M.P Chandrakantaraj Urs, J.:— These four appeals arising out of the Karnataka Sales Tax Act, 1957, are directed against the common order dated January 16, 1984, made in exercise of the powers conferred on the Commissioner of Commercial Taxes by section 22-A of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as “the Act”).

2. The appellant-assessee is a distiller and dealer registered under the Act. With reference to his purchase of molasses for the purpose of manufacturing ethyl alcohol, he made use of form 37 prescribed under the Act for the purpose of claiming concessional rate of tax on the purchase of molasses which he treated as a component part of the end-product (ethyl alcohol) sold by him in the State. The assessing authority for the relevant years, viz., 1975–76, 1976–77, 1977–78 and 1978–79 imposed penalty in different sums, with the quantum of which we may not concern ourselves, inter alia, on the ground that there was abuse of the form inasmuch as it could not be said that molasses form identifiable component of the end-product ethyl alcohol manufactured by the assessee. Aggrieved by such imposition of penalty for abuse of the form, the assessee preferred an appeal before the Deputy Commissioner of Commercial Taxes. By a common order dated February 16, 1981, the Additional Deputy Commissioner of Commercial Taxes (Appeals), Bangalore City Division, Bangalore, set aside the imposition of penalty by the assessing authority, inter alia, on the ground that no penalty could have been imposed under section 5(3-B) as there was no abuse of the form in obtaining molasses and consuming it for production of ethyl alcohol as molasses did form a component of such end-product. The assessee demonstrated before the appellate authority by production of a certificate issued by the Chief Chemist of the assessee-company that molasses were chemically identifiable in the end-product. Acting on such demonstration, the appeals came to be allowed and the orders of penalty for the relevant assessment years were set aside. Therefore, the Commissioner of Commercial Taxes, respondent No. 1 herein, issued show cause notice in purported exercise of his power under section 22-A of the Act having considered that the order of the Additional Deputy Commissioner of Commercial Taxes (Appeals) was erroneous and prejudicial to the interests of the Revenue, calling upon the appellant to show cause as to why the order of the Additional Deputy Commissioner should not be set aside and the penalties reimposed. Despite the cause shown, the Commissioner of Commercial Taxes, by his order dated January 16, 1984, set aside the order of the Additional Deputy Commissioner and restored the order of the assessing authority for the assessment years 1975–76 and 1976–77 while he remanded for fresh determination of the penalties in respect of assessment years 1977–78 and 1978–79, inter alia, on the ground that certain purchases of molasses in those years by the assessee-company had not been taken into account by the assessing authority.

3. Therefore, what falls for our determination in these appeals are the following two questions:

“(1) Whether under section 5(3-A) of the Act read with its explanation, a very restricted meaning should be given to the expression ‘component part’ occurring in that sub-section?

(2) Whether the Commissioner was correct in coming to the conclusion that by allowing the appeal, the Additional Deputy Commissioner had permitted abuse of the form by the assessee?”

4. It will be, therefore, useful to set out the relevant sub-section together with its proviso and explanation to understand the arguments advanced by the learned counsel for the assessee as well as the learned Government Pleader appearing for the respondent-Commissioner of Commercial Taxes in Karnataka. Sub-section (3-A) of section 5 of the Act as it then stood reads as follows:

“Notwithstanding anything contained in sub-section (1) or subsection (3), the tax payable by a dealer in respect of any sale of goods by such dealer to a registered dealer for use by the latter as component part of any other goods mentioned in the Second Schedule, which he intends to manufacture inside the State for sale, shall be at the rate of three per cent on the turnover relating to such sale:

Provided that the provisions of this sub-section shall not apply to any sale unless the dealer selling the goods furnishes to the assessing authority in the prescribed manner a declaration duly filled in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the; prescribed authority.

Explanation.—For the purpose of this sub-section, ‘component part’ means an article which forms an identifiable constituent of the finished product and which along with others goes to make up the finished product.”

