TaxTMI 
TaxTMI 
2018 (10) TMI 147
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....d the nature of the product and its ascription. The relevant facts leading to the application are set out as under. 2.1 The applicant has informed that the product manufactured and distributed by the applicant is Shaheen-Misri. The 'Dust' and 'Rava' of tobacco is used for manufacturing of the product. It is submitted that the Masheri is roasted or burnt powdered tobacco. It is applied on teeth and gums due to addiction of Nicotine. It is commonly used as tooth powder. The addiction of this product leads to number of diseases especially oral cancer, gum disease, etc. 2.2 The 'Shahin Bhajki Masheri' is known in the market as tooth powder for cleaning the teeth. He has relied on the judgement dated 06/07/2011 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Branch at Ahmedabad and judgement of the Supreme Court dated 08/03/2016 in Civil Appeal No.3207 of 2006. Further he stated that the Hon. Supreme court of India had held the product as tooth powder covered under Chapter Heading 3306.10 as against Chapter Heading no.2204.99 which is for tobacco product. The apex court in clear terms held that the product is tooth powder and no....
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...., Analysis and discussion:- On this background, it would be worthwhile to have a closer look at the statutory provisions under the MVAT Act, 2002 and relevant schedule entry under the Act. 3.1 The charging Section- 6: Levy of sales tax on the goods specified in the Schedules:- (1) There shall be levied a sales tax on the turnover of sales of goods specified in column (2) in Schedule B, C, D or, as the case may be, E, at the rates set out against each of them in column (3) of the respective Schedule. Thus, section-6 of MVAT Act provides that the tax is to be levied on commodity which is sold. In fact, the dealer liable to pay tax, should discharge the tax liability as per the charging section. 3.2 The scheme of levy of tax as per provided schedule. For the purpose of determination of rate of tax on particular commodity MVAT ACT, 2002 provides Five schedules namely, A,B,C,D and E. The rate of tax indicates that tax on goods to which the entry relates shall be charged on the basis of the sale price, the tax being equal to such percentage of the sale price as is indicated against the respective entry under which the goods fall in that schedule. The classification of g....
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.... 1.4.2007 to 31.3.2010 A-45 Sugar and fabrics as described from time to time in column (3) of the First Schedule to the Additional Duties of Excise [Goods of Special Importance], Act, 1957 (58 of 1957) but excluding those specified in schedule 'C'. - Nil % 1.4.2010 to 7.4.2011 A-45 Sugar and fabrics as described from time to time in column (3) of the First Schedule to the Additional Duties of Excise [Goods of Special Importance], Act, 1957 (58 of 1957) as it stood prior to the date on which the Finance Act, 2011 comes into force, but excluding those specified in schedule 'C'. - Nil % 8.4.2011 to date 45A (a) unmanufactured tobacco covered under Tariff Heading No. 2401 of the Central Excise Tariff Act, 1985 (5 of 1986) - Nil % 1.4.2007 to 31.3.2012 (b) biris covered under tariff item No 24031031, 24031039, of the Central Excise Tariff Act, 1985 (5 of 1986). The Centra Excise Tariff Item No 24031090 has been deleted by Corrig. Dated 09.07.2007 45A (a) unmanufactured tobacco covered under Tariff Heading No. 2401 of the Central Excise Tariff Act, 1985 (5 of 1986); - Nil % 1....
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....t is necessary to see whether the impugned product is classified in schedule entry D-12 or otherwise. The term manufactured tobacco is important to decide the impugned product is manufactured tobacco products or otherwise:- The Section 2(15) of the MVAT ACT, 2002 throws light on concept of manufacturing. "manufacture", with all its grammatical variations and cognate expressions includes producing, making, extracting, altering, ornamenting, finishing or otherwise processing, treating or adapting any goods. The Masheri is roasted or burnt powdered tobacco. The salt is added to the tobacco and it is burnt and packed. In common parlance, it is understood in its popular sense, and in conversant with the class of people uses it as tooth powder. There is no doubt that it is the product of tobacco. It is applied on gum for consumption of Nicotine. It is also to be noted that for the purpose of MVAT ACT, 2002 the schedule entry provided was A-45A- as Unmanufactured tobacco covered by Tariff heading 2401for earlier periods. The appellant has stated that the Hon. Apex court held that the product is tooth powder and covered by the Excise heading 3306. So the product is manufactu....
