Exemption for imported ingot moulds upheld where used as raw materials in steel manufacture; entry tax demand quashed.

Ingot moulds imported inter-State and used in steel manufacture were treated as raw materials falling within the exemption in S.R.O. No. 263 of 1998. The Kerala High Court read the notification according to its plain wording and rejected the Revenue's contention that the exemption failed because the moulds were first used as receptacles and later melted, or because immediate consumption was required. As the manufactured products were liable to tax under the relevant sales tax laws and the stated conditions were satisfied, the entry tax demand and consequential penalty proceedings under the Kerala Tax on Entry of Goods into Local Areas Act, 1994 were held to be without authority of law.

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Issues: Whether ingot moulds imported from outside the State and used in the manufacture of steel products were covered by the exemption under S.R.O. No. 263 of 1998 and, on that basis, whether the demand for entry tax and penalty under the Kerala Tax on Entry of Goods into Local Areas Act, 1994 was sustainable.

Analysis: The exemption under S.R.O. No. 263 of 1998 applied to cement or iron and steel imported for use as raw materials in the manufacture of other goods, subject to the stated conditions. The Court held that the petitioners imported the goods inter-State, used them in the manufacturing process as raw materials, and the manufactured products were liable to tax under the Kerala General Sales Tax Act or the Central Sales Tax Act. The contention that exemption failed because the ingot moulds were first used as receptacles and later melted was rejected, as the notification did not impose a time-limit or require immediate consumption in the narrow sense advanced by the Revenue. The reading of the exemption was based on the plain wording of the notification, and the proposed levy could not override the express concession granted by the Government.

Conclusion: The ingot moulds were held to fall within the exemption, and the demand for entry tax and consequential penalty proceedings was without authority of law.

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