Mixed Material Products

[Deepak Whorra]

In the DVAT or CST Act/Rules/Procedures/precedents, etc is there any provision for defining what is mixed material in terms of value.

For example if a product that  is  taxable at 5% is sold for Rs.100/- and the main product description is of a value of, say, Rs.98 and the balance Rs.2 is the value of accessories to the product , will it be considerewd mixed material and so taxed . Or is there any threshold , value wise, of it being classified as the main product  ( 98% value ) and taxed at 5% for VAT purposes.

The Excise Act/Rules specify that the classification will be as per the main product

Numerous examples can be given - an automobile has an airconditioner ; a painting has a frame; A TV may have a DVD player in built; a computer may have an inbuild DVD player; etc  etc.... will these be considered mixed materials ?

 

AI Summary

Principal component classification governs VAT of composite goods; accessories' minor value does not automatically invoke residuary tax.
Classification of a composite article sold as a single good depends on identifying the principal component, not on excise-style valuation apportionment; if the composite is classifiable under the principal product's schedule entry that rate applies, but if it cannot be so classified and falls into the residuary description it attracts the residuary VAT rate.