V. Balakrishna Eradi, C.J.
1. The short question that arises in this case is whether mill-made handkerchiefs are cotton fabrics falling within the scope of entry No. 19 of the First Schedule in the Central Excises and Salt Act sale of which be exempt from the levy of sales tax under the Kerala General Sales Tax Act by virtue of the exemption conferred by item 7 of the Third Schedule to the said Act. The Third Schedule of the Kerala General Sales Tax Act enumerates the categories of goods exempted from tax under Section 9. Item 7 thereof reads :
'Cotton fabrics, woollen fabrics and rayon or artificial silk fabrics as defined in items No. 19, 21 and 22 respectively of the First Schedule to theCentral Excises and Salt Act, 1944.'
Item 19 of the First Schedule to the Central Excises and Salt Act, 1944 reads.
'Cotton fabrics' means all varieties of fabrics manufactured either wholly or partly from cotton and includes dhoties, sarees, chadders, bed- sheets, bed-spreads, counter-panes, table clothes, embroidery in the piece, in strips or in motifs and fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic materials but does not include any such fabric if it contains-
(i) 40 per cent or more by weight, of wool;
(ii) 40 per cent or more by weight of silk;
(iii) 60 per cent or more by weight of rayon or artificial silk; or
(iv) 50 per cent or more by weight of jute (including Bimlipatam jute or mesta fibre):Provided that in the case of embroidery in the piece, in strips or in motifs and fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic material, the percentages referred to in (i) to (iv) above shall be in relation to the base fabrics which are embroidered or impregnated, or coated as the case may be...'
2. The assessing authority as well as the Appellate Assistant Commissioner took the view that handkerchiefs being 'ready-made goods' cannot be regarded as cotton fabrics as defined in item 19 of the First Schedule to the Central Excises and Salt Act. The Appellate Tribunal before whom the matter was carried in appeal by the assessee relied on two earlier decisions rendered on the same point in T.A. No. 87 of 1971 and T.A. No. 11 of 1973 wherein the view had been taken that mill-made handkerchiefs are cotton fabrics as defined in the Central Excises and Salt Act and upheld the claim put forward by the assessee that the turnover of handkerchiefs is exempt from levy of sales tax. The State has preferred this revision petition challenging the correctness of the said view.
3. The specific plea put forward by the assessee before the assessing authority as well as before the Appellate Assistant Commissioner was that the handkerchiefs in question had been sold by him in the very same form in which they were received from the mill and that excise duty bad already been paid in respect of those goods and no additional process of manufacture had been applied to the goods. This contention put forward by the assessee has not been controverted by the department at any stage of the proceedings. The factual position in this case, therefore, is that the kerchiefs have been manufactured in a mill and the assessee had sold the goods in the same condition in which it had been supplied to him from the mills. In other words, this is not a case where any further process of manufacture has been applied to the article which was manufactured and supplied by the mills after it came out of the mills. It is not in dispute that the kerchiefs have been manufactured wholly out of cotton. The mere fact that as part of the process of manufacture the edges of the cloth have been stitched will not in any way affect its character as a cotton fabric. In fact such process of stitching is essentially involved in the manufacture of several of the items enumerated in the inclusive portion of the definition of cotton fabrics contained in entry No. 19 of the First Schedule to the Central Excises and Salt Act, for. example, bed-sheets, bed-spreads, counter-panes, table clothes etc. It is not therefore possible to accept the plea put forward by the learned Government Pleadar that the fact that the edges of the kerchiefs have been stitched will take the article out of the scope of the entry 'cotton fabrics'. We find that the same view has been taken by the Calcutta High Court in Delhi Cloth and General Mills Co. Ltd. v. Commercial Tax Officer, Central Section, West Bengal and Ors. [(1975) 36 S.T.C. 575] with which ruling we are in respectful agreement.
In the result, we affirm the decision of the Tribunal upholding the assessee's claim for exemption from sales tax in respect of the mill-made handkerchiefs and dismiss this revision petition. The parties will bear their respective costs.