JUDGMENT Deepak Verma J. - Shri M. Thirumalesh appeared for the appellant and Ms. Geetha Menon appeared for the respondents. This is an appeal under section 24(1) of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as, "the Act") against the order dated March 15, 2006 passed by the Additional Commissioner of Commercial Taxes, Zone - II, Bangalore, under the powers of suo motu revision exercised by him under section 22A(1) of the Act. Notice was issued to the appellant - assessee proposing to take up the matter in suo motu revision against the appellate order dated February 10, 2005 passed by the Joint Commissioner of Commercial Taxes, on the ground that the same was erroneous and prejudicial to the Revenue. The revisional authority had formulated a question to be answered by it, which reads thus : "(1) Does the mixing of the asphalt, jelly and sand involve a manufacturing process resulting in the production of a product different from the ingredients used ?" While considering the matter, the revisional authority set aside the order passed by the appellate authority and restored the order of the assessing authority dated December 6, 2004. Against the said order, this appeal has been preferred. The appeal has been admitted on the following substantial question of law : "Whether the appellant is entitled to purchase superior kerosene oil at concessional rate of tax under section 5A of the KST Act against form 37 for use in the manufacture of bitumen mixture for sale in the course of executing works contract of laying of roads ?" The facts material for deciding this case are mentioned herein below. The appellant is a proprietory concern and is a duly registered dealer under the provisions of the Act. The appellant is engaged as a contractor in execution of contracts of laying of roads and construction of buildings. Roads laid by the appellant are macadamized by use of bitumen mixture. According to him, bitumen, jelly, chemicals and superior kerosene oil (SKO) are the inputs used in the preparation of bitumen mixture. Superior kerosene is used more as a catalyst to accelerate the process of mixing of bitumen with jelly and chemicals. Roads laid by the appellant are macadamized by use of bitumen mixture. According to him, bitumen, jelly, chemicals and superior kerosene oil (SKO) are the inputs used in the preparation of bitumen mixture. Superior kerosene is used more as a catalyst to accelerate the process of mixing of bitumen with jelly and chemicals. Section 5A of the Act extended the facility to registered dealer to purchase, inter alia, raw materials and consumables for use in the manufacture of other goods, for sale at concessional rate of tax at four per cent by using declarations in form 37. Use of bitumen mixture for the laying of roads constitutes deemed sales within the definition of "sale" in section 2(1)(t) of the Act. Thus, in terms of the authorisation provided by section 5A of the Act, the appellant herein purchased bitumen for value of Rs. 12,87,936 from registered dealer, M/s. Supreme International, Mangalore, and used kerosene in the preparation of bitumen mixture, using in turn the bitumen mixture, in the execution of works contracts for laying of roads. The assessing authority issued notice to the appellant proposing to levy penalty under section 5A(3)(iii) of the Act on the ground that he had misused form 37 declaration for purchase of SKO, which was in fact used as fuel, which is not permissible under the Act. The assessing authority proposed to levy penalty at 2.5 times of the regular tax payable on SKO. Against the said penalty order passed by the assessing authority, the appellant preferred appeal before the Joint Commissioner of Commercial Taxes (Appeals). The second respondent - appellate authority allowed the appeal of the appellant on the ground that the appellant, in the course of executing works contract of laying roads, manufactured bitumen mixture using bitumen, chemicals, jelly, etc. The first appellate authority, after appreciating the process of manufacture involving proper mixing of all ingredients, transporting of bitumen mixture to work site and laying of roads, held that SKO acts as catalyst in the manufacture of bitumen mixture which was used for laying of roads. As bitumen mixture was used while executing works contract of laying roads, there was no violation of section 5A(3)(iii) of the Act. The Additional Commissioner of Commercial Taxes, exercising the powers conferred on him under section 22A(1) of the Act, issued notice for taking up the said matter in suo motu revision. As bitumen mixture was used while executing works contract of laying roads, there was no violation of section 5A(3)(iii) of the Act. The Additional Commissioner of Commercial Taxes, exercising the powers conferred on him under section 22A(1) of the Act, issued notice for taking up the said matter in suo motu revision. The first respondent, i.e., the revisional authority, proceeded on the assumption that SKO was being used by the appellant, in heating the drums containing the asphalt mix. Thus, from the impugned order, it appears that there was some doubt with regard to the use of SKO by the appellant. However, the appellate order passed by the Joint Commissioner, makes everything crystal clear, and has held as under : "(4) The bitumen mixture/asphalt is manufactured by using required quantity of bitumen, chemicals, jelly, etc., as per technical specifications for laying of roads, and this bitumen mixture is manufactured at one place where the contract for laying of roads is awarded, and then the bitumen mixture so manufactured is transported by lorries and thereafter, the road is asphalted. (5) The manufacturing process involves melting of bitumen and proper mixing of the other