TaxTMI 
TaxTMI 
2011 (6) TMI 657
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....e import and sale of footwear at Pune and is registered under the Maharashtra Value Added Tax Act, 2002. An application was submitted on 25 December 2007 to the Commissioner for a determination under Section 56 of the Act, accompanied by a Tax Invoice for a product described as Escort 111 SYN Black. The contention of the Respondent was that the product manufactured by it is plastic moulded footwear and is covered by Entry C-74 of the Schedule so as to attract a taxable rate of four per cent. Entry C-74 at the material time was as follows : "C-74 Plastic Footwear 4% 1-4-2005 to 30-4-2005 C-74 Plastic footwear (moulded); hawaii chappals and straps thereof" 4% 1-5-2005 onwards 3. The Commissioner by his determination dated 11 February 2008 held that in order to fall for classification under Entry C-74, a product must satisfy two criteria: (i) The product should be moulded; and (ii) The product should be made entirely of plastic. Upon examining the process of manufacture, the Commissioner came to the conclusion that the product in question is made by applying a Direct Injection Process and is hence, moulded footwear. The first criterion was held to be satisfied. On the s....
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....ade primarily of plastic. 5. On behalf of the Appellant, it has been submitted that (i) Entries in the Schedule must be construed according to their plain and literal meaning unless there is an ambiguity or an absurd result would ensue; (ii) Entry C-74 refers to plastic footwear. If the footwear is not of plastic, but is mixed with any other material, it cannot be termed as plastic footwear within the meaning of Entry C-74; (iii) It is an admitted position that the shoe upper is made of fabric coated with plastic, while the sole is made out of plastic. The Respondent contended that the footwear in question, is plastic footwear because it is predominantly made out of plastic and relied upon certificates/reports of the manufacture of the footwear from the Footwear Design and Development Institute to the effect that it is plastic footwear. Those certificates have certified the product as plastic footwear only and with specific reference to the definition contained in Note-3 of Section XII of Chapter 64 to the Central Excise Tariff; (iv) The scheme of the Central Excise Tariff and Customs Tariff is based on the International Harmonized System of Nomenclature (HSN) and the explana....
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.... of fact, that the footwear in question, is not made entirely of plastic because other material like fabric is also used. The Tribunal, however, incorrectly applied the test of predominance in the present case; (x) The judgment of the Supreme Court in A. Nagaraju Bros. v. State of Andhra Pradesh - (1994) 95 STC 1 = 1994 (72) E.L.T. 801 (S.C.), is distinguishable. In that case, for the very dealer in issue, suitcases had been held to be plastic articles in the following Assessment Year 1983-84, but the Tribunal had taken a different view for Assessment Year 1981-82. The Judgment of the Supreme Court does not lay down that the test of predominance should be applied for classification in all cases and is authority for the proposition that no single or universal test can be applied. 6. On the other hand, it has been submitted on behalf of the Respondent that (i) The Respondent and other traders similarly situate had submitted their sales tax returns periodically by making payment of tax at four per cent right since 1 April 2005. None of the authorities had raised objections till a survey was conducted in 2007; (ii) entry C-74 does not postulate that the footwear should be made pu....
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....per portion of the footwear. As a matter of fact, the documents which were produced by the Respondent before the Commissioner of Sales Tax, make it abundantly clear that while the sole of the footwear is made of PVC compound, the upper portion is made out of plastic coated textile where textile material is used as the base in order to avoid direct contact with the skin. For instance, one such certificate dated 15 March 2009 in respect of a sample of the footwear - Escort 111 SYN Black - states that the insole is made up "of top with cotton fabric and base of plastic" whereby a weight of 10% to 15% is attributable to cotton and 85% to 90% to plastic. On this basis, it has been estimated that by weight and by value about 90% of the material is plastic, while 10% consists of other materials. The FDDI in its certificate dated 15 June 2009 states that the weight of elastic, thread, knitted fabric, sponge material etc., other than the PVC, is less than 10%. Several certificates of the Footwear Design and Development Institute of the Union Ministry of Commerce were relied upon. Those certificates which have also been produced during the course of these proceedings in a compilation state t....
