TaxTMI 
TaxTMI 
2023 (2) TMI 657
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.... arise out of a common judgment dated 27^th February, 2017 of the Maharashtra Sales Tax Tribunal at Mumbai ("MSTT Mumbai"/"Tribunal") affirming the Determination of Disputed Question ("DDQ") order of the Commissioner of Sales Tax. 2. The subject matter of the present dispute is classification of Aluminium Composite Panels ("ACP"). 3. Three separate but similar applications for determination of DDQ u/s. 56(1)(e) of MVAT Act, 2002 were filed before Commissioner of Sales Tax by three dealers namely M/s Eurobond Industries Private Limited, M/s. Kevin Impex Private Limited and M/s Prime Bond Industries, the appellants herein for classification of ACP which were sold by them in the State of Maharashtra. 4. It is the contention of the Appellants that ACP is classifiable under Entry C-6 of Schedule to the MVAT Act, 2002 read with Sr. No.6 of Notification No. VAT- 1505/CR-113/Taxation-1 dated 1st June, 2005 and the sale was chargeable to 5% VAT and not 12.5 % as claimed by the State Authorities. 5. Schedule Entry C-6 and relevant portion of the said Notification dated 1st June, 2005 reads as follows- 6. Aluminium, its alloys and products as may be notified from time to tim....
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.... heading or sub-heading is shown as "other", then the interpretation as provided in Note 2 shall apply. By order and in the name of the Governor of Maharashtra Sudhakar Jamode Deputy Secretary to the Government." 6. Goods covered by Schedule Entry C-6 of the MVAT Act are liable to tax @ 4% till 31st March, 2010 and 5% w.e.f. 1st April, 2010. 7. The Commissioner held that ACP is not covered under the Central Excise Tariff ("CET") Heading 7606, but would fall within CET Heading 7610 and therefore, the same is not covered by the notification issued for the purpose of Schedule Entry C-6 of the MVAT Act. The two competing entries of Chapter 76 with respect to Aluminium are set out below : CETH 7606 Aluminium plates, sheets and strips, of a thickness exceeding 0.2 mm CETH 7610 Aluminium structures (excluding prefabricated buildings of heading 94.06) and parts of structures (for example, bridges and bridge-sections, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, balustrades, pillars and columns); aluminium plates, rods, profiles, tubes and the like, prepared for use in structures. ....
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....and considered the rival contentions. We have also considered the written submissions tendered on their behalf. 13. We observe that the primary issue between the Appellants and the Revenue is on the interpretation of Heading 7606 and Heading 7610. While the Appellants have argued that the appropriate classification of ACP is under Heading 7606, the Tribunal has accepted the arguments of the Revenue holding the ACP to be under Heading 7610. Various arguments have been advanced in support of the rival contentions. Learned Counsel have also relied upon the Harmonized Commodity Description and Coding System published by the World Customs Organization contained in the Harmonized System Compendium of 30 years which comprises of the following : (i) General Rules for the interpretation of the Harmonized System; (ii) Section and Chapter Notes, including Subheading Notes; (iii) A list of headings arranged in systematic order and, where appropriate, subdivided into subheadings. (iv) Explanatory Notes to the HS published separately by the World Customs Organization (v) The Compendium of Classification Opinions The said material inter alia elab....
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.... impugned goods are not aluminum plates, sheets and strip simplicitor, and hence, prima facie their classification under CTH 7606 appears to be ruled out. On the other hand, the impugned aluminum composite panels bearing the trade name Alpolic is composed or metal skins, a core and surface finish. Prima facie, such panels under impart are processed and prepared material meant for use in structures and not mere aluminum plates, sheets or strip. Though normally use of a material by itself is not a determinant for classifying a product, CTH 7610 particularly refers to materials "processed for use in structure". Hence, the impugned goods which are prepared and used for cladding in structures, prima facie appear to be classified under CTH 7610. Further, we find that similar goods have been classified under Heading 7610 in the case of Ram Enterprises v. Commissioner of Customs, Mumbai-2011 (267) E.L.T. 546, though in that case the competing entries considered were CTH 7610 and CTH 3920, out of which CTH 7610 was preferred by the Tribunal. 34. Further we find that even under CET Heading 7606 in the case of Rana Enterprises (cited supra), these observations of CESTAT South Zonal B....
