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2018 (7) TMI 668
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....fza" under the residuary entry (Entry 1 of Schedule V) and not under the Entry 103 of Part A of Schedule II of the U.P. VAT Act? B. Whether the Tribunal was legally justified to give the finding based on common parlance test that the product "Rooh Afza" is known as 'sharbat'? C. Whether the Tribunal was legally justified in classifying the impugned product under the residuary list without considering the 'essential character' test which is a cardinal principle in classification of goods under taxation law?" 3. These bunch of revisions were heard at length on 19.4.2018, 23.4.2018 and 2.5.2018. 4. Sri Laksmi Narsimhan, learned counsel for the revisionist submits as under: (i) In the case of revisionist's itself i.e. M/S Hamdard (Wakf) Laboratories vs. Collector of Central Excise, Meerut, 1999 (113) ELT 20 (SC) (Paras 3 to 8), Hon'ble Supreme Court held that product "Rooh Afza" is classifiable under Heading 2201.90 of the Central Excise Tariff Act, 1985 being a non-alcoholic beverage containing fruit juice. Thus Hon'ble Supreme Court held that "Rooh Afza" is a beverage containing fruit juice and therefore, it is fruit drink. (ii) The licence under....
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....ndia, Office of A.D.G. (PFA) and the determination of the product in question, i.e. "Rooh Afza" by the Food Safety and Standards Authority of India, vide letter dated 31st July, 2009, as "non-fruit syrup", he submits that it would mean that "Rooh Afza" is a fruit drink since it is non-fruit syrup. (x) Alternatively, even if it is assumed that "Rooh Afza" is not a fruit drink, it will still be a "processed fruit" since Entry-103 covers processed fruit and preserved fruit. Therefore, the product "Rooh Afza" is liable to tax at the rate of 4% classifiable under the aforesaid Entry-103. (xi) In reply to a question put by the court as to whether the point No.(x) above was argued before the Tribunal or the other statutory authorities, learned counsel for the revisionist submits that in Ground-2 of Sales/ Trade Tax Revision No.527 of 2015, the ground was taken before the Tribunal and therefore, it is presumed that it was argued before the Tribunal. (xii) Even if the alternative submissions as made above, was not raised before the Tribunal, yet it being a pure question of law, can be raised at any stage of the proceedings even it there was no adjudication on the question by the fact ....
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....pretation of commodities the well recognised principle is the common parlance test i.e. how the goods are understood by those who trade in it and also by consumers who purchase it for consumption. (v) The other judgments relied by learned counsel for the revisionist are wholly distinguishable on facts. The judgment in the case of M/s Parle Agrao (P.) Ltd. Vs. Commissioner of Commercial Taxes, Trivandrum, (2017) SCC Online SC 659 has been passed without considering the larger bench judgment of Hon'ble Supreme Court in the case of M/s. Indo Internatinal Industries Vs. Commissioner of Sales Tax 1981 UPTC 481 (SC) (Para 4) and Ram Avtar Budhai Prasad V/s Assistant Sales Tax Offier Akola AIR 1961 SC 1325 (para 2) and Commissioner of Central Excise Nagpur Vs. Shree Baidyanath Ayurved Bhawan Ltd. 2010 NTN (Vol 42) 63 (Paras 29, 35, 36, 38, 40, 41 and 43). Hon'ble Supreme Court settled the law that a commodity can not be interpreted in a technical sense. If the words are not defined, the technical meaning can not be assigned to it. For interpretation of commodities under the Sales Tax Laws, the commodity has to be interpreted applying the common parlance test. The judgment in M/s....
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.... rival contentions of the parties, it would be appropriate to narrate briefly the facts of the present cases. 11. The revisionist is manufacturer of the commodity "Sharbat Rooh Afza". During the assessment years 2007-08 and 2008-09 the revisionist manufactured and sold "Sharbat Rooh Afza" and deposited VAT @ 4% on the sales thereof alongwith monthly returns. The Assessing Authority made provisional assessment for several months holding that the product "Sharbat Rooh Afza" is an unclassified item liable to tax @12.5% falling under residuary entry of Schedule - V. The revisionist preferred First Appeals before the Appellate Authority which were dismissed. The revisionist preferred Second Appeals which were dismissed by the impugned orders passed by the Member Commercial Tax Tribunal, Bench-I, Ghaziabad. Aggrieved with the orders of the Tribunal the revisionists have filed the present revisions. Concurrent findings of fact have been recorded by the fact finding authorities that the product "Rooh Afza" is not a fruit drink but a Sharabat which is an unclassified item and, therefore, it is liable to tax @ 12.5%. 12. The product "Rooh Afza" is being manufactured by the revisionist unde....
