TaxTMI 
TaxTMI 
2017 (10) TMI 426
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....eferred against order dated 07/03/2002, which was an order passed in first appeal under Section 62(1) of the Commercial Tax Act, 1994. The appeal was arising out of orders dated 07/03/2002 and 24/04/2001 (Annex.-'L' and 'K') passed by the Deputy Commissioner of Commercial Tax and Assistant Commissioner of Commercial Tax, State of Madhya Pradesh. 03- The facts of the case reveal that the petitioner Company M/s. Castrol India Ltd. is a Company incorporated under the Companies Act, 1956. The Company was originally registered as "Indrol Lubricants and Specialities Private Limited" and later on the name was change to "Indrol Lubricants and Specialities Limited". The name of the Company was subsequently changed as "Castrol India Limited". 04- The petitioner Company is a manufacturer of "Brake Fluid". In the State of Madhya Pradesh, the Madhya Pradesh Commercial Tax Act, 1994 came into force w.e.f. 01/04/1995 and the petitioner Company is registered as a dealer under the provisions of Act of 1994. The Act of 1994 does not provide any specific entry in respect of levy of sales tax on "Brake Fluid", however, it provides for an entry i.e. Entry No.9 in Part-III of Sched....
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.... appeal was preferred by the petitioner and the appeal was decided against the petitioner by an order dated 07/03/2002. Thereafter, revision petition was preferred under Section 62(1) of the Commercial Tax Act and the same was dismissed on 21/03/2003. The petitioner has prayed for quashment of all three orders passed by the respondents by which the levy of tax in respect of Brake Fluid has been done by treating the Brake Fluid as Lubricant. 11- The petitioner's contention is that Brake Fluid cannot be categorized as Lubricant and therefore, Sales Tax / Commercial Tax cannot be charged by treating as a Lubricant. The petitioner has also raised a ground in respect of composition of Lubricant as well as of Brake Fluid and the stand of the petitioner is that Brake Fluid, by no stretch of imagination, can be treated as Lubricant. 12- The respondents have filed a reply and the respondents have stated that Brake Fluid has to be treated as Lubricant and tax has rightly been charged by treating Brake Fluid as Lubricant as mentioned in the Entry No.9 Part-II of Schedule-II. The respondents have stated that functions of the Lubricant and Brake Oil are almost identical. The Lubricant....
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....lls under the category of Lubricant or not. The various dictionaries have defined the Lubricant and normally the Lubricant is a substance, usually organic, introduced to reduce friction between surfaces in mutual contact. The Lubricant is always used for reducing friction. The basic distinction between Lubricant and Brake Fluid are as under:- "i) Water Solubility: Brake Fluid is soluble in water, whereas lubricant is not soluble in water. ii) Flash Point: Universal brake fluid has flash point of 620C whereas flash point of lubricant i.e. CRB Pluc 20W/40 is 1000C. iii) Brake Fluid should not contain a trace of Lub. Oil because it affects the Rubber parts in the Brake system. iv) Brake Fluid is based on Solvent like Glycol equilibrium refluxing boiling point." 19- It is pertinent to note that under the Bombay Sales Tax Act, 1959, lubricants have been classified under Entry 8 whereas Brake Fluid is classified under the residuary entry and not under the Entry No.8 relating to lubricants. The position under Central Excise Tariff Act, 1985 also requires consideration and the same reads as under:- "UNDER CENTRAL EXCISE TARI....
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....orks because liquids are not appreciably compressible-in their natural state, the component molecules do not have internal voids and the molecules pack together well, so bulk forces are directly transferred to compress the fluid's chemical bonds. Most brake fluids used today are glycol-ether based, but mineral oil (Citroën/Rolls-Royce liquide hydraulique minéral (LHM)) and silicone (DOT 5) based fluids are also available. 3 - As per https://www.merriam webster.com/dictionary/brake %20fluid: The liquid used in a hydraulic brake cylinder. 4 - As per http://www.thefreedictionary.com/brake+fluid : An oily liquid used to transmit pressure in a hydraulic brake or clutch system. 5 - As per https://en.oxforddictionaries.com / definition/us/ brake_ fluid : Fluid used in a hydraulic brake system. 6 - As per http://www.definitions.net/definition/brake%20fluid: Brake fluid is a type of hydraulic fluid used in hydraulic brake and hydraulic clutch applications in automobiles, motorcycles, light trucks, and some bicycles. It is used to transfer force into pressure, and to amplify braking force. It works becaus....
