TaxTMI 
TaxTMI 
2021 (6) TMI 338
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....Goods Act, 1979 (hereinafter referred to as 'the Act' for short), the question which arises for consideration is whether the assessee is entitled to claim the benefit of exemption as contained in Explanation I to the Notification dated 30.03.2002 issued by the Government of Karnataka under Section 3(1) of the Act. The said question in turn depends on whether the cutting tools used by the appellant such as twist drills, reamers, cutters and tapes etc can be termed as component parts of inputs in the manufacture of finished product viz., textile machinery and auto parts. 2. Facts leading to filing of this appeal briefly stated are that the appellant was engaged in the business of manufacture and supply of textile machinery and auto....
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....he order dated 27.11.2012 passed by the first Appellate Authority is erroneous and is prejudicial to the interest of the revenue. Accordingly, the order passed by the Appellate Authority dated 17.02.2010 was maintained. In the aforesaid factual backdrop, this appeal has been filed. 4. Learned counsel for the appellant while inviting the attention of this court to the words 'Consumption' or 'Use' in Explanation submitted that specified goods need not necessarily be part of intermediate or finished product and since, the specified goods there consumed / used in the manufacturing activity, as component parts / inputs, the appellant is entitled to benefit of exemption contained in Explanation-I to the Notification dated 30.03....
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....VE COMPANY LIMITED VS. STATE OF BIHAR', (1994) 6 SCC 479. 5. On the other hand, learned counsel for the Additional Government Advocate has submitted that cutting machines used by the appellant can neither be treated as input nor component parts and cutting machines are not used as raw materials for manufacture of finished product. It is further submitted that the revisional authority has therefore, rightly held that the appellant is not entitled to benefit of exemption under Explanation I to the Notification dated 30.03.2002. It is also submitted that the order passed by the revisional authority does not call for any interference in this appeal. 6. We have considered the submissions made by learned counsel for the parties and have....
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.... 2% Explanation-I- No tax shall be payable by a dealer on the goods specified in Serial Number 2, 3, 4, 7, 8 and 9 in the table above when brought by him into a local area for consumption or Use as raw materials, component parts and inputs in the manufacture of an intermediate or finished product but excluding when brought for use in the manufacture of tobacco products and liquor. 7. Thus, from perusal of the relevant extract of the aforesaid Notification, it is evident that if goods specified in the table are bought by the dealer into the local area for 'consumption' or 'use' as raw materials, component parts and inputs in the manufacture of an intermediate or finished product, such goods are exempted from lev....
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....ant's stand is that cutting tools were used by it for roughing, drilling and boring of semi finished goods and for cutting and shaping of metals and other materials during the process of manufacture of textile machines. The exemption was claimed on the ground that the cutting tools were used in the process of manufacture of intermediate or final products. The first Appellate Authority after perusal of samples of drill bits, millers and inserts accepted the explanation of the appellant that they were consumed as inputs in the process of manufacture. Accordingly, it was held that the appellant is entitled to benefit of exemption under Explanation I to the Notification dated 30.03.2002. 10. However, the revisional authority without assi....