2018 (6) TMI 517

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....m with bell and zalar' and is mainly used in temple during morning and evening prayer in the form of Aarti. 2. The applicant submitted that the 'electrically operated drum with bell and zalar' was exempted from tax under the Gujarat Sales Tax Act, 1969 vide Determination Order dated 26.02.1990 given in the case of M/s. Jagdish Industries, reported at 1989/D/144. Subsequently, the said instrument was held as covered under entry 43 of Schedule I of the VAT Act vide Determination Order dated 31.05.2013 passed under section 80 in the case of the applicant. Accordingly, it was exempted from tax even under the VAT Act. The relevant entry 43 under the VAT Act was as under. "Entry 43 - Musical instruments (handmade and other than electronic musical instruments) and harmonium reeds" 3. The applicant submitted that the Chapter 92 of GST Tariff provides musical instruments, parts and accessories of such articles. The Chapter 92 provides various kinds of musical instruments which are subject to tax under the GST Act. The Chapter 92 also provides the 'Indigenous handmade musical instrument' subject to NIL rate of GST. They submitted that the entry of musical instrument under the ....

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....trically operated drum with bell and zalar' is manufactured by the applicant at his place of business. Accordingly, the item manufactured by the applicant is an indigenous musical instrument. 7. The applicant submitted that the third requirement is that the musical instrument should have been handmade. They submitted that the body for installing drum and zalar is manufactured with the help of machine. The further process of assembling drum and zalar and other component is done manually. Accordingly, the main process of assembling of instrument is done manually. The Hon'ble Supreme Court in the case of Collector of Central Excise V/s. Louis Shoppe & Another, 102 STC Pare 129 while interpreting the item as handicraft product has held that "it must be predominantly made by hand. It does not matter if some machinery is also used in the process". Accordingly, the disputed item of the applicant is handmade musical instrument. 8. It is submitted by the applicant that the item electrically operated drum with bell and zalar is an indigenous handmade musical instrument covered under Chapter 92 subject to NIL rate of tax. They submitted that there is a principle for interpretation of sc....

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....of the Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 provides as follows :- "Explanation. - For the purposes of this notification, - (i) ...... (ii) ...... (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification." 12.2 Further, Hon'ble Supreme Court in the case of L.M.L. Ltd. Vs. Commissioner of Customs [Civil Appeal No. 3764 of 2003, decided on 21.09.2010 reported at 2010 (258) ELT 321 (S.C.)] has held as follows :- "12. In Collector of Central Excise, Shillong v. Wood Crafts Products Ltd. reported in (1995) 3 SCC 454, it was held by this Court that as expressly stated in the statements of objects and reasons of the Central Excise Tariff Act, 1985, the Central Excise Tariffs are based on....

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....nd Services Tax Act, 2017, provided exemption to 'Indigenous handmade musical instruments' of Chapter 92. The said Notification No. 2/2017-Central Tax (Rate), dated 28-6-2017 was amended vide Notification No. 28/2017-Central Tax (Rate), dated 22.09.2017, whereby, inter-alia, in Sl. No. 143, entry "Indigenous handmade musical instruments as listed in ANNEXURE II", has been substituted and 'Annexure - II' containing list of 134 indigenous handmade musical instruments, was inserted. Thus, the exemption vide Sl. No. 143 of the said Notification is now admissible only to those indigenous handmade musical instruments of Chapter 92 as are listed in Annexure-II of the said Notification. 14.2 As per the submissions of the applicant, for manufacture of product 'Electrically operated Drum with Bell and Zalar', they prepare body by using Lathe Machine, Drill Machine and Welding Machine, wherein different parts are manually assembled. In the said product, Drum, Bell and Zalar are used which are played in a rhythm by using electricity and electric motor. The resultant product is distinctly known in the market as 'Electrically operated Drum with Bell and Zalar'. We, therefore find that the sai....