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.... a new brake fluid that is still in its sealed container. It is usually between 240°C and 280°C. On account of its composition, brake fluid has hygroscopic properties. This means that it draws in moisture from its surroundings, primarily through the brake hoses. As a consequence, the water content of the brake fluid increases over time and the boiling point drops. The temperature known as the wet boiling point is reached at a water content level of 3.5%. Once this point in time has been reached, the brake fluid must be changed. The actual boiling point of the brake fluid can be determined in a garage using a test device. This test should be carried out annually. To safeguard the function of the brake system, the quality of the brake fluid must meet the specifications defined by the vehicle manufacturer. Furthermore, the prescribed intervals for changing the brake fluid must be observed. The viscosity of the brake fluid is also very important. It is viscosity which safeguards the function of various brake systems. In modern control systems such as ABS or ESP(r), very low viscosity is a prerequisite for absolutely reliable control processes in fract....
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....s were held not to be included in item No.23A(4) of Schedule-I appended to Central Excise and Salt Act, 1944 which was relating to other Glass and Glassware. The apex Court in the aforesaid case has held as under:- "A broad description of the process through which a glass sheet passes has been detailed earlier. It indicates clearly to our mind that the original glass sheet undergoes a complete transformation when it emerges as a glass mirror. What was a piece of glass simpliciter has now become a commercial product with a reflecting surface. Into the process of transformation have gone successive stages of processing with the aid of chemicals such as stannous chloride, silver nitrate and copper coating besides an entire range of physical proscesses involving polishing, washing, coating, drying, varnishing, evaporation and cooling. The evolved product is completely different from the original glass sheet. What was once a glass piece in its basic character has no longer remained so. It has been reduced to a mere medium. That is clear if regard is had to the fundamental function and qualities of a glass mirror. The power to reflect an image is a power derived not from the gla....
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.... character that a product is so identified. In Commissioner of Sales Tax, U.P. v. Macneill & Barry Ltd., Kanpur [1985] (2) SCALE 1093. This Court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be described as paper as that word was used in common parlance. On the same basis the Orissa High Court held in State of Orissa v. Gestetner Dluplicators (P) Ltd. [1974] (33) S.T.C. 333 that stencil paper could not be classified as paper for the purposes of the Orissa Sales Tax Act. It is a matter of common experience that the identity of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identified it in his mind. In the case of a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else. It is a mirror, an article which reflects images. It is referred to as a glass mirror on....
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....expression as developed through successive Notifications. Our attention has been drawn on behalf of the Revenue to the circumstance that glass mirrors have been classified as 'glass and glass ware' in Chapter 70 of the Brussels Tariff Nomenclature. It seems to us that this circumstance can hardly advance the case of the Revenue, because the First Schedule to the Central Execises and Salt Act does not appear to have been modelled on the Brussels Tariff Nomenclature. There is nothing to show that the Tariff Items were classified in the Schedule on the basis of the Brussels Tariff Nomenclature. It was when the Customs Tariff Act, 1975 was enacted that the First Schedule to that Act was framed in accordance with the Brussels Tariff Nomenclature, evidently because the progress made in industrial growth and economic development, and the substantial changes in the composition and pattern of India's external trade called for the need to modernise and rationalise the nomenclature of India's Tariff in line with contemporary conditions. The glass mirrors were still not specifically mentioned under the Customs Tariff Act, 1975. They are now being brought in as such by ....
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....cation dated January 29, 2000 issued under section 3A(1)(d) of the U. P. Trade Tax Act, 1948. Since it is not separately mentioned in entry 75(i) and 75(ii), it would be covered by entry 75(iii), being an item of electronic goods, not covered by any other item in entry 75 and would be taxable under entry 75(iii)." 24- The apex Court in the case of Commissioner of Sales Tax, U. P. Vs. Macneill & Barry Ltd. reported in Sales Tax Cases (Vol.61) 76 was dealing with an issue relating to Ammonia Paper or Ferro Paper. The apex Court by taking into account the meaning as per common parlance has held that Ammonia Paper and Ferro Paper does not fall within Entry the entry "paper other than hand-made paper". 25- The apex Court in the case of Commissioner of Central Excise, Delhi Vs. Carrier Aircon Ltd. reported in (2006) 9 STJ 292(SC) was dealing with an issue relating to classification of Chillers under Chapter Heading No.84.18 of the first Schedule of the Central Excise Tariff Act, 1985, and was held that chillers would not be classifiable under Chapter Heading No.84.15, meaning thereby, they cannot be a refrigerator even by testing it from commercial parlance test. 26- The Divisio....
