TaxTMI 
TaxTMI 
Mixed Material Products
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....ixed Material Products<br> Query (Issue) Started By: - Deepak Whorra Dated:- 20-5-2013 Last Reply Date:- 3-6-2013 VAT + CST<br>Got 4 Replies<br>VAT / Sales Tax<br>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 ....
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....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 - a....
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....n 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 ? Reply By Rama Krishana: The Reply: What is the manner is which you are dealing with the issue. Are you selling the product for Rs. 100 or for Rs. 98. The concept of valuation in excise is not applicable....
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.... to valuation issues in sales tax. You can not bifurcate the value in two parts where the goods are sold as a whole including the accessories. As long as classification issues, the same would be related if you are selling two products independently. If you are selling the main product with accessories, the classification would be done on the basis of main product. Reply By Deepak Whorra: The Re....
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....ply: Dear Mr.Rama Krishana, Thank You for your reply. Actually my question is still answere. We manufacture and sell a product which is taxable at 5% as per the DVAT schedule. This product is sold at, say Rs.100. As an attachment to this product is an acessory. The cost of the main product is Rs.98 and that of the Accessory it is Rs.2. Now the departtment is claiming that the final product ....
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....is a mixed material product and therefore taxable at 12.5% even if the cost of the main proct is 98%. Is this a correct viewpoint ? Reply By Pradeep Khatri: The Reply: If your product falls under the residuary list then it will attract VAT @ 12.50% otherwise rate of tax will be 5%. Reply By Deepak Whorra: The Reply: Dear Mr.Khatri, Thank You for your comments. However my question still remai....
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....ns unanswered. We make Aluminium Utensils which are taxed at 5%. However, for utility and/or design purposes we put acylic handles or put a glass insert so that heating food is easier just by removing the glass insert and putting in the microwave. Cost wise/ selling price wise, the Aluminium Utensil is 98% of the cost and the acylic handle is 2% or the Glass Insert is 4% of the value. We sell t....
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....he productrs as Aluminium Utensils. The VAT department is contending that since the product comprises of an Aluminium Bowl/Tray + Acylic Handle or Glass Insert thus it is a mixed material product even if the value of the acylic part is 2% and thus the product falls in the residual category and should be taxed at 12.5%. Is this correct ? Kind Regards Deepak<br> Discussion Forum - Knowledge Shar....
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