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....cation. Ultimately the High Court has been pleased to hold that- "The fabricated structural glazing prepared by the applicant are transported to the site by the applicant and affixed on the exterior portion of the building, which building is constructed by the building contractor who is a third party. There is no dispute that the applicant is not a building contractor, it is not in the business of construction and erection of buildings. The activity of affixing glass and erecting glass walls with aluminum framework requires an altogether different expertise, and is ordinarily subcontracted by the building contractor. The contention that some of the walls in the building are not required to be constructed by laying bricks and they are substituted by affixing the glass would not carry the case of the applicant further. We are also unable to accept the contention that the work of the applicant would be covered under the term "incidental or ancillary activity to the construction of the building" as that would have to have a direct nexus to the construction of the building itself. Therefore, the alternative argument that the contract would get covered by paragraph B of the said....
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....he visible part i.e. the flat rolled product, which gave the whole its essential character. The General Explanatory Note to Chapter 72, which is referred to in Chapter 76, made clear that the product of that chapter 76, made clear that the product of that chapter could be combined with a coating of plastic, moreover, there was no legal provision preventing flat rolled product s from being combined or laminated with a layer of plastics. Since the product consisted of clad plated or coated material sheet the committee agreed that they corresponded to the texts of heading 76.08 and should be classified in that heading (subheading 7600. 11 to 7608.92) thus precluding the possibility of classification in Heading 76.13 which was only a residual heading 42.100G/11 + 41.800 F/1341.304 41.348 HSC/ 20 YES 39. In our considered opinion, the opinion given by the Harmonized System Committee, Brussels is required to be followed as it is, provided the description of the item is exactly same. Mr. Thakar placed his reliance on the judgment delivered by Delhi high court in the case of Manisha Pharma Plasto Pvt. Ltd. V/s. Union of India reported in 1999 (112) E.I.T.22 (Del.) decided....
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....ion are exactly identical. A slightest difference in components can change the classification of the commodity. 41. Ms. Naira brought to our notice the technical manual published by the appellant. It is specifically mentioned on page no.2 that the Top Aluminum Sheet is coated with either Polyester or PVDF Paint. The core is either Low Density Polyethylene or a FR (Fire-Resistant) Core which is specially treated for fire resistance. The Bottom Aluminum Sheet comes with anti-corrosive primer or (6-8 micron) backside paint (White wash or Light Grey Color. It is also mentioned on page no. 4 that Aluminum Panel sheet is sandwich with top and bottom layers of aluminum sheets, nontoxic polythene cores materials. Both surface of coil coated with special baking varnish. Flow chart of the product Testing is at Page no.7 which indicates that coating is the integral part of product. Page nos. 8 & 10 of the manual provides information in respect of PVDF coating and page no.11 describes the protective film. Furthermore it was brought to our notice that item of the appellant's are cut to size. 42. We have considered this submission. In our view, these facts go to show that item ....
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.... 20 of 2006 decided on 23rd December, 2014, wherein the Hon'ble High Court has been pleased to hold that if the specific heading is covered under the relevant entry then irrespective of its use, item is required to be held falling in the said entry. Similarly he has also placed reliance on the judgment of the Bombay High Court in the case of The Addl. Commissioner of Sales Tax V/s. M/s Sun Systems in Maharashtra Value Added Tax Appeal No. 20 of 2015 in VAT Appeal No. 658 of 2013 decided on 24th November, 2015. In our considered opinion, this argument cannot be accepted for the following reasons.:- 47. There are two entries before us for consideration under CET Heading 7606 and 7610. If the product appears to fall within the description of two different entries within two Heading, then Rule 3(c) comes into picture. It reads that when goods cannot be classified by reference to (a) or (b), then the same shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. If this rule is considered, in our considered opinion, the product would fall within CET Heading 7610 and not 7606. 48. For these reasons, we do n....