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....ion with Director (Fruits and Vegetable Products.) Yours Faithfully. (Dr. Dhir Singh) Assistant Director General (PFA)" 15. As per lable being wrapped on the bottles of "Sharbat Rooh Afza" and filed as Annexure 10 to the revision No.617 of 2012, the product "Rooh Afza" has been represented to customers as "Sharbat Rooh Afza" "a non alcoholic sweetened beverage". 16. After considering the facts and evidences on record the Tribunal, in its impugned order in Revision No.617 of 2012, dated 27.3.2012 passed in Second Appeal No.355/10 (April 2008) and other 8 connected Second Appeals, concluded as under: "प्रश्नगत मामले में निहित विवादित वस्तु शरबत रूहआफजा को आम बोलचाल की भाषा तथा व्यापारिक परिवेश दोन....
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....;म्पनी, अलीगढ़-2004 यू०पी०टी०सी०-1001 में मा० उच्च न्यायालय द्वारा प्रतिपादित व्यवस्था के प्रकाश में भी अपीलकर्ता को कोई लाभ देय नहीं है। यह भी उल्लेखनीय है कि विभिन्न वस्तुओं पर कर की दर के विनिश्चय के लिए ही अधि....
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....351; है कि सर्व श्री हमदर्द (वक्फ) लेबोरेटीज बनाम कलक्टर सेन्ट्रल एक्साईज, मेरठ (1999) 6 एस०सी०सी०-617 का संदर्भित निर्णय सेन्ट्रल एक्साईज एक्ट से सम्बन्धित है, सर्व श्री हमदर्द दवाखाना (वक्फ) देहली व अन्य बनाम यूनियन आ....
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....2341;्य व विधिक स्थिति प्रश्नगत मामले से सर्वथा भिन्न होनें के कारण भी अपीलकर्ता को कोई लाभ देय नहीं है। हमारे द्वारा सर्व श्री आशुतोष ट्रेडिंग कम्पनी गौतमनगर, मरेठ रोड, गाजियाबाद अपील सं० 56/10 में पूर्ण पीठ द्वा&....
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....2381;भित मामले में प्रतिपादित विधि व्यवस्था के प्रकाश में विवादित वस्तु शरबत रूहआफजा के अधिनियम की किसी भी अनुसूची में वर्गीकृत न होनें के कारण तथा संदर्भित न्याय निर्णयों में प्रतिपादित व्यवस्था को दृष्ट....
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....368; श्रेणी में मानते हुऐ प्रथम अपीलीय अधिकारी द्वारा जो आदेश पारित किये गये है, वह हमारे विचार से पूर्णतः उचित है और उसमें किसी हस्तक्षेप की आवश्यकता नहीं है।" 17. In another Revision No.527 of 2015 being part of the present Bunch cases arising from another order of the Commercial Tax Tribunal (Bench-I), Ghaziabad, dated 14.08.2015, the product " Sharbat Rooh Afza" has been held to be not a fruit juice or drink, as under: "10. After having ca....
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....bench of commercial tax tribunal at Ghaziabad is binding on this bench. 12. On the basis of discussion made here-in-above the contention of the appellant that its product 'Rooh-Afza' is a fruit drink and is covered in entry no. 103 of Schedule-II appended to the U.P. Value Added Tax Act, 2008 is here-by rejected. 18. In Hamdard Dawakhana (Wakf) Delhi Vs. UOI AIR 1965 SC 1167, relied by learned counsel for the revisionist; the question involved was the validity of certain provisions of the Fruit Control Order 1955, which was enacted for the purpose of controlling the production, supply and distribution, and Trade and Commerce in, certain commodities in the interest of general public. In Hamdard (Wakf) Laboratories Vs. Collector of Central Excise, Meerut 1999 (113)ELT 20(SC) relied by learned counsel for the revisionist, the controversy was whether "Sharbat Rooh Afza" falls within Tariff Heading 2202.90 or under Heading 21.07 of the Central Excise Tariff Act, 1985. Considering the Tariff entries, Hon'ble Supreme Court held that it falls within the terms of the Heading 2201.90 of the Central Excise Tariff Act, which is residuary entry of the items "beverages and Vinegar....