5. A plain reading of the sub-section leaves no doubt in our mind that a concessional rate of tax is available to a purchaser of any goods specified in the Second Schedule to the Act, if such goods are used as component parts in the production of other goods meant for sale in the State. Such concessional rate depends upon the rate prescribed under section 5 of the Act. The explanation under the section is no bore than an attempt to define with some degree of precision the expression “component part”. Whether that has been achieved or not is a matter which should be decided by our pronouncement. Mr. Dattu, learned Government Pleader, appearing for the respondent-Commissioner of Commercial Taxes, has contended strenuously that a very restricted meaning must be given having regard to the explanation to the expression “component part” as visibly identifiable part of the end-product in which the goods so purchased occurring in the Second Schedule is used for the production of other goods by the dealer. In other words, if the goods purchased by the dealer, i.e, goods occurring in the Second Schedule loses its form and substance when used as a component part, it ceases to be identifiable and, therefore, if in the end-product, ethyl alcohol, molasses in the form purchased lose its form and substance, then it cannot be said to be an identifiable part of the end-product and, therefore, molasses cannot be declared to be a “component part” of ethyl or industrial alcohol. He, therefore, commended to us the conclusion reached by the respondent-Commissioner of Commercial Taxes. It would be reasonable to extract that part of the order in which the reasoning of the respondent-Commissioner is found and it is as follows:

“(7) The contention that the declarations are issued for the purposes specified and that no contravention of section 5(3-A) has been considered is not acceptable. Molasses is one of the ingredients/raw materials used in the manufacture of liquors. A raw material cannot be considered as a component part. The respondents have quoted the case of Shanthi Chemical Work v. State of Karnataka, decided by the Karnataka Sales Tax Appellate Tribunal, Bangalore, wherein it was held that the meaning of the word ‘identifiable’ in section 5(3-A) of the Act is not in any way restricted under the explanation to section 5(3-A) so as to mean that it should only be visually identifiable. If the constituent is identifiable by chemical analysis, it can still be said as identifiable constituent. Sodium silicate is determinable in the soap by subjecting it to scientific tests. Therefore, sodium silicate is an identifiable component of soap falling under section 5(3-A) of the Act. In the case of molasses, the above decision would not be applicable because molasses loses its identity in liquor……….”

6. We are unable to see how the Commissioner could distinguish the earlier ruling of the Karnataka Appellate Tribunal to which a reference is made. Sodium silicate used as a component part in the manufacture of soap cannot be held to be a visible component part in the soap manufactured. In fact, the decision itself refers to such component being identifiable by chemical analysis. In the facts and circumstances of this case, the appellate authority whose order came to be revised by the Commissioner proceeded on the basis of the certificate given by the chemist of the assessee-company that molasses as a component part could be identified by chemical tests conducted on the end-product, viz., ethyl or industrial alcohol. Under such circumstances, the Commissioner could have had a second opinion from an independent source as to the correctness or otherwise of the certificate issued by the chemist of the assessee-company.

7. Even otherwise, we are of the view that having regard to the purpose with which the amendment was brought about, i.e, to benefit a class of manufacturers or producers of such goods with a lower rate of taxes on the component parts used in their manufacturing process, it is difficult to see how sodium silicate used in the soap manufactured would stand on a different footing than the molasses used in the manufacture of ethyl or industrial alcohol. No doubt, it is true in the case of a motor vehicle, the component parts are easily identifiable as tyres, gear box, engine, window, steerings, wheels, radiator, dynamo, etc., etc. But, everything manufactured cannot be equated with a motor car or a piece of furniture or something similar which undergoes a mere change in the shape and form but not in the composition of the material or assumes new form by putting various components together to serve a purpose. But, there can be a process of manufacture or production of goods in which the component part used in its very nature is bound to lose its form and substance and assume a totally different form on account of its use for the purpose of achieving the end-product. Even if we leave aside the manufacture of alcohol and take the example of manufacture of steel, we may easily see that the coke used in the manufacture of steel in the furnace which is burnt along with other components like iron-ore and lime stone, coke is not identifiable in steel except in its chemical form subject to the chemical tests. Therefore, it cannot be said that coal does not form component part of the steel. The object of using coke is to introduce carbon into the end-product and nothing more. If carbon is identifiable in the end-product, steel, by chemical tests, then coke which is a form of carbon can be said to be an identifiable component.

8. Yet another way we may take assistance is to give normal meaning to the expression “component part” in English language. Webster's Third New International defines “component” as:

I (1) a constituent part: ingredient, components of an electric motor the essential components of Kantian philosophy.

