TaxTMI 
TaxTMI 
2017 (7) TMI 1236
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.... and Chloroform. 2.1 The Crysol Cu is a registered trademark under class-1 and is classified as chemical solvent by applicant. The analysis certificate shows that the product is insoluble in water. 2.2 The applicant had classified the products under CETH sub-heading 38231900 while preparing the sales invoice. The investigation branch, Thane had visited the place of business of applicant. It was brought to applicant's notice that the impugned products are not covered by the Industrial input Notification and therefore not covered by the Schedule Entry, C-54 of MVAT ACT, 2002. The applicant has not paid the differential tax liability but preferred to apply for determination of tax liability. 2.3The raw material, EDC Bottom is supplied by M/s Reliance Industries Ltd (RIL). The RIL has classified the said commodity under CET Heading 38256900. The constituents of raw material (EDC Bottom) along with their Excise heading used for manufacturing of Crysol CU are enumerated in tabular format, Table-2 as under. TABLE-2 Sr. No. Raw material Chemical formula Excise Tariff Head. 1 Ethylene Dichloride Bottom' (EDC Bottom). 38256900 2 Ethyle....
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....nd understood that the impugned products, the Crysol Cu and its variants have different application and used in various industries. As suggested by the applicant on the website http://www. crystalindiachem.com/files/ crysolapps.pdf, the application and uses are as under. a) In Automobile Industries:- Crysol CU used for de-oiling of mild steel sheets along with degreasing automotive components such as Carburettors, plugs, Rubber moulded components, Metal parts, Surface preparation of metal parts before painting / electroplating / galvanizing / anodizing / bonding etc. b) As a paint stripper:- Crysol CU used as paint stripper in repair workshops / maintenance also for cleaning all types of metal & moulded metal parts. c) ln Engineering Industries:- CRYSOL CU is very versatile, effective cleaning & degreasing agent of fabricated metal parts & components for removal of oil, grease, water and other contaminants before assembly in all types of heavy & semi-heavy Engineering Industries, for example, Bearings, Gears & gearboxes, Transformers, Pumps, Chains & pulley blocks, and many other Engineering Industries. d) In Textile Industries:- CRYSOL CU is used as effective Stain rem....
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.... The legal position, 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. 4.1 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, when the dealer is liable to pay tax, should discharge the tax liability as per the charging section and provisions of Act. 4.2 To ascertain these claims, it is necessary to understand the schedule Entry under which applicant has discharged tax liability for impugned goods and the concept of State Government Notification issued for the said purpose. The Notification contains the schedule, description of commodities along with Central Excise heading Tariff / Sub-Heading, Tariff Items and Four Notes as Rules of interpretation. 4.3 The real issue invol....
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.... used in the printing industry 182. 3823 - - Industrial mono-carboxylic fatty acids; acid oils from refining; industrial fatty alcohols Note.- (1) The Rules for the interpretation of the provisions of the Central Excise Tariff Act, 1985 read with the Explanatory Notes as updated from time to time published by the Customs Co- operation Council, Brussels apply for the interpretation of this Notification. Note.- (2) Where any commodities are described against any heading or, sub-heading or as the case may be, tariff item, and the aforesaid description is different in any manner from the corresponding description in the Central Excise Tariff Act, 1985, then only those commodities described as aforesaid will be covered by the scope of this Notification and other commodities though covered by the corresponding description in the Central Excise Tariff will not be covered by the scope of this Notification. Note.- (3) Subject to Note 2, for the purpose of any entry contained in this Notification, where the description against any heading or, as the case may be, sub-heading, matches fully with the corresponding description in the Central Excise Tariff, then all the co....
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....cise meaning of the words 'that is to say' must vary with the context........But, in the context of single point sales tax, subject to special conditions when imposed on separate categories of specified goods, the expression was apparently employed to specifically enumerate separate categories of goods on a given list. The purpose of such specification and enumeration in a statute dealing with sales tax at a single point in a series of sales would, very naturally, be to indicate the types of goods each of which would constitute a separate class for a series of sales. Otherwise, the listing itself loses all meaning and would be with- out any purpose behind it." In regard to the test for determining the taxable events in relation to the sales tax, observed as follows: "The mere fact that the substance or raw material out of which it is made has also been taxed in some other form, when it was sold as a separate commercial commodity, would make no difference for purposes of the law of sales tax. The object appears to us to be to tax sales of goods of each variety and not the sale of the substance out of which they are made......... As soon as separate commercial commoditi....