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.... cases regarding application of common parlance test for interpretation of schedule entry when the terms are not specifically defined under those Acts. For ready reference we would like to cite some cases. Indian Cable Co. Ltd. v. Collector of Central Excise, (1994) 6 SCC 610, Trutuf Safety Glass Industries [2007] 8 VST 661 (SC), Ganesh Trading Co., (1973) 32 STC 623 SC, RK. Rim Pvt. Ltd. versus Commissioner of Sales Tax, Mumbai and another: (2010) 30 VST 435 (Bom.), Raman Board Ltd. versus State of Karnataka, 2015 (3) TMI 1048 (Kar.) The larger bench of Apex court in the case of Indo International Industries, 2002-TIOL-333-SC-CT. The various court decision pertain to sales tax laws lessons that in the absence of a statutory definition in precise terms; words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. In other words, they have to be construed in the sense that the people conversant with the subject matter of the statute, would attribute to it. Resort to rigid interpretation in terms of scientific and technical meanings should be avoided in such circumstances. It is needless t....
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....de a general Entry. Resort has to be had to the residuary or general Entry only when a liberal construction of the specific Entry cannot cover the goods in question. 7.. We are of the opinion that the High Court was wrong. Both the Tribunal and the High Court commonly enunciated the principle that a specific entry would override a general entry. In addition we would add, and as has been held in Collector of Central Excise v. Wood Craft Products Ltd. (1995) 3 SCC 454, 462, resort has to be had to the residuary heading only when a liberal construction by the specific heading cannot cover the goods in question. b) The Hon Bombay High Court in the case of M/s Kirloskar Oil Engines Ltd. Versus The Commissioner of Sales Tax Maharashtra came across with classification of bearing and held that As far as the bearings are concerned, there is special Entry which deals with bearings of all types including Ball or Roller bearings. This Entry is Schedule Entry C-II-146. There being a specific/special Entry for bearings (Entry C-II-146), it is not correct to hold that the bearings sold by the applicant would fall either under Entry C-II-102(2) [as a components, parts of a motor vehicle] or ....
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....ion No. 595 dated 10.4.1999 contain a general entry with respect to fresh roots. It is well settled that a special provision shall prevail over a general provision. When the Chicory Roots are specifically covered by independent Notification dated 29.1.2001, the contention that it shall be covered by general entry mentioned in any other Notification is not correct. This question, therefore, is answered accordingly. Thus, it is safely concluded that the specific schedule entry overrules general schedule entry. 05 The legal submission of applicant: - The Applicant has relied on the decision of Hon. Apex court judgment in own case which is related to Excise Act. The issue involved was whether the product is classified in CETH 3306 or otherwise. The apex court has applied common parlance test and since the impugned product is used as tooth powder has ruled that it falls under chapter 33 of Excise Act. On similar chronology the appellant tried to persuade that the impugned products are held as tooth powder in Excise Act and hence they are covered by E-1 of MVAT ACT, 2002. On the backdrop of discussion held hereinabove, the contention, legal submission and arguments advanced b....
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....towards the product, thus, assumes significance. What is important to be seen is how the consumer looks at a product and what is his perception in respect of such product. The user's understanding is a strong factor in determination of classification of the products. We find it difficult to accept the contention of the learned senior counsel for Baidyanath that because DML is manufactured exclusively in accordance with the formulae described in Ayurveda Sar Sangrah which is authoritative text on Ayurvedic system of treatment and is notified in the First Schedule to the Drugs and Cosmetics Act, 1940 and the said product is sold under the name 'Dant Manjan Lal' which is the name specified for the said product in Ayurveda Sar Sangrah, the common parlance test is not applicable. As a matter of fact, this contention is based on misplaced assumption that Chapter Sub-heading 3003.31 by itself provides the definition of Ayurvedic Medicine and there is no requirement to look beyond. c) We have gone through the judgments and found that the various court authorities had considered the provisions under Excise Act (such as, meaning of medicaments, cosmetics as per relevant act, t....
