TaxTMI 
TaxTMI 
2010 (3) TMI 1031
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.... is a dealer duly registered under the provisions of the Punjab Value Added Tax Act, 2005 and is engaged in the business of purchase and sale of electrical goods including UPS, inverters and batteries, etc. As far as the sale of inverters and batteries is concerned, the appellant-dealer has paid tax at the rate of 12.5 per cent but on the sale of UPS, tax was paid at the rate of four per cent in accordance with entry 60 of Schedule B attached to the Punjab VAT Act, 2005. The appellant was selling microtek digital inverters manufactured by Microtek International. Initially, up to the first quarter of 2006-07 the appellant had been selling microtek brand digital inverters and after that the same manufacturer started using the name as UPS-EB as certain new changes had been installed in the UPS device mode and an extra facility of UPS had been added to run computers. As the dealer had started selling inverters with UPS facility, therefore he claimed that the sale of UPS was covered under entry 60, sub-entry (27) of Schedule B which was liable to be taxed at the rate of four per cent. The designated officer found that UPS-EB was not covered under entry 60, sub-entry (27) of Schedule ....
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....ed to be used only for IT products. According to the appellant, a reading of entry 60 and sub-entries mentioned therein shows that each item has to be determined on its own and there is no condition attached with regard to its usage so as to disqualify the UPS being sold by the appellant from the UPS which is meant solely for IT products. Another argument of the appellant is that the Tribunal was wrong in holding that the usage would determine the classification of goods. According to the appellant, he is selling the goods in the market through the retailers and is not in a position to determine as to what use the goods would be put into as it would be entirely at the discretion of the purchaser and the same cannot be determined at the time of sale in the hands of the appellant-assessee. The learned counsel has placed reliance on the decision in the case of State of Tamil Nadu v. Vinyl Cable Industries [1993] 88 STC 430, wherein a Division Bench of the honourable Madras High Court has held that if PVC cables are sold to dealers in automobile parts that itself does not make them as motor accessories and it continues to be electrical goods for all purposes. The honourable Ma....
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....C 414; [1990] 45 ELT 525, the honourable apex court has held in para 3 as under (page 415 of 84 STC): "(3) The question before us is whether the Department is right in claiming that the items in question are dutiable under tariff entry No. 68. This, as mentioned already, is the residuary entry and only such goods as cannot be brought under the various specific entries in the tariff should be attempted to be brought under the residuary entry. In other words, unless the Department can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort cannot be had to the residuary item. . ." (iii) In the case of Dunlop India Ltd. & Madras Rubber Factory Ltd. v. Union of India [1983] 13 ELT 1566, the honourable apex court has held in para 37 as under: "37. . . . When an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause. The question of competition between two rival classifications will, however, stand on a different ....
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....tilizer." Yet another argument of the appellant is that once there is an ambiguity or confusion with regard to classification of the goods, then the same is required to be decided in favour of the assessee as the benefit of such an ambiguity should be resolved in favour of subject as has been held by various courts. Reliance in this regard is placed upon the judgment of the honourable Supreme Court in the case of Commissioner of Central Excise, Calcutta v. Calcutta Springs Ltd. [2008] 229 ELT 161, wherein a Bench of the honourable Mr. Justice S.H. Kapadia and honourable Mr. Justice B. Sudershan Reddy have held that in classification dispute the benefit should go to the assessee. The observation of the honourable apex court is reproduced hereunder: "4. Lastly, in the present case, the Commissioner has himself stated that on interpretation of the above two entries, that it is quite possible that the liner in question is capable of falling simultaneously under both the entries quoted above. If that be the case, then, in a classification dispute, the benefit should go to the assessee . . ." The arguments raised by the counsel for the appellant have been vehemently controverted....
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....ng sold by the appellant could not get precedence over what has been mentioned in the statute. We have heard the counsel for the parties at length and have perused the record. The product in question is UPS-EB. This product is an electronic power source which stores the energy in batteries connected to it when the AC source is present and converts this energy automatically to AC power when the input AC source fails and automatically feeds so generated AC powers to loads connected and returns to main when the AC source comes back to the input side. The appellant deals with inverters and UPS supplied by the company having trademark of "Microtec". Schedule B attached to the VAT Act pertains to the list of goods taxable at the rate of four per cent. Entry 60 and sub-entry (27) of the aforementioned Schedule are as under: "60. Telephones, cell phones, tele-printer, wireless equipment and parts thereof, digital video disc and compact disc and information technology products as given hereunder: (27) Uninterrupted power supply" The product being sold by the appellant, i.e., Microtec UPS-EB 600, Microtec UPS-EB 850 and Microtec UPS-EB 1400 were sent for testing to the Indian ....