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2015 (4) TMI 966 - HC - VAT and Sales TaxClassification of goods - levy of VAT @ 4% or taxable @ 12.5% in terms of Section 4(1)(e) - Held that:- The expression “Handicrafts”, not specially defined for purposes of DVAT Act, cannot take a meaning other than the one explained by the interpretation given to it in the context of another fiscal statute viz. the Central Excise Act. The tests to be applied, for present purposes, must thus be the same as were evolved in the case of Louis Shoppe (1995 (3) TMI 108 - SUPREME COURT OF INDIA). - no hesitation in concluding that a product in order to qualify as “Handicrafts” for the purposes of application of entry no.128 of the third schedule to DVAT, must have been made “predominantly by hand” and it would be inconsequential if some part of the process involves use of some machinery. Needless to add, such product must be one “graced with artistic visual appeal” resultant upon substantial (not a mere pretence) ornamentation or in-lay or some similar work adding to it elements of artistic improvement. Expression “Handicrafts” used in entry no.128 of the third schedule to DVAT Act must be construed in its plain lexical sense, without any colour being added by extraneous factors. - The fact that “Baldi” items are imported from Italy seems to have been considered by both authorities, the Commissioner and the Tribunal, as a factor which clinches the issue. There is nothing in the DVAT Act, or the Rules framed therein or, for that matter, any other instruction, notification etc. to require that a commodity in order to be accepted as “Handicrafts” must be one indigenously made or, to put it conversely, must not be one imported into India. We have concluded earlier that the expression “Handicrafts” has to be construed in the sense it is commonly understood. Since the legislative entry does not qualify it by any other pre-requisites, the restrictive interpretation put on it by the authorities below (based on the fact that it is imported from Italy) cannot be approved. The revenue did not refute, either before the Tribunal or before this Court, the claim that the “Baldi” items, in which the appellant deals, are predominantly made by hand. There is no dispute that they are items graced with visual appeal, on account of ornamentation or inlay work carried out skilfully by expert artisans. For these reasons, they do qualify as “Handicrafts” on the twin tests laid down in the case of Louis Shoppe (1995 (3) TMI 108 - SUPREME COURT OF INDIA) which hold good for the purpose of entry no.128 of the third schedule to DVAT Act. - if the facts cover the case under a specific provision, the residuary clause would not apply. Since, in our judgment, entry no.128 of the third schedule governs the commodity in question, there is no question of invoking the residual category specified under Section 4(1)(e). - goods sold under the brand name of “Baldi”, as described above, fall in the category of “Handicrafts” within the meaning of the expression used in entry no.128 of the third schedule of DVAT Act and, therefore, chargeable to VAT at the rate applicable to the said third schedule. - Decided in favour of assessee.
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