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....entries, this Court held, as under: "It is not disputed that Rooh Afza is a concentrate of invert Sugar base mixed with various items namely Juices, Vegetable, flavours etc. It is said to be a Summer drink and useful also in treating disorders associated with heat. It can be used in ice cream, puddings and then like but its main use is as a table drink for which water is mixed. Sharbat Rooh Afza being concentrate of Sugar is a "Syrup" and falls under the Notification No.7421 dated 26.10.81 and has been rightly taxed @12%." 20. Before I proceed to record my conclusions on the facts and relevant entries under the U.P. VAT Act as discussed above, it would be appropriate to refer to certain judgments of Hon'ble Supreme Court with respect to the tests to be applied for interpretation of commodities in tax matters. 21. In the case of Mamta Surgical Cotton Industries Rajasthan Versus Assistant Commissioner (Anti Evasion), Bhilwara, Rajasthan, 2014 (4) SCC 87 ( paragraph Nos. 32 to 34 ), Hon'ble Supreme Court held as under:- "32.The aforesaid view is further fortified by the common parlance test. It can be said that when a consumer requires surgical cotton, he would not be ....
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....is supplied by me) 22. In the case of Commissioner of Central Excise, New Delhi Vs. Connaught Plaza Restaurant Private Limited, New Delhi, (2012) 13 SCC 639 (Paragraph Nos. 20 to 33), Hon'ble Supreme Court held, as under: "20. Time and again, the principle of common parlance as the standard for interpreting terms in the taxing statutes, albeit subject to certain exceptions, where the statutory context runs to the contrary, has been reiterated. The application of the common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law maker; "[i] it is an attempt to discover the intention of the legislature from the language used by it, keeping always in mind, that the language is at best an imperfect instrument for the expression of actual human thoughts." [(See :Oswal Agro Mills Ltd. v. CCE, 1993 Supp(3) SCC 16." (Emphasis supplied by me) 21. A classic example on the concept of common parlance is the decision of the Exchequer Court of Canada in R. v. Planter Nut and Chocolate Co. Ltd. The question involved in the said decision was whether salted peanuts and cashew nuts could be considered to be "fruit" or "veget....
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....fuel would give to that word. A sales tax statute is being one levying a tax on goods must in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as coal according to the meaning ascribed to it in common parlance. Viewed from that angle both a merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include 'charcoal' in the term 'coal'. It is only when the question of the kind or variety of coal would arise that a distinction would be made between coal and charcoal; otherwise, both of them would in ordinary parlance as also in their commercial sense be spoken as coal. (Emphasis supplied by me) 24."In Dunlop India Ltd. v. Union of India, at p. 251, while holding that VP Latex was to be classified as "raw rubber" under Item 39 of the Indian Tariff Act, 1934, this Court observed:(SCC pp.252-54, paras 29 & 34) "29. It is well established that in interpreting the meaning of words in a taxing statute, the acceptation of a particular word by the trade and its popular meaning should commend itself to the authority. ....
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....ed, unless contrary intention is clearly expressed by the legislature. But there is a word of caution that has to be borne in mind in this connection, the words must be understood in popular sense, that is to say, these must be confined to the words used in a particular statute and then if in respect of that particular items, as artificial definition is given in the sense that a special meaning is attached to particular words in the statute then the ordinary sense or dictionary meaning would not be applicable but the meaning of that type of goods dealt with by that type of goods in that type of market, should be searched." (Emphasis supplied by me) 28."In Reliance Cellulose Products Ltd. v. CCE, it was observed : "20. In other words, if the word used in a fiscal statute is understood in common parlance or in the commercial world in a particular sense, it must be taken that the Excise Act has used that word in the commonly understood sense. That sense cannot be taken away by attributing a technical meaning to the word. But if the legislature itself has adopted a technical term, then that technical term has to be understood in the technical sense. In other words, if in the fisca....
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.... treated the products in question as Ayurvedic medicines and not as Allopathic medicines, which gave an indication that they were exclusively Ayurvedic medicines or that they were used in the Ayurvedic system of medicine, though they were patented medicines. Consequently, it was held that the said products had to be classified under the Chapter dealing with medicaments. (Emphasis supplied by me) 32. B.P.L. Pharmaceuticals Ltd. v. CCE, was a case in which product "Selsun Shampoo" was under consideration for the purpose of classification under the Tariff Act. According to the manufacturers this shampoo was a medicated shampoo meant to treat dandruff which is a disease of the hair. This Court held that having regard to the preparation, label, literature, character, common and commercial parlance, the product was liable to be classified as a medicament. It was not an ordinary shampoo which could be of common use by common people. The shampoo was meant to cure a particular disease of hair and after the cure it was not meant to be used in the ordinary course. 33.Therefore, what flows from a reading of the afore-mentioned decisions is that in the absence of a statutory definition in....
