TaxTMI 
TaxTMI 
2009 (4) TMI 885
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....pellant applied for clarification before the Commissioner of Commercial Taxes on the rate of tax applicable to the above two products, the Commissioner clarified that both the products would fall under entry 27 of Notification S.R.O. No. 82 of 2006 dated January 21, 2006 issued under section 6(1)(d) of the Act, which is as follows: 27.. Detergents whether cake, liquid or powder, toilet soap, washing soap, laundry brighteners, abir, blue, stain busters, stain removers and all kinds of cleaning powder and liquids including floor and toilet cleaning. (Emphasis Here italicised. supplied) Essentially the finding of the Commissioner was that since the items were used for imparting brightness and stiffness to clothes, those are laundry brighteners falling under entry 27 abovestated. However, the appellant filed an appeal before this court contending that Ujala Supreme is an item falling under entry 155(8)(d) of the Third Schedule to the Act, which provides for "acid violets" with HSN Code No. 3204.12.94 and Ujala Stiff and Shine falls under entry 118(5) with HSN Code No. 3905 which provides for "polymers of vinyl acetate or of other vinyl esters, in primary forms; other vinyl polyme....
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.... the Act. However, the question to be considered is whether the two items are covered by the specific entries of the Third Schedule as claimed by the appellant. Since the items involved are different, though use is similar, we consider the items separately and serially hereunder. 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 by notification issued under section 6(1)(d) of the Act. The appellant's case is that Ujala Supreme is made by the manufacturer, namely, Jyothy Laboratories by just diluting acid violet paste with water. They have produced test reports, annexures 7 and 8, issued by SGS India Private Ltd., which show that on analysis of the product, namely, Ujala Supreme, the presence of AV49, that is acid violet paste, is only less than one per cent and balance 99 per cent (exactly 99.01) is water. Annexure 9 is the test report of acid violet paste and Ujala Supreme obtained by the appella....
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..... 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 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 Institute of Chemical Technology in their above report that by virtue of the extreme dilution to below one per cent, AVP lost its identity and therefore Ujala Supreme can no longer be regarded as AVP from which it is made. In fact the test result produced by the appellant itself shows that the product has lost its property as a dyeing agent, once it is subjected to conversion process by Jyothy Laboratories to Ujala Supreme. In the impugned order, the Commissioner of Commercial Taxes, has also come to the conclusion that irrespective of whether there is manufacture or not for the purpose of deciding on the lia....
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....ry 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 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 item falls under entry 155(8)(d) of List A of the Third Schedule to the Act with HSN Code No. 3204.12.94. The next question to be considered is whether the Commissioner is justified in classifying the item under entry 103 of the Notification, S.R.O. No. 82 of 2006. The appellant has no case that the item falls under any of the entries of the Second or Third Schedule other than entry 155(8)(d) of the Third Schedule which we have found against. Since the item falls outside the Second or Third Schedule, the rate of tax can be prescribed by the Government in terms of section 6(1)(d) of the Act. The only notificat....