other than jaggery water is added to the tobacco and that this process of sprinkling of jaggery water is employed by all dealers in raw tobacco generally, but more by those who proceed to manufacture the tobacco. But factually, the position is clear that only this process of bulking was employed by the petitioners before us. Learned counsel for the department, while conceding this factual position, nevertheless contends that the cutting up of this tobacco into small pieces and packing them into small packets, costing three or six pies, and the subsequent marketing of the tobacco so packed, constitutes a process of manufacture of the tobacco, thereby bringing it within the scope of Section 5(vii). He purports to rely upon certain decisions to which we shall presently refer.

7. In Kulkarni v. State [1957] 8 S.T.C. 294, the question arose whether the quarrying and breaking of large stones and the production of small ones suitable for roads or for ballast involved a manufacture of the raw product. The learned Judges observed, Now, in the present case the act of quarrying results in the accumulation or extraction of a large heap of big stones. Those stones may well be marketable, and if they are sold, the process would be not one of manufacture but one of quarrying. After that stage is reached and the person who has won the stones attempts to break them, may be by manual labour, into sizeable stones for sale as gitti, he is shaping the stone into an object of a different size. Now, the word 'manufacture' has got various shades of meaning.... The essence of manufacture is the changing of one object into another for the purposes of making it marketable. The stones which are won in the process of quarrying may be sold without fashioning them into something else. If they are so sold they would not be manufactured but merely delivered from the quarry-head. When they are broken into metal or gitti there is some process, manual though it may be, for the purpose of shaping the stones into another marketable commodity.

8. In dealing with the criticism that chopping of wood into fuel would, on a parity of reasoning, be a manufacturing process, the learned Judges observed that that might be an extreme example,

"but the making of metal for the purposes of ballast and road is a well-known trade and occupation and is a very fruitful source of income to one who shapes larger stone into smaller ones of a pre-determined size. It is well-known that metal has to be within a particular size. Each piece cannot be smaller than a designated size nor above another designated size. The size therefore determines the skill necessary to fashion the stone..."

and they came to the conclusion set out above.

9. Reference has also been made to State of Bihar v. Chrestien Mica Industries Ltd., [1956] 7 S.T.C. 636. It would suffice to refer to the headnote which reads :

The word 'manufacture' in Section 2(g) means that something is brought into existence which is different from that originally existing, in the sense that the thing produced is itself a commercial commodity which is capable as such of being sold or supplied.

10. In Pithapuram Taluk Tobacco Cigars and Soda Merchants' Union v. State of Andhra Pradesh, [1958] 9 S.T.C. 723, the taxability of cheroots, etc., arose. Though the question that was considered in that case was different, what "manufacture" means was considered briefly by the learned Judges. They observed :

Whenever any article is prepared from raw materials by giving them a form different to the raw material or changing the quality, and the property, it cannot be said to remain in the same state.... As Webster's Dictionary says, manufacture means the process or operation of making wares or any material products by hand, by machinery of by other agency. The Century Dictionary defines manufacture to mean production of articles for use by giving those materials new forms, qualities, properties, whether by hand labour or by machinery...

11. We have referred to the above decisions as reliance has been placed upon them by the learned counsel for the department in support of the argument that when tobacco is cut into pieces and packed in a particular manner, the tobacco has undergone a process of manufacture. We are totally unable to agree. If the tobacco up to the stage before it was cut had not been subjected to any manufacturing process, it could not be brought within the scope of Section 5(vii) of the Act. Then does the process of cutting it into smaller pieces and packing these pieces, separately for the purpose of sale introduce an element of manufacture? The argument could equally well be advanced to that if without previously cutting and packing the tobacco in that fashion, a dealer, at the time of effecting the sale of tobacco to customers requiring it, cut off bits of tobacco, rolled them in pieces of paper and handed the packets to the customers.. It does not appear to us to involve any manufacturing in the sense in which the decisions have understood that expression. While the raw product may be capable of a particular use, "manufacture" as understood in these decisions, involves the connotation of some change in the article in question. Though basically the material might remain the same, it is being adopted to a particular use which in the original form it was not capable of; that we conceive to be the essence of manufacture. The case earlier referred to in Kulkarni v. State [1957] 8 S.T.C. 294, is an apt illustration of this point. When large stones are quarried out, they may be converted into slates or broken up into ballast or for road material. In each of these cases, the transformation of the original form of the material is intended for a particular use, and the resultant product is, in that form which facilitates the use of that product for the particular purpose. It is not the case of the department that the tobacco could not be used as chewing tobacco unless it was cut and packed in the above manner. One might well say that if a sugar merchant measures quantities of sugar and puts them into one-pound and two-pound packets, a process of manufacture would be involved. We are unable to accept the argument, which would lead to such an unreal conclusion. We are accordingly of the view that on the accepted facts of this case, no process of manufacture was involved which would attract the taxability of the product under Section 5(vii) of the Act.

12. The petitions are allowed with costs, counsel's fee of Rs. 100 one set in T. C. Nos. 161 and 170 of 1959, and another in T. C. Nos. 171 and 172 of 1959.