AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 1022
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....(i) Whether in the facts & circumstances of the case, the Rajasthan Tax Board was justified in law and has not acted illegally and perversely in holding that "Ujala Supreme" Fabric / Laundry Whitener sold by assessee falls in the category of Industrial Input / Synthetic Colouring Matter and is liable to tax under Entry 119 of Schedule-IV Part-B instead of Schedule-V as held by the Assessing Officer ? (ii) Whether in the facts & circumstances of the case, the Rajasthan Tax Board has not acted illegally and perversely in deleting the tax, interest and penalty holding the goods sold by assessee are liable to tax @ 4/5% despite of the facts that there is no specific Entry and the general Entry invites tax liability @ 12.5/14% ? 3. Brief facts noticed for disposal of the present petitions are that the respondent assessee is a Limited Company and is engaged in the business of trading in product called "Ujala Supreme", which is claimed to be made by dilution of Acid Violet Paste (in short AVP), which is classifiable under Tariff Entry No.3204.12.94 of the Central Excise Tariff Act, 1985. 4. A survey was conducted at the business premises of the respondent assessee on 30.8.2012 wherei....
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....rts on the same product, have held in favour of the respondent assessee and also relied upon judgment of Hon'ble Apex Court in the case of M.P. Agencies v. State of Kerala (2015) 7 SCC 102, where the Apex Court had an occasion to consider the same product, namely "Ujala Supreme". 9. The ld. AA, taking into consideration the issue which had arisen before other courts and the Hon'ble Apex Court, held in favour of the assessee and accepted the contention of assessee that the product falls in a specific Entry and once it falls in a specific Entry then question of taking it to the Residuary Category, does not arise and since the claim was allowed, penalty u/s 61 was also directed to be deleted. Interest was also deleted as the claim of the assessee was accepted. 10. The Revenue being not satisfied with the order of AA, preferred appeal before the ld. Tax Board reiterating the facts noticed by the AO and in contending that the product being not specifically entered in any of the specific Entries, it would fall in the Residuary Category, however, the Tax Board was not inclined with the claim of Revenue and taking into consideration the fact that the issue is squarely covered in favour o....
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....is applied as observed by the Apex Court time and again in such cases, then the product is merely a laundry whitener / brightener, and will not be treated as industrial input. If a consumer goes to purchase the product "Ujala Supreme", then the trader will give the same product to be sold as such and not as an industrial product, and thus contended that the finding reached by the AO was well reasoned and justified, who took into consideration all facts and material and the finding reached by both the Appellate Authorities deserve to be reversed. Learned counsel relied upon Atul Glass Industries (Pvt.) Ltd. v. Collector of Central Excise (1986) 3 SCC 480, M/s Mauri Yeast India Pvt. Ltd v. State of U.P. & Another 21 Tax Update 60 (SC), State of Tamil Nadu v. Pyare Lal Malhotra & Others(1976) 1 SCC 834, the judgment of this court in M/s Pidilite Industries Limited v. Rajasthan Tax Board & Others [STR 104/2014, decided on 13.4.2017], and also contended that the RVAT Act of 2003 itself being a separate Act, provisions of the Central Excise are not applicable. 14. Learned counsel also contends that it is clear cut case of concealment and penalty u/s 61 was rightly imposed by the ld. AO ....
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.... and thus claims that even HSN Code is applicable. In support of his claim, apart from the judgment of Apex Court, learned counsel relied on M/s Jyothy Laboratories Ltd. v. State of Assam & Others (2011) 46 VST 308, The State of Assam & Others v. M/s. Jyothy Laboratories Ltd. (2012) 55 VST 371, Commissioner of Central Excise, Chandigarh v. Shital International (2011) 1 SCC 109, Commissioner of Customs, Mumbai v. Toyo Engineering India Ltd. (2006) 7 SCC 592, Collector of Central Excise, Surat v. Besta Cosmetic Ltd. (2005) 3 SCC 790. 17. I have heard learned counsel for the parties and have meticulously perused the material on record, including the judgments cited by both the learned counsel. 18. Before proceeding ahead, it would be appropriate to quote the Entries in Schedule appended to the Act of 2003, which are to be considered in the instant case :- Schedule Item Entry Rate of Tax(%) IV Part-B(Goods under category of industrial inputs 119 Synthetic organic colouring matter whether or not chemically defined, preparations based on synthetic organic colouring matter, excluding catechu or gambiar 4/5 IV Part-B(Goods under category of industrial inputs 121 Ma....