ingredients as per specialized technical specifications and for this purpose of manufacture superior kerosene oil is used. The said superior kerosene oil acts as a catalyst for melting the bitumen to specified thickness and thereafter when the bitumen assumes a semi-liquid form, the other ingredients are mixed while the process is in heating by using superior kerosene oil, and thereafter, the bitumen mixture emerges. (6) In the course of such manufacture, the superior kerosene oil acts as a consumable/input, and thereby the provisions of section 5A apply and the appellant is therefore, eligible to purchase such an input and thus the provisions of section 5A are not contravened. (7) That the ingredient required for manufacture of such bitumen mixture constitutes an input and therefore, the superior kerosene oil can be purchased against form 37." The reasoning assigned by the appellate authority appears to be clear. In any case, SKO was not used by the appellant as a fuel. In fact, it was used in liquidifying the asphalt, which was used for laying on the road, so as to make it a tarred road. In any case, SKO was not used by the appellant as a fuel. In fact, it was used in liquidifying the asphalt, which was used for laying on the road, so as to make it a tarred road. Learned counsel for the appellant placed reliance on a Division Bench judgment of this court reported in the case of Habeeb Proteins & Fats Extracts v. Commissioner of Commercial Taxes, Bangalore [2007] 6 VST 87, wherein it has been held as under : "25. The word 'consume' contemplates the complete exhaustion of the purchased goods. Alternatively, the conversion of a commodity into a different commercial commodity by subjecting it to some processing is consumption of the former commodity. The 'consumption' in the true economic sense does not mean only use of goods in the production of consumer goods or final utilisation of consumer goods by consumers. It also means 'used up', 'spent', etc. The goods purchased should be consumed, the consumption should be in the process of manufacture, and the result must be the manufacture of other goods. There are several criteria for determining whether a commodity is consumed in the manufacture of another. The generally prevalent test is whether the article produced is regarded in the trade, by those who deal in it, as distinct in identity from the commodity involved in its manufacture, and where there is no essential difference in identity between the original commodity and the processed article, it is not correct to say that one commodity has been consumed in the manufacture of another. Although it has undergone a degree of processing, processed commodity must be regarded as still retaining its original identity. 26. Manufacture implies a change but every change is not manufacture. Something more is necessary. There must be a transformation as a result of the process undertaken on the product and a new and different article having a distinctive name or character must emerge. The true test for determining whether a manufacture has taken place is whether the commodity which is subjected to the process of manufacture can no longer be regarded as the original commodity but is recognised in the trade as a new and distinct commodity. The difference between 'processing' and 'manufacture' is by now well understood and well recognised. 'Processing' means subjecting a commodity to a process or treatment so as to develop it or make it fit for market. The difference between 'processing' and 'manufacture' is by now well understood and well recognised. 'Processing' means subjecting a commodity to a process or treatment so as to develop it or make it fit for market. With each process, the original commodity undergoes a change. But it is only when the change takes the commodity to a point where it can be no longer regarded as the original commodity but is recognised in the trade as a new and distinct commodity that a manufacture can be said to take place. Where the commodity retains a continuing substantial identity through a processing stage, it cannot be said that there has been a manufacture." Reliance has also been placed on a judgment of the Supreme Court in the case of Commercial Taxation Officer, Udaipur v. Rajasthan Taxchem Ltd. reported in [2007] 5 VST 529 (SC), wherein, in paragraph 33, it has been held as under : "33. The respondent - assessee used diesel as raw material for the manufacture of the end-product, namely, yarn and fabric. The diesel used by the assessee is a fuel and lubricant as defined under section 2(34) of the Sales Tax Act." The Supreme Court had the occasion to consider as to what would constitute manufacture. The same has been decided in the case of Union of India v. J.G. Glass Industries Ltd. [1999] 114 STC 387 (SC). Paragraphs 16 and 17 thereof, which are relevant, are reproduced below : "16. On an analysis of the aforesaid rulings, a two-fold test emerges for deciding whether the process is that of 'manufacture'. First, whether by the said process a different commercial commodity comes into existence or whether the identity of the original commodity ceases to exist; secondly, whether the commodity which was already in existence will serve no purpose but for the said process. In other words, whether the commodity already in existence will be of no commercial use but for the said process. In the present case, the plain bottles are themselves commercial commodities and can be sold and used as such. By the process of printing names or logos on the bottles, the basic character of the commodity does not change. They continue to be bottles. It cannot be said that but for the process of printing, the bottles will serve no purpose or are of no commercial use. 17. By the process