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....e pipes and tubes are manufactured by rolling, forging, spinning, casting, drawing, annealing, welding or extruding." In our considered opinion, basic distinction in the case before the Hon'ble Supreme Court and the case before us is that the process of manufacture makes difference in the application of Schedule Entries. We have elaborately discussed this issue in our judgment. It is pointed out that the description of the item of the Appellant is different than that of the description of the item mentioned in the Harmonized System Committee of World Customs Organization, Brussels. It is also demonstrated that appropriate description is given in CET Heading 7610 and that entry is not a residuary entry. In our view, therefore, reliance placed by Shri. C.B.Thakar on the case of Bharat Forge & Press Industries (P) Ltd. (supra) is misplaced. 51. The Appellant also placed reliance on the judgment of Hon'ble Bombay High Court in the case of Additional Commissioner of Sales Tax, VAT-III, Mumbai V/s. Bunge India Pvt. Ltd. reported in (2011) 39 VST 213 (Bom.) decided on 4th March, 2011. Reliance on this judgment is misplaced since there is no question of interpreta....
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....rnment of Gujrat, there is no reference in Central Excise Tariff Heading and therefore the general rules of interpretation are different as applied by Gujrat VAT Tribunal. 55. So far as the contention of Mr. Thakar in respect of granting prospective effect is given, Ms. Naira contended before us that Sec. 56(2) of the MVAT confers the power upon the Commissioner of Sales Tax to resolve on disputed question and has power to direct that the determination not to affect the liability of the Appellant or other person till the date of order. The sub-section 2 of Sec.56 makes it abundantly clear that discretion is vested with the Commissioner either to grant prospective effect or to refuse to grant such prospective effect depending upon the facts and circumstances of the case. As far as the case at hand is concerned, the contention of the Appellant that he was misguided by the order dt.22 September, 2010 in the case of Kevin Impex Pvt. Ltd. appears to be incorrect, because the judgment in the case of Rana Enteprises (cited supra) was delivered on 8th February, 2011. It is settled position of the law that ignorance of law has no excuse, particularly in the field of taxation. It al....
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....nds that there was never a disputed question to be determined and the law is very clear and free of doubt, equally its applicability, then, refusal by the Commissioner to exercise the discretion is rightly upheld by the Tribunal. Just as the Commissioner was obliged to assign reasons for not exercising his discretionary power equally the Tribunal was in upholding his order. The Tribunal in paragraph 22 of its order found that the entire process was utilized so as to delay compliance with the mandate of the Act. The Tribunal has also found that the Commissioner refused to grant relief holding that there is no ambiguity in the provisions and there is no scope, for any doubt arising out of the provisions and relevant for the purpose of 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." In view of the above observations of the Hon'ble Bombay High Court, we do not find it necessary to discuss in detail the decisio....
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.... from its factory various other processes are performed on the ACP by the customers. It is submitted that the explanatory notes for Heading 7610 explain the details which are covered under the heading. Explanatory notes for Heading 7610 state that the provisions of Explanatory Note to Heading 7308 will apply mutatis mutandis. 18. The Explanatory Note to Heading 7610 reads as follows : "The provisions of the Explanatory Note to Heading 73.08 apply, mutatis mutandis to this heading" Both, Heading 7308 and Heading 7610 fall under Section XV of the HSN which covers "Base Metals and Articles of Base Metal." Section Note (c) to Section XV reads as follows : "In general, identifiable parts of articles are classified as such parts in their appropriate headings in the Nomenclature." 19. The Explanatory Note under Heading 7308 inter alia reads as under : "This heading covers complete or incomplete metal structures, as well as parts of structures. For the purpose of this heading, these structures are characterised by the fact that once they are put in position, they generally remain in that position. They are usually made up from bars, rods, tubes, an....
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....t the Glossary of Terms relating to aluminium and aluminium alloys, published by the Bureau of Indian Standards defines a "Plate" as 6 mm or thicker and a "Sheet" as between 0.15 mm and 6 mm which also suggests that Heading 7610 only includes "plates, rods, profiles, tubes and the like" which are capable of bearing a load, and not "sheets" which are not load bearing. It is submitted that ACP Sheets are expressly mentioned in Heading 7606 and cannot be brought into Heading 7610 by using the phrase "and the like". 23. It is submitted that even assuming that ACP "Sheets" fall within the "expression plates, rods, profiles, tubes and the like, prepared for use in structures" even then plain unworked ACP sheets are not covered by Heading 7610. The HSN Explanatory Notes to Heading 7308 point to the fact that "prepared for use in structures" means drilling, bending or notching the article of aluminium. Admittedly, the Appellant's do not carry out any such activities on the impugned goods. For ease of reference, the HSN Explanatory Note is extracted below : "The heading also covers parts such as flat-rolled products ... ... which have been prepared (e.g.. drilled, bent or notche....
