TaxTMI 
TaxTMI 
2015 (4) TMI 966
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....on 4(1)(b) of DVAT Act, so as to attract levy of VAT @ 4% at the rate then prevalent, and, instead, held it as unclassified item taxable @ 12.5% in terms of Section 4(1)(e). 2. The appellant claims to be a dealer registered under DVAT Act having its registered office at 323-A, Emporium Mall, Vasant Kunj, New Delhi-110070. It claims to be engaged, inter alia, in the business of sale of stained glass products such as panels, lamp shades and other miscellaneous glass articles including decorative items sold under the brand name of "Baldi". It is averred that the "Baldi" glass items are manufactured primarily using the designs given by craftsmen and formulating the same on a glass base. The manufacturing process of "Baldi" statedly involves crystal playing, engraving, polishing, assembling, chiseling and after final product is made the same is subjected to hand polishing, dismantling, pre-gilding and then finally assembled as per the design given by the craftsman. The entire process of manufacture is claimed to engage highly qualified artisans who make the individual pieces by hand with no two pieces resembling each other. Claiming that these goods having decorative visual appeal are ....
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....cts sold under the brand name "Baldi" were classifiable as "Handicrafts" in terms of the third schedule appended to DVAT Act thereby attracting the levy of DVAT @ 4% under Section 4(1)(b), as it then stood, an application was submitted on 27.1.2009 by the assessee before the Commissioner under Section 84(4) of DVAT Act praying for following questions to be determined : "a. Whether the said goods, viz,. stained glass lamps and hand crafted decorative articles of glass including the goods sold under the brand name of "Baldi" are classifiable as Handicrafts under Entry 128 of Schedule III of the said Act. b. Whether the said goods are chargeable to VAT @ 4% ad valorem instead of 12.5% under the residual category as specified under Section 4(e) of the Act." 5. The above questions persist, as questions of law, for the purpose of the appeal at hand, though restricted to the goods sold under the brand name of "Baldi". 6. As mentioned earlier, the assessee submitted on 6.3.2009 documents describing the manufacturing processes of the products in question for consideration of the Commissioner. The claim of the assessee about the products being "Handicrafts" was resisted by the Revenue. It....
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....rly denying the benefit of the entry after concluding that the process of manufacture involved substantial use of hand. It was submitted that the goods in question are covered within the expression used in entry 128 of the third schedule and that considerations such as price of the product or its place of manufacture are irrelevant. Urging a strict interpretation of the fiscal statute, the assessee prayed that the benefit of specific entry be accorded and recourse to the residuary clause be rejected. 9. The Tribunal, however, upheld the view taken by the Commissioner and dismissed the appeal of the assessee holding that it had failed to show that "Baldi" items imported from Italy, could be classified as "Handicrafts" under entry 128 of the third schedule . Rejecting the case of the appellant , inter alia, based on the tests laid down in the case of Collector of Central Excise V. Louis Shoppe (1996) 83 ELT 13 (SC) and the ruling of Oswal Agro Mills Ltd. V. Collector of Central Excise (1993) 66 ELT 37 (SC), the Tribunal observed as under : "19. ..... It is to be noted that from the preface of the copy of the printed material pertaining to „Baldi' filed with this appeal, the s....
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....hrid Schedule." 10. Rejecting the contention of the appellant that the Commissioner had failed to adhere to the express words of the taxing statute or erred in classifying "Baldi" under the residuary entry and relying on the cases of Atul Glass Industries P. Ltd. V. Collector of Central Excise 63 STC 322 (SC), Delhi Cloth and General Mills Co. Ltd. V. State of Rajasthan (1980) 46 STC 256, State of Kerala V. N D Narayanan Nambiar (2008) 11 VST 380 (Ker) and Commissioner V. Kohinoor Glass House (2009) 26 VST 135 (All), the Tribunal proceeded to apply "common parlance theory as well as the functional test" for observing that "an item is to be considered sometimes by the express words of the taxing statute and sometimes by the implied meaning of the words of a taxing statute." 11. In the case of Louis Shoppe (supra), the issue for determination was as to whether wooden furniture by itself could be treated as "Handicrafts" within the meaning of the Government notification dated 10.2.1986 issued under the Central Excise Act. The Supreme Court observed that furniture as such would not qualify as "Handicrafts" but could be so characterised if the following tests are satisfied :- "(1) It....
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.... ornamenting, finishing, or otherwise adapting for sale, any article." 16. In a case reported as Padmini Products V. CCE, 1989 (43) ELT 195 (SC) the question was as to whether agarbatti and dhoop are entitled to exemption as "Handicrafts" within the meaning of the government notification under Central Excise and Salt Act, 1944. The claim of the assessee to such effect was rejected on the factual finding that a very small portion of the required work for the manufacture of these items was done by hand, when it is machines which predominantly produced the end product. While examining the issue, the Court subjected to scrutiny the process of manufacture of the items in question, inter alia, in light of the dictionary meaning of the expression "Handicrafts" as provided in the Concise Oxford English Dictionary and Encyclopaedia Britannica as indeed the distinction between "Handicrafts" and goods which are "machine made" as explained in the definition adopted by UNCTAD as follows :- "Some goods may be produced partly by machine and partly by hand : (i.e. a dress made up by hand from machine made cloth, perhaps with additional hand embroidery or other decorations) ... in such cases a pr....
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.... it does not intend to include. 21. To illustrate the above, we may refer to entry at serial no.117 in the third schedule of DVAT Act. It relates to "imported textiles and fabrics". Necessarily, such textile and fabrics as are indigenously produced cannot take the cover of entry no.117. Similarly, entry No.22 in the first schedule to DVAT Act, which relates to sales which are exempt from such tax in terms of Section 6, concerns "indigenous handmade musical instruments". Obviously, the benefit of such exemption cannot be extended to imported handmade musical instruments. The logic is simple. By adding the word "indigenous", the legislature has qualified the expression giving it a restrictive meaning. 22. We may add three more examples here. The entry nos. 12, 20 and 39, again in the first schedule to DVAT Act, relate to "earthen pot", "all bangles except those made of precious metals" and "handmade safety matches" respectively. All these items are exempt from VAT. The way these commodities have been described in the said schedule, pots which are metallic, bangles which are made of precious metals like gold or silver, or safety matches produced with the help of machinery would not ....
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....nce to a particular point in time. It makes no sense to say that only such commodities as are known to be "Handicrafts" at a particular point of time would be acceptable and that any further additions to the category would remain outside the scope, as if the idea stood frozen with reference to the date of legislative amendment. 28. The Tribunal seems to have been overwhelmed by the fact that the product in question is relatable to "luxury style of living". It seems to have taken a cue from the observations of the Commissioner who pointedly described "Baldi" items as "object d'art", and "not merely" a "handicraft" as if to say that a handicraft cannot be object d'art. Reference to the high price (at which these items seem to be selling in Indian market), also has been made in the same context. We are unable to subscribe to this kind of syllogism. It is not proper to reject a commodity from the category of "Handicrafts" only because it is also an object d'art. The dictionary explains the expression "object d'art" as a small "decorative object", [Reference : Shorter Oxford English Dictionary]. Having regard to the tests laid in the case of Louis Shoppe (supra), the fact that the comm....