of printing names or logos on the bottles, the basic character of the commodity does not change. They continue to be bottles. It cannot be said that but for the process of printing, the bottles will serve no purpose or are of no commercial use. 17. Learned counsel for the Revenue has strenuously contended that the printing on the bottles will make them a different commodity known as printed bottles. According to him such printed bottles cannot be of any general commercial use but they will be useful only for the persons on whose behalf and for whose benefit such printing has been done. Therefore, according to him the process of printing on bottles is a 'manufacturing' process. Reliance is placed by him on the judgment of this court in Empire Industries Limited v. Union of India [1987] 64 STC 42 (SC); [1985] 3 SCC 314. The question which arose for consideration in that case was whether introduction of sub-clauses (v), (vi) and (vii) in section 2(f) of the Central Excises and Salt Act by Act 6 of 1980 was valid. While upholding the validity of the amendment of the section by which the definition of 'manufacture' was widened so as to include the process of bleaching, dyeing, printing, finishing, etc., with reference to cotton fabrics and man-made fabrics, the court considered what constituted 'manufacture'. In that connection the court observed : 'The taxable event under the excise law is "manufacture". The moment there is transformation into a new commodity commercially known as a distinct and separate commodity having its own character, use and name, whether be it the result of one process or several processes, "manufacture" takes place and liability to duty is attracted.' The court referred to various earlier decisions dealing with the expression 'manufacture'. We are unable to appreciate as to how the ruling helps the Revenue in the present case. We have already pointed out that the printing on the bottles does not bring into existence a new commercial commodity which is distinct and separate in its character, use and name from the original commodity. We are unable to appreciate as to how the ruling helps the Revenue in the present case. We have already pointed out that the printing on the bottles does not bring into existence a new commercial commodity which is distinct and separate in its character, use and name from the original commodity. Hence, we are unable to accept the contention of the Revenue in this case that printing on bottles involves a process of 'manufacture'." Useful reference can also be made to a decision of the High Court of Kerala in the case of Namputhiris Pickle Industries v. State of Kerala reported in [1994] 92 STC 1, wherein a Full Bench of the High Court of Kerala, dealing with the expression "manufacturing process", quoted the apex court's observation in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Pio Food Packers [1980] 46 STC 63 thus : "With each process suffered, the original commodity experiences a change. But it is only when the change, or a series of changes, take the commodity to the point where commercially it can no longer be regarded as the original commodity, but instead is recognised as a new and distinct article that a manufacture can be said to take place. ... Although it has undergone a degree of processing, it must be regarded as still retaining its original identity." In the very same decision, the High Court of Kerala also had this to say at paragraph 14 : "14. In the light of the above line of cases dealing with the 'substantial identity' test, can it be said that chilli in its original form (item 27 of the First Schedule) and chilli powder are different commercial commodities ? In our opinion, not. When chillies are made into powder, they do not, in our view, change in 'substantial identity and character' or 'essential nature'. They may be used in their natural form or used after being converted into powder. The mere change into the powdered form, in our view, does not change the 'essential nature' of the commodity, as stated in Tungabhadra Industries' case [1960] 11 STC 827 or the substantial identity, as stated in Pio Foods case [1980] 46 STC 63 and Sterling Foods case [1986] 63 STC 239 decided by the Supreme Court. The mere change into the powdered form, in our view, does not change the 'essential nature' of the commodity, as stated in Tungabhadra Industries' case [1960] 11 STC 827 or the substantial identity, as stated in Pio Foods case [1980] 46 STC 63 and Sterling Foods case [1986] 63 STC 239 decided by the Supreme Court. There is only a change in the form and no change in the substantial identity." A perusal of the aforesaid judgments would show that in the ultimate process, some new product must come out of the said manufacture or mixing process, which should be different from, the commodities which have been used for manufacturing it. In the case on hand, the bitumen chemicals, jelly and SKO, cannot be used independently, unless they undergo certain process whereby it becomes bitumen mixture or asphalt. That bitumen mixture or asphalt which ultimately is laid for the purpose of road can be made only by undergoing some process and that process of mixing the said ingredients make the mixture usable. Thus, there is definitely change in the end result of such mixing. In the light of the aforesaid discussion, we are of the opinion that the order passed by revisional authority dated March 15, 2006 cannot be sustained in law. Same is hereby set aside. Instead, the order passed by the Joint Commissioner of Commercial Taxes (Appeals), dated February 10, 2005 is hereby restored. The effect of restoration thereof, results in allowing this appeal. The question, therefore is answered in favour of the appellant and against the Revenue.