TaxTMI 
TaxTMI 
2011 (4) TMI 1082
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....Ujala Stiff and Shine is concerned, the product was launched in June 2005 and four per cent tax was collected and paid. The assessing officer issued annexure A notice under section 22(3) of the KVAT Act, on the basis that the aforesaid products of the assessee were laundry brighteners and proposing to classify the products under entry 27 of S. R O. No. 82/2006 tax and levy tax at 12.5 per cent. On receipt of the notice, the assessee filed its objections contending that Ujala Supreme is the brand name under which it is marketing "acid violet" a Synthetic Organic dye, classified under HSN Code 3204.12.94, and that the same was used as a fabric whitener. Similarly, with respect to Ujala Stiff and Shine also, it was contended to be a brand name, under which vinyl acetate diluted in water which is used as a fabric stiffner and classified under HSN Code 3905, was marketed. According to the respondent, applying the Rules of Interpretation of Schedules to the Act, the products are liable to be assessed only at four per cent, these being covered by entry Nos. 155(8)(d) and 118(5) of the List A to the Third Schedule. The assessing officer rejected the contentions of the a....
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....06? (C) Has not the Tribunal grievously erred in deciding the issue without reference to the definition of 'manufacture' under the KVAT Act and is not the finding of the Tribunal perverse in the facts and circumstances of the case?" O. T. (Rev) No. 16/2009 (against TA (VAT No. 314/2008)) "Is not the order of the Tribunal confirming the order of the first appellate authority deleting the penalty levied by the assessing officer against the provisions of section 22 of the Kerala Value Added Tax Act and is not the same perverse in the facts and circumstances of the case?" We heard the learned Government Pleader and the learned counsel for the respondent-assessee. The learned Government Pleader relied on the Division Bench judgment of this court in M. P. Agencies v. State of Kerala [2010] 28 VST 44 (Ker) ; [2010] 18 KTR 82 (Ker) and contended that the issues raised in O. T. Rev. No. 13 of 2009 have been already held in favour of the State. On the other hand, the learned counsel for the respondent contended that many relevant questions were not considered by the Bench while deciding the case of M. P. Agencies [2010] 28 VST 44 (Ker) ; [2010] 18 KTR ....
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....cation S. R. O. No. 82/2006, no such item is provided in any of the sub-headings with HSN Code No. The Commissioner therefore held that both the items fall under the residuary entry 103 of S. R. O. No. 82/2006 which provides for rate of tax on items not covered by any of the entries in the list provided in the notification or by any entry of any of the Schedules to the Act. Accordingly the appellant's claim that the items fall under the two entries of the Third Schedule referred to above was turned down by the Commissioner. It is against this order the appellant has filed this appeal. . ." It was against the above order of the Commissioner that M/s. M. P. Agencies filed the appeal. As far as Ujala Supreme is concerned, the Division Bench dealt with the contentions in the following manner (para 5 at pages 47-50 in 28 VST):- "3. Ujala Supreme:- The appellant's claim is that the item falls under entry 155(8)(d) of the Third Schedule with HSN Code No. 3204.12.94, which covers 'acid violets'. We have to therefore consider whether Ujala Supreme sold by the appellant is an 'acid violet' falling under the said entry and if so, it cannot be treated as covered b....
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....uce Ujala Supreme. In our view, the finding of the Commissioner is consistent with the appellant's own case that industrial inputs, namely, acid violet paste, is purchased by the Jyothy Laboratories and is converted into final product, namely, 'Ujala Supreme' for use as a fabric whitener. The appellant has produced several orders of the Central Excise Tribunal and Commissioners of Central Excise in support of their contention that there is no manufacture involved for payment of excise duty in the conversion of AVP into Ujala Supreme, which according to the appellant, is extremely diluted form of AVP. However, from the test report, namely, annexure 9, extracted above, it is clear that AVP is a synthetic organic dye for fabric dyeing and is used for dyeing silk/wool and dyeing of these fabrics can take place at elevated temperature in the presence of acid only. However, the further finding of the Institute is that the product sold by the appellant, namely, Ujala Supreme, cannot be used as a dye or a colouring matter. Even though the appellant contends that there is no manufacture in the conversion of acid violet paste to Ujala Supreme, we find from the opinion expressed by the Instit....
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.... longer be identified with AVP in any manner and in the conversion process it has lost its property as an industrial input used for dyeing silk and woollen material. Moreover in the process of conversion, there is 99 per cent erosion in the concentration of AVP leaving only an insignificant percentage of the item in water with different properties and different use. In other words, what is done is that an industrial raw material which is used as a dyeing agent for silk and woollen clothes at high temperature is converted into a laundry whitener. Obviously an acid base industrial raw material cannot be used as a laundry whitener and it has to be necessarily subjected to processing or manufacture to make it fit for use as a laundry whitener which is exactly what is done by the Jyothy Laboratories, the supplier of the items to the appellant. Since in the process, the original item lost its identity and a new commodity with distinct composition, identity and use emerged, the appellant's contention that the item, should be treated as the original commodity for classification cannot be accepted. We therefore confirm the order of the Commissioner rejecting the appellant's claim that the i....
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....of entry 118 provides for the 'plastic granules, plastic powder and master batches'. Sub-entry (5) provides for rate of tax for polymers of vinyl acetate or of other vinyl esters, in primary forms ; other vinyl polymers in primary forms. Annexures 17 and 18 are test reports obtained by the appellant from Shriram Institute for Industrial Research. In annexure 18 the test result of Ujala Stiff and Shine is given as follows:- Sl. No. Tests Results 01. Polymerized vinyl acetate content, % w/w 42.98 02. Water content % w/w 55.80 03. Solid content % w/w 43.80 04. Fragrance (Rose) Present According to the appellant, the processing done by the Jyothy Laboratories which purchases raw materials and converts the same to Ujala Stiff and Shine, does not involve any manufacturing activity. However, the appellant does not deny the contents of the product certified by the Laboratory which shows that the product is different from raw materials and it has a rose fragrance. We do not know on what basis appellant can contend that an industrial raw material, namely, polymerized vinyl acetate retains its character even after subjecting it to the pro....