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....a'. As far as "Ujala Supreme" is concerned, it is urged that it is nothing but a diluted form of AVP. The AVP is merely diluted to create Ujala Supreme in the form of mathematical equation. Learned Counsel for the Appellant has referred us to report dated 30.8.2006 of the Institute of Chemical Technology, Matunga, Mumbai which has stated that the chemical composition of AVP and Ujala are the same except for the dilution in Ujala. The relevant part of the said report reads as follows: "The Acid Violet Paste (referred as "AVP" hereafter) supplied to us confirms to Acid Violet 49, a synthetic organic dye classified into acid dye class which is used for the colouration of silk/wool at elevated temperatures in the presence of acid. "AVP" is uniform and having standard strength which is formulated and prepared as ready for use. The "AVP" as well as "Ujala" purchased from the market are subjected to instrumental analysis (High Performance Thin Layer Chromatography) and the results are observed as below: (1) The Chemical composition of "AVP" and "Ujala" are the same except for the dilution in "Ujala''. (2) It can be observed from the chromatogram that "Ujala" is a heavily....
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....uorescent whitening agent is nothing but Ranipal as per the packing list on the tin. Factory is making the Ujala by simply mixing these three items, Acid violet, ultra marine blue, fluorescent whitening agent in water heating them to a particular temperature and then filter this solution and bottling them in small packings and packing them in paper cartons for marketing, as such, there is no machinery is used for the production. All the process is done by manual labour only. Hence, in my opinion, no new product is emerged by this process, only three colouring matters mixed together in a particular proportion for colouring the fabric.' " 39. It is apt to note here that the majority opined that the Chemical Examiner's opinion is in accordance with the Tariff Ruling of the Board. These authorities fundamentally relate to the issue that there has been really no manufacture process for the purpose of classification. That apart we find from the test reports that there is only dilution in water and needless to emphasize the same does amount to or result in manufacture and hence, no new product emerges. Therefore the common parlance would come into play. 40. From the aforesaid ....
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....s are covered under HSN Code 3905 and HSN Code 3204.12.94 and also held that it covers as industrial inputs and packaging material. 24. The AO had placed reliance on the Kerala High Court judgment in the case of M/s M.P. Agencies v. State of Kerala (supra) which, as aforesaid was reversed by the Apex Court and once a judgment of High Court has been reversed by the Apex Court, none can rely on the judgment of the High Court, and claim by the learned counsel for the assessee still placing reliance on the judgment of the Kerala High Court supra, is not justified and proper. 25. Apart from the direct judgment of the Apex Court on the same product (supra), learned counsel for the assessee has also placed reliance on judgment in the case of assessee itself before the Gauhati High Court in the case of Jyothi Laboratory v. State of Assam (supra), where also the product considered by the Gauhati High Court is of "Ujala Supreme". In the aforesaid case even the court found that the product comprised of :- AV/49 - .98% Water - 99.02% 26. It would be proper to quote para 37 of the judgment :- "37. On a totality of the above considerations, this Court is of the unhesitant view that the p....
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.... Residuary Tariff Entry can only be made if a product does not squarely fall within any of the specified Entries, and a good deal of caution is required to be undertaken in the matter of classification, identification of an Entry and a description thereof would be relevant for assigning it to a particular Tariff Entry, and lodgment of an item in Residuary Category is approvable only if by no conceivable reasoning which can be brought within the purview of any other tariff item, and the burden always lie on the Revenue, if it intends to carry it to the Residuary Schedule. 30. The Apex Court has reiterated repeatedly and even in the case of M.P. Agencies (supra) that in such cases, common parlance test would come into play and the Apex Court held that even if common parlance test is applied then too, the product can certainly be said to be classifiable as aforesaid. 31. Though learned counsel for the assessee relied on a Circular / Notification of this court supra, that even the Rajasthan Value Added Tax has accepted that insofar as the Rules for interpretation of the provisions of Central Excise Tariff Act, 1985 read with explanatory notes as amended from time to time shall apply ....