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....is confined to the itemized expressions that follow the word "namely". Consequently the meaning of the word "namely" can only be restrictive and can be neither illustrative nor expansive. The purpose of such specification and enumeration in a statute dealing with sales tax at a multi point in a series of sales would, very naturally, be to indicate the types of goods each of which would constitute a separate class for a series of sales. Otherwise, the listing itself loses all meaning and would be without any purpose behind it. Considering the settled principles of interpretation as declared by the Hon. Apex Court from time to time, the contents of the Notification are required to be interpreted strictly and not liberally. If it is interpreted liberally then, the intention of legislature to notify specific goods for the purpose of exemption of sales tax would be defeated. C) The Notification issued by State Government in pursuance of Schedule entry, C-54 is of exemption in nature and needs to be construe strictly. We have already discussed the content of Notification issued by state Government for the purpose of schedule entry C-54. The Notification pertains to exemption of ....
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....riff Heading, sub-heading and item No. along with descriptions of commodities are linked with it, in order to grant the benefit of concessional rate of VAT. Hence, it is necessary to compare the both heading and their descriptions. 4.6 The tariff heading, sub-headings and item No. and their descriptions under Central Excise Act is required to be compared with tariff heading, sub-headings and item No. and their descriptions provided in industrial input Notification is to be applied with the help of the rules provided in four foot-Notes appended to the Notification. Those four Notes are very basic rules of interpretation provided for how to read the said Notification and to conclude as to whether a certain product is included or otherwise for the concessional rate of tax under sales tax Statute. In view of this background, it is worthwhile to apply the notes appended with respective chapter under Excise Tariff to determine whether impugned products would fall under respective CETH or otherwise. After deciding it, we have to compare the respective CETH heading with the respective description provided in Notification issued by State Government for the exemption of rate of tax. ....
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....ious compounds like Chloroform, Ethylene Dichloride, Carbon Tetrachloride etc. Also these compounds constitute around 65% of the product sample and other portion is composed of various compounds in small quantities which are not mentioned in the reports. [v] In view of above discussion, the impugned products do not satisfy the requirements / qualifications as laid in Note-1 specifically (a) and (b). Therefore, the products cannot be classified under chapter 29 of Central Excise Tariff Act, 1985 (CETA). We have already dealt the issue with the respect of heading 2903 and observed that the impugned products are not separate chemically defined elements or compounds (usually classified in Chapter 28 or 29) and not covered with the exception provided there in. Hence, the impugned product is not covered by Central Excise Tariff chapter-29. [vi] The applicant has prepared sale invoice with CETH No. 38231900 having description Industrial mono-carboxylic fatty acids; acid oils from refining; industrial fatty alcohols. The Crysol CU and its variants are not mono-carboxylic acids. A carboxylic acid is an organic compound that contains a carboxyl group (C (=0) OH). The general formula of....
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....d that the impugned products are not elsewhere specified or Included in other chapters. It is relevant to note that as mentioned above, the CETH 3814 is covered at serial number 178 in the Notification Dt. 01.09.2005 issued to define "Industrial Inputs" for the purpose of Schedule Entry C-54. However, the description of goods in column 5 of the said notification against CETH 3814 is restricted to products, "Reducers and blanket wash/roller wash used in the printing Industry". The product Crysol CU and its variants is manufactured out of EDC Bottom (Supplied by RIL) and after manufacturing it is a combination of Ethylene Dichloride (EDC), Carbon Tetrachloride (CTC), Trichloro Ethylene (TCE) and Chloroform. The individual ingredients are neither separable nor identifiable in the final product. Therefore it is different and separate product than aforesaid four chemicals and it is a Composite Organic Solvent. From the applications of Crysol CU and its variants as described by the dealer, it is clear that Crysol CU and its variants are certainly not "Reducers and blanket wash I roller wash used in the printing Industry" as envisaged in the notification issued to define "Industrial In....