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....Act is most important and that decisions relatable to the Central Excise Act and to Sales Tax statutes would not therefore apply. Further, held that 14. Equally, the argument based on Section 5A of the Karnataka Sales Tax Act is fallacious in that it is only for the purpose of "industrial inputs" that packing materials are included, and forms a separate scheme of taxation under the Sales Tax statute. We cannot accede to the argument that de hors the context of the Entry Tax Act, we should accept that industrial inputs include packing materials and that therefore, by parity of reasoning, "inputs" under the Entry Tax Act should also include packing material. This argument has therefore correctly been turned down by the High Court of Karnataka in the Nestle case. e) The Hon. Apex court in the case of Falcon Tyres Ltd. Versus State of Karnataka and others 2006 (7) TMI 316 has come across the meanings employed in other acts would be relevant or otherwise. It is held that- The learned counsel for the appellant relied upon Karnataka Forest Development Corporation Ltd. V. Cantreads Pvt. Ltd. [1994] 4 SCC 455, to contend that rubber is an agricultural produce. This was a case under....
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.... of a new commodity commercially known as distinct and separate commodity namely Masheri used as tooth powder and thus having its own character, use and name. Be it the result of one process or several processes in fact ' manufacture' had taken place. There is no doubt that the impugned product is product of Tobacco. Moreover, it is keenly observed that the warning "injurious to Health" is advertised on the use of product. We have already seen that the specific entry overrules general entry. Under MVAT ACT, 2002 the product related to tobacco is classified according to class of good as tobacco product. Since specific schedule entry (class of goods) is available under MVAT ACT, 2002, the impugned product is to be classified in that entry only. Hence, we respectfully opined that the ratio of Hon. Apex Court judgment set on different facts is not squarely applicable to case in hand. The applicant has stated that the impugned product being tooth powder is to be covered by residuary entry cannot be allowed when the specific entry D-12 available for classification of goods. h) Moreover, for academic purpose, it is also seen that the product is covered by The Cigarettes and Oth....
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....s under. 8.1 Section 55 (9):- The Commissioner or, as the case may be, the Advance Ruling Authority, may direct that the Advance Ruling shall not affect the liability of the applicant or, if the circumstances so warrant of any other person similarly situated, as respects any sale or purchase effected prior to the Advance Ruling. On careful analysis of the section, it reveals that the Advance Ruling Authority may protect the liability of dealer in two conditions. a. in case of applicant or b. if the circumstances so warrant of any other person similarly situated. The dealer has not submitted any evidences as to grant the benefit .The issue of prospective effect is to be considered on fact of the case. (a).The Hon. Bombay high Court in case of Lalbaugcha Raja Sarwajanik Ganeshotsav Mandal (MVAT Tax Appeal No. 10 of 2015) while interpreting the section 56 of MVAT ACT, 2002 laid dawn the principles regarding the granting of prospective effect and observed in relevant Para that- "10. On plain reading of both the subsections (1) and (2) of Section 56, it is apparent that the Commissioner may direct that the determination shall not affect the liability under the MV....
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....f the determination. The reasons that are assigned by the Commissioner for refusing to give prospective effect to his determination order, have not been found to be suffering from any error of law apparent on the face of the record or perversity warranting interference in the appellate jurisdiction of the Tribunal." The observations of the Hon. High Court as above are equally applicable to the Advance Ruling Authority and the powers delegated to the Advance Ruling Authority must be used in very logical and judicious manner in order to protect the liability of applicant and also sub-serve the larger public interest. These powers are coupled with duty to see whether the applicant has really strong reasons, which necessitate the use of discretionary powers. These powers cannot be used as per wish and whims of authority. (b) In present case, as discussed above, there is no ambiguity in the provisions and there is no scope, for any doubt arising out of the provisions. However, the various court authorities have upheld the principles of common parlance test for interpretation of schedule entries provided in sales tax statutes. The schedule entries have been changed under MVAT ACT, ....