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....in common parlance inasmuch as a customer asking for chewing gums or bubblegums would not be given lozenges by a shop keeper. 9. The Supreme Court in the matter of Commissioner of Trade Tax, U.P. v. Associated Distributors Ltd. reported in [2008] 15 VST 39 (SC); [2008] 13 STJ 150, while holding that bubblegum is different from sweetmeat, has noted the distinguishing features of bubble gum as follows : "9. If the ratio of the aforesaid judgment is properly comprehended then bubblegum in the common parlance cannot be construed as mithai (sweetmeat). When we apply common parlance test and in fact ask someone to bring the sweets from the market, he will never bring bubblegum. In common parlance, even items of confectionery will not be construed as sweetmeat (mithai). In fact, bubblegum is not an item for eating. It is kept in the mouth and after chewing the same is thrown out. The bubblegum while kept in the mouth by the children is also inflated as a balloon. In fact, it is used as a 'mouth freshener'. It is not made only of sugar. It contains gum base, vexes, etc., along with sugar. 10. According to wikipedia, the encyclopedia, bubblegum is a type o....
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....ectionery goods of different category. It is accepted principle of law that in case of controversy of tax on commodities, one of the principles which is usually applied, is known as doctrine of 'noscitur a sociis'. i.e., where two or more words are stated together they are to be construed in a cognate manner. To put it differently, each word takes colour from each other. One application of the above general principle is the doctrine of 'ejusdem generis' which say that wherever the general words are followed by particular or specific words of same nature, the general words would take its meaning from the later specific word, however this is not the case in present appeal. Here the goods or items 'bubblegums' and 'chewing gums' neither find place at all in the entry nor the entry is head by 'all kinds of confectionery'. There- fore the above principle does not apply here. 18. In view of the above factual analysis, the rulings and principles propounded by the honourable Supreme Court of India in its various judgments, the Appellate Board has come to the conclusion that goods 'bubblegum' and 'chewing gum' cannot be covere....
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....ndles, lubricant wax, sealing wax, etc." 29- Lastly the Hon'ble Supreme Court in the case of Ravi Prakash Refineries (P) Ltd. Vs. State of Karnataka reported in (2016) 29 STJ 50 (SC) was dealing with an entry under Central Sales Tax and has held that oil-cake and de-oiled cake are two different commercial products. The apex Court in the aforesaid case in paragraph No.17 to 20 has held as under:- "17. Relying on the said passage, it is contended by Mr. Mehta that when identity of the goods on the basis of commercial parlance is similar, the High Court would have been well advised to follow the principles set out in the aforesaid decision and should not have been guided by the concept of enumeration in the Notification. In essence, the submission is that there is no distinction between the oil cake and the de-oiled cake and both should be perceived as one in commercial parlance. Thus, the emphasis is on the commercial parlance test. To bolster the said stand, reliance has been placed on M/s Habeeb Protiens case, wherein the Division Bench of the High Court of Karnataka has drawn a distinction between sunflower oil cake and groundnut oil cake on the one hand and de-oil....
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.... subject to production of declaration in Form 'C' or certificate in Form 'D' duly filed and signed by the registered dealer or the Government to whom the said goods are sold:- 1. Cotton Yarn 2. Bicycles 3. Chemical fertilizers and chemical fertilizer mixtures 4. Edible oil - refined and non-refined 5. Khandasari Sugar 6. Liquid Glucose, Dextrine, Maixe Starch, gluten, grits, maize, husk, oil cake, corn steep liquor, dextrose, corn oil, maixe hydrol and maize germs." 19. From the said Notification, it is evident that the competent authority while exercising power under sub-section (5) of Section 8 of the CST Act, has kept the reduction of tax qua de-oiled cake from the purview of Notification and has only provided oil cake to be taxed at the reduced rate of tax. In view of the fact that the goods have distinct and different identity which also get recognition from the Notification, we are obliged to hold that the High Court has correctly distinguished the authority in M/s Sterling Foods (supra) and we unhesitatingly agree with the same. 20. Though we have agreed with the said conclusion of the Hi....