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....es are not medical devices and hence not covered under the notification dated 23rd November, 2005. In other words, in common parlance protective sunglasses may not be considered as a medical device, but if the legislature for the purpose of entry C-107(8) considers protective sunglasses to be medical device, it would not be open to the Commissioner to hold to the contrary." Thus, it is held that the additional requirement (which is not part of Notification) cannot be imported to classify the product. In present case we are not applying any additional requirement which is not part of notification or Notes appended with Central Excise Chapters. Hence, the ratio in the case of Chheda marketing is not applicable. b) The applicant has stated that the Excise authorities on intimation have confirmed this submission of the application. The applicant has produced the copy of letter submitted to Excise authorities during the course of hearing. We have perused the letter and observed that this is simply a letter submitted by the applicant. The Excise duty on the earlier heading and heading submitted by the applicant is same, and it hardly matters to the excise department for levy of ....
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....rysol CU and its variants are not covered by CET H No. 38231900 as mentioned in sales invoices. c) The applicant has informed that the impugned product is manufactured by distillation of "EDC Bottom". The impugned product is composite solvent and composed of Ethylene Dichloride Bottom' (EDC Bottom), Ethylene Dichloride, Carbon Tetra Chloride, Tetra Chloro Ethylene and Chloroform. Thus, it is organic composite solvent. The impugned products, the Crysol CU and its variants have different application and used in various industries as effective solvent, paint stripper, stain remover and cleaning & degreasing agent. The Central Excise Tariff provides the CETH No. 3814 with description "Organic Composite Solvents and Thinners, Not Elsewhere Specified or Included; Prepared Paint or Varnish Removers". We have gone through the probable Chapter and found that the impugned products are not elsewhere specified or Included in other chapters. d) It is relevant to note that as mentioned above, the CETH 3814 is covered at serial number 178 in the Notification Dt. 01.09.2005 issued to define "Industrial Inputs" for the purpose of Schedule Entry C-54. However, the description of good....
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.... the analysis report of M/S. Reliable Analytical Laboratories and tried to explain that Crysol Cu is chlorinated blended solvent (Halogenated derivatives of hydrocarbon).We have perused these documents and observed that these agencies, on analysis have given the composition of impugned products only. On merit, we have discussed that the impugned product is not covered by CETH No. 2903 of Central Excise Tariff Act, 1985 (CETA) having description "Halogenated derivatives of Hydrocarbons". With this conclusion, we find that the contention of the Applicant is devoid of merit. h) The Crysol CU, being a blend of various chemicals as shown above in Table-2. The Crysol CU 132 is a versatile organic solvent used in various industries for different purposes, which is rapidly replacing other cleaning processes such as emulsion cleaning, alkaline cleaning and steam cleaning." and hence shall not be covered under the scope of Schedule Entry, C-54 and covered under schedule 'E-1' of MVAT Act 2002. 7. The prospective effect:- Mrs. Nikita Badheka, Advocate stated that if Authority arrived to different opinion, and it is held that product is not covered by the said schedule entry a....
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....e 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 MVAT Act of the applicant or if the circumstances so warrant, of any other person a similarly situated, as respects any sale or purchase effected prior to a determination. Therefore, this is not a mandate but a discretionary power vested in the Commissioner. This discretionary power has to be exercised and while exercising it, the Commissioner, has to be guided by certain inbuilt checks and safeguards. He cannot in the garb of giving relief of the nature contemplated by subsection (2) totally wipe out the liability of any and every dealer. 11. The Commissioner is expected to exercise this discretionary power so as not to defeat the law or render its provisions meaningless or redundant. The power must be exercised bearing in mind the facts and circumstances ....
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....owers. These powers cannot be used as per wish and whims of authority concerned. (e) In the present case, as discussed above on the merit, there is no ambiguity in the entries of the Notification. The Central excise Headings and exemption Notification is to be required to read with the Notes appended with them and should interpret accordingly. There is no scope, for any doubt arising out of the provisions on the settled principles. However, the various court authorities have upheld the principles of strict interpretation of Notification provided in sales tax statutes. This aspect is not new for interpretation of Notification issued for the purpose of sales tax exemptions or granting the concession in rate of tax under the sales tax statutes by way of Notifications. As discussed in earlier paras, the Hon. Apex court and various Courts have held that the Notification issued for sales tax exemption is to be construed strictly and not liberally.We have already discussed that the Notes appended with State Notification and Central excise Headings and are found to be very clear to interpret it. There is no ambiguity in language provided in the Notification and Notes appended with Centr....