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..... v. CEE, Nagpur (2006) 3 SCC 266; State of Goa v. Colfoax Laboratories (2004) 9 SCC 83 ; B.P.L Pharmaceuticals v. CCE, 1995 Supp (3) SCC1] : 35. However, there cannot be a static parameter for the correct classification of a commodity. This Court in the case of Indian Aluminium Cables Ltd. v. Union of India, (1985) 3 SCC 284, has culled out this principle in the following words: "13. To sum up the true position, the process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the broad description of the article fits in with the expression used in the Tariff..." (Emphasis supplied by me) 36. Moreover, the functional utility and predominant or primary usage of the commodity which is being classified must be taken into account, apart from the understanding in common parlance [see O.K. Play (India) Ltd. v. CCE, (2005) 2 SCC 460; Alpine Industries v. CEE, New Delhi (1995) Supp. (3) SCC 1; Sujanil Chemo Industries v. CEE & Customs (2005) 4 SCC 189; ICPA Health Products (P) Ltd (supra) v. CEE (2004) 4 SCC 4....
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....urt held that classification of commodity cannot be made on its scientific and technical meaning. It is only common parlance meaning of the term which should be taken into consideration for the purpose of determining the tax liability. Application of common parlance test for interpretation of a commodity in Taxing Statute has always been recognized by Hon'ble Supreme Court as aforenoted. Reference in this regard may also be had to the judgments of Hon'ble Supreme Court in the case of Commissioner of Central Excise v. Baidyanath Ayurved Bhawan Ltd. 2009(12) SCC 419, B.O.C. India Ltd v. State of Jharkhand 2009 (15) SCC 590 (Pararaph-24), Godrej Industries Ltd. v. CCE 2008 (8) SCC-600, Ponds India Ltd. v. Commissioner of Trade Tax 2008(8) SCC 369, U.P. State Agro Industrial Corporation Ltd. v. Kisan Upbhokta Parishad, 2007 (13) SCC 246, Trutuf Safety Coal Industries CST 2007 (8) SCC 242 (paragraph 13), Craft Interiors (P) Ltd. v. CCE 2006(12) SCC 250 (paragraph 18 and 20 ), Parley Biscuits Pvt. Ltd. v. State of Bihar, 2005 (9) SCC 669, Associated Cement Company Ltd. v. State of M.P. 2004 (9) SCC 72, Alpine Industries v. CCE 2003(3) SCC 111, S. Samuel MD, Harrisons Malyalam v. ....
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....g and also an ordinary meaning according to common parlance, it is the latter sense that in a taxing statute the word must be held to have been used, unless contrary intention is clearly expressed by the legislature. If in respect of a particular item an artificial meaning is attached to particular words in the taxing statute then the ordinary sense or dictionary meaning would not be applicable but meaning of that type of goods dealt with in that type of market should be searched. The process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal statute. What is more important is whether the broad description of the article fits in with the expression used in the Tariff.... Moreover, the functional utility and predominant or primary usage of the commodity which is being classified must be taken into account, apart from the understanding in common parlance. A residuary entry can be taken refuge of only in the absence of a specific entry. The word "Fruit drink" and "Fruit Juice" used in entry 103 of Part A of the IInd Schedule to the U.P. VAT Act has neither been defined under the Act n....
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....f the Assistant Director General (P.F.A.), Food Safety and Standards Authority of India, New Delhi, dated 31.7.2009, the product "Fruit Syrup" has been defined in Part - II of Second Schedule of FPO 1955, as the product which contains 65% soluble solids and minimum 25% fruit juice content in the product but from daily production record of the revisionist manufacturing "Sharbat Rooh Afza" and marketing it in the same brand name contains 10% fruit juice (volume by volume) which is classified as per Part IV of the second Schedule of FPO 1955 as "Non Fruit Syrup" which is also indicated from the declaration on the label of this product. As per copy of the licence No.10013051000525, dated 22.1.2013, issued by the designated Officer, Food Safety and Standards Authority of India, Ministry of Health and Family Welfare, Government of India, filed as Annexure 9 to the Revision No. 527 of 2015, the revisionist has been authorised to manufacture two products, firstly, Synthetic Sharbat and, Secondly, Fruit Syrups and Squashes. As per letter of the Food Safety and Standards Authority of India, dated 31.7.2009 (aforequoted) the product "Rooh Afza" is a "Non Fruit Syrup". 28. A concurrent findin....