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....ce to a construction to be placed on the provisions of the relevant entry in the MVAT Act. 10. The entry in question, C-74, adverts to plastic footwear. The entry has to be construed as it stands. The Respondent submitted before the Tribunal that it was the predominant nature of the material used that must be a determining factor. The Tribunal accepted the submission and held that footwear which is made predominantly of plastic and which is made by a moulding process would be covered by the description of "plastic moulded footwear". In response to a query of the Court, Counsel appearing on behalf of the Respondent submitted that so long as the element of plastic in the footwear is in excess of 50%, the product must fall for classification as plastic footwear. It is impossible to accept the submission. The Legislature has provided for a specific classification of plastic footwear to which a rate of duty of 4% was applicable at the material time. In order to fall for classification under Entry C-74, the product must constitute plastic footwear. Adding the expression "predominant" to the interpretative process is to add words to the entry. That is to amend the entry - something ....
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....vance to interpreting the Central Excise Tariff because that Tariff is based on the HSN. 12. In Geep Flashlight Industries Ltd. v. Union of India, 1985 (22) E.L.T. 3 (S.C.) the Supreme Court considered the interpretation to be placed on Tariff Entry 15A(2) of the Central Excise Tariff which dealt with "articles made of plastics of all sorts including tubes, rods, sheets ..." The issue was whether a plastic torch manufactured by the Petitioner was covered by residuary item 68 and not by tariff Item 15A(2). The Supreme Court held that "articles made of plastic would mean articles made wholly of (the) commodity commercially known as plastics and not articles made from plastics along with other materials. The plastic torch was held not to fall within the description of an article made of plastic. The Supreme Court held that the High Court had arrived at the correct conclusion that the expression "articles made of plastics" used in Tariff Item No. 15A(2) does not cover such articles which are not directly made from the material indicated in sub-Item (1), but such articles as arc made out of such material. This decision was followed in a subsequent judgment of the Supreme Court in ....
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....mmissioner, the Tribunal and the High Court. The Supreme Court noted that the decisions of the Tribunal in the case of certain other dealers were not uniform. In the case of some similar dealers, the Tribunal had taken the view that the suitcases were plastic articles. In the case of very same dealer pertaining to Assessment Year 1983-84, the Tribunal had followed its decision in other cases and had held that the suitcases were plastic articles. However, a contrary view was expressed in the case of Assessment Year 1981-82. The Supreme Court adverted to the decision of the Tribunal in Blow Plast wherein several circumstances were spelt out in holding that the suitcases were plastic articles. The Supreme Court held that the main raw material was plastic and in common parlance the suitcases were understood to be plastic goods. Though certain other material was used in the manufacture of suitcases and the value may be substantial, the Supreme Court was of the view that having regard to the several circumstances set out in the judgment of the Tribunal, in the case of Blow Plast and applying the common parlance test and the test of usage in trade circles, the goods must be called plastic....
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....taxable as plastic footwear. The second product of the Appellant was called EVA footwear in which both the sole and the strap consisted of EVA polymers, moulded together. The Appellant sought an advance ruling from the Authority. In the case of the Walkie Chappal, the Authority held that the Appellant was not entitled to the benefit of the entry relating to plastic footwear and that the Appellant would have to pay a higher rate of tax of 12.5% as opposed to 4%. In the case of EVA footwear, the Appellant was allowed a classification under the entry relating to plastic footwear for the period from 1 April 2005 to 6 June 2005, but not thereafter. A Division Bench of the Karnataka High Court held that for the period 1 April 2005 to 6 June 2005 when the entry read as plastic footwear, the Walkie Chappal could not be classified under that entry. The High Court observed that the material used for the upper portion of the footwear is man made fabric with plastic coating. Hence, the High Court upheld the reasoning of the Authority that the footwear did not fall within the description of plastic footwear, in the case of EVA Chappal, the High Court noted that the product was made of plastic a....