(2) Physics: any one of the vector terms added to form a given vector sum or resultant.

(3) an ingredient of a chemical system the concentration of which in the different phases is capable of independent variation-copper and zinc are the components of brass.

(4) American Archaeology: the smallest unit of classification in the Midwestern system of constituting a single complex of traits found in one site or level.

II (1) part of componere to put together more at compound: serving or helping to constitute: Constituent (component parts-component elements).

9. Two parts with its grammatical variations are used both as noun and adjective. When used as noun, it only means a section of the whole. Similarly, when used as an adjective, it means whole of the object. Therefore, if a liberal meaning is given as it deserves to be given, we cannot read it down to limit it to component part which is visible to the naked eye when so used, because in the sub-section under consideration, there is no classification made of manufacture of the end-products into any class as producing goods which are of such a nature where the component parts are visible and manufacture of goods where such component parts are not made visible parts of the end-product. As long as the goods purchased is found in the Second Schedule (molasses, the item found in the Second Schedule at the relevant time), the purchaser of it for producing something else would normally attract the benefits under the provision. Merely because the use of that as a component part or constituent part it is not visible, it does not mean that the benefit should disappear.

10. In fact, we have had the advantage of using or seeing the meaning of the word “component” in the Condensed Chemical Dictionary—Tenth Edition —Revised by Gessner G. Hawley, and it reads as follows:

“One of the minimum number of substances required to state the composition of all phases of a system. In the absence of chemical reaction, any of the substances in a mixture. See also constituent.”

11. The above illustrates that the word “component” is capable of giving very flexible meanings depending on the context in which it is used. Therefore, every item in the Second Schedule used in the manufacturing process which brings out chemical change by any means, then it is likely that the ingredient used or component used is likely to lose its form and substance.

12. We, therefore, see no reason to read down the meaning of the expression “component part” despite the explanation in regard to the identifiable character of such a component part. Identification does not necessarily mean visual satisfaction if it can otherwise be identified by chemical identity. Then also it will come within the ambit of this analysis.

13. Our attention was drawn to two decided cases. This Court had occasion to consider in the case of M/S. Kishindas Agencies… v. State Of Mysore…., [1974] 33 STC 65. The meaning of the words “component part” occurring in the same sub-section fell for consideration in the said case. The question decided in that case was whether the felt washers manufactured by the assessee-appellant before the court was a component part of a motor car, because it was used in micro filters manufactured by another manufacturer and which filter was a component part of the motor car. Negativing the contentions of the assessee, this Court ruled that a component part of a component part cannot fall within the ambit of sub-section (3-A) of section 5 of the Act. Similarly, considering an identical question, a Division Bench of the High Court of Kerala in the case of Paul Lazar v. State Of Kerala, [1977] 40 STC 437, ruled that copper wire used in a transformer could not be said to be a component part of the transformer which could be identified as such in the transformer.

14. Both the cases are distinguishable on facts. In neither of the cases did the court have occasion to consider the effect of a chemical change of the component part used in manufacturing process to bring out an end-product, a goods which was sold in the State in accordance with sub-section (3). Therefore, we find that the Commissioner was in error in taking a restricted view in confining it to the visual identity of the component part. Undoubtedly, the section as it was at the relevant time, permitted avoidance of higher rate of tax by certain industries which did not deserve such encouragement. It was for that purpose, we feel that the provision came to be deleted and separate provision made later, with effect from the year 1982. Under section 5-A of the Act molasses used in the production of alcohol is clearly taken out of the purview of the concessional rate. That rather assists the view we have taken as the Legislature has made clear what its real intention was earlier. We also notice before we part with these cases that the Commissioner has remanded for fresh imposition of penalty for two years in which certain other purchases were not taken into account. In the view we have taken on the interpretation of the sub-section itself and having set aside the order, there is no cause for us to say anything more about it, because whatever the purchases for the relevant year and whatever molasses, the assessee would be entitled to use the form and obtain concessional rate as such. Once the impugned order is set aside, there is no reason to make any specific reference to that part of the order. Accordingly, the appeals are allowed and the order of the Deputy Commissioner impugned as at annexure J is set aside. In the circumstances of the case, there will be no order as to costs. Rule is made absolute.

15. Appeals allowed.