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....r, becomes clearly "identifiable" as a "part" of a car, and has no other use/purpose. 30. In view of the above, it is submitted that plain ACP sheets are not "identifiable parts of structure" and it is only after cutting, drilling, grooving etc., they may become an "identifiable part of a structure", which is not the case here. 31. It is submitted that the Hon'ble Supreme Court in the case of CCE, Delhi vs. Insulation Electrical (P) Ltd. 2008 (224) ELT 512 (SC) inter alia held that "a part is an essential component of the whole without which the whole cannot function". 32. It is submitted that if the aforementioned test is applied, it is clear that the ACP Sheets sold by the Appellant are not parts of a building, since a building is complete even without ACP cladding. However, a building is not complete without doors and windows and therefore, these products are "parts of structure". Similar are the examples given under 7610 viz. bridges and bridge sections, roofs, roofing frameworks etc. ACP cladding only gives an aesthetic look to the building and therefore, is not a "part of a structure". 33. It has also been submitted that ACP does not have load bearing capacity....
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....tention. 38. Learned Special Counsel for the Revenue would submit that the ACP falls under Heading 7610 and the same is borne out by the following facts : "a. Classification tests to be applied - predominant use and common parlance test bear out that the product ACP is part of a structure; b. Alternatively, the ACP has been "prepared for use in structures"; c. CETH 7610 is more specific and hence should be preferred to CETH 7606; d. The wording of CETH 7610 cannot be read in a restrictive manner as contended by the Appellant; e. Under Indian law, ACP has been classified under heading 7610. The decision relied on by the Appellant is per incuriam and in any event distinguishable from the facts of this case. f. Under the Rules for interpretation of the CET Act ("the CET Rules"), Heading 7610 is to be preferred to Heading 7606. 39. With respect to ACP being part of a structure, learned Special Counsel refers to the common parlance theory as elucidated by the Hon'ble Apex Court in Alpine Industries vs. Collector of Central Excise (2003) 3 SCC 111 and submits that the terms and expressions used in tariff have to be understood by....
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....rt of the structure. Accordingly, since the predominant use of ACP is as part of buildings, it follows that ACP is part of a structure. Since the predominant use of the ACP is as part of a wall / structure, it would fall within CETH 7610. 43. Learned Special Counsel addresses this Court with respect to ACP prepared for use in structures as well and clarifies that that an article like ACP may be both prepared for use in structures and part of a structure as it is logical that a part of a structure would be prepared, as required, to be used in the structure. However, even assuming the ACP is not held to form part of the structure, the ACP sold by the Appellants has clearly been prepared for use in structures as, in the present case, it is an admitted position that the Appellant's product is cut to the desired size and coated. 44. It is submitted that apart from the fact that the ACP is prepared for use in structures by application of the PVDF coating, it is also cut to the requisite size by the Appellants which is a further act of preparing it for use in the structure. Learned Special counsel would submit that the Appellants' have contended that the cutting is only to make the ....
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...., even assuming some additional work may be done at the site. 47. Learned Special Counsel would submit that, therefore, the entry 7610 is more specific and should be preferred to entry 7606 as per the Rules of Interpretation of Entries. She relies upon the decision cited by the Tribunal in support of the Revenue's case that the subject ACP falls under entry 7610. Learned Special Counsel would submit that the decision of the Tribunal, therefore, needs to be upheld and the question to be answered in favour of the Revenue and against the Appellants. 48. Learned Counsel for the Appellants have strenuously argued that the Tribunal being a final fact finding body ought to have, at the least, given a finding whether cutting to size of the subject aluminum sheet would make it prepared for use in a structure. Learned Senior Counsel refer to paragraph 41 quoted above and submit that there is no independent finding nor any application of mind to the factual aspects except dealing with judgments. It is also submitted that the technical manual referred to in paragraph 41 is not a manual published by the industry but by one of the Appellants viz. M/s. Eurobond Industries Private Limited. I....