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Report No. 30

103. Mingling or goods test how to be applied.- Similarly, another point may arise for our consideration in the course of the present discussion on the subject before us. And that is what is meant by mingling of imported goods with the general mass of goods and merchandise in our country; and when does such mingling of goods take place? It seems to me that the mingling of goods does not mean that the imported goods can be mixed up with the indigenous goods of the same kind and quality, for instance, the imported cotton can be mixed up with the cotton that is grown in our country with the result that the imported cotton may lose (if at all) its identity. I do not think this is the meaning of the mingling of imported goods.

In the Second Travancore case (AIR, p. 337, bottom), the learned Chief Justice observed:-

"Similar difficulties and uncertainties are encountered in bringing within the exemption the first sale after import. How is the exemption to be applied to the goods imported from abroad after they are mingled with the other goods and lose their distinctive character as imports"?

I think this only means that the imported goods will cease to be considered as imported goods after they cross the customs barrier of the importing country and stand on a par with the indigenous goods for the purpose of taxation. The observation of Mr. Justice S. R. Das (in the II Travancore case) on this point is also instructive [AIR 1953 SC 333 (350)]:-

"It is only after that first sale of the goods by the importers to the dealers that the goods become parts of the general mass of property in the State concerned thereafter subject to the taxing power of that State.".

104. Deputy Commissioner of Commercial Taxes v. Caltex Ltd.-In Deputy Commissioner of Commercial Taxes, Madras v. Caltex Ltd., [AIR 1962 Mad 298: ILR (1962) Mad 585], the High Court of Madras observed (AIR, p. 300):-

"When once the goods have been permitted to be imported and the import duty on the goods has been levied by the customs officers, the course of import ends whether or not the goods are immediately cleared for home consumption, or are only kept in the bonded warehouses. In our opinion, it is not the factual mingling of the imported goods with the mass of the goods of the local area that terminates the course of import. The course of import to our minds comes to an end when once the goods have passed the customs frontier in the sense that the customs duty has been levied on the goods and the importer has been permitted to clear the goods.".

It is stated in this case that when and after this event happens, the goods cease to be part of the import stream and there is then no objection to the goods being brought into the country presumably in the sense of their being thereafter regarded as part of the general mass of property liable to taxation by a State.

105. Deputy Commissioner of Commercial Taxes v. Devar & Co.-Again, in Deputy Commissioner of Commercial Taxes v. Devar & Co. [ILR (1964) Mad 363], the same High Court observed (p. 387)-

"The import stream dries up and ceases to flow after the Customs Department of the importing State levies the duty and thereby declared the eligibility of the goods to be cleared and mingled with the general mass of goods and merchandise in the country.".

Section 5 of the Central Sales Tax Act, 1956 - Taxation by the States of Sales in the Course of Import Back

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