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2018 (10) TMI 147 - AAR - VAT and Sales TaxRate of tax - Classification of goods - Shaheen Misri - section 55 of MVAT ACT, 2002 - whether the Product 'Shahin Masheri' to be held as covered by the Entry E-1 Of the MVAT Act, 2002? Held that:- It is revealed that the tobacco and tobacco products are classified as unmanufactured tobacco, manufactured tobacco and different products of tobacco in different entries - Further it is seen that out of tobacco products cigar and cigarettes are subjected to higher rate of tax equal to 35 percent. Thus, it is found that most relevant schedule entry D-12 for the purpose of classification. On analysis of this schedule entry, it is seen that the manufactured tobacco products excluding cigar and cigarettes are grouped under this schedule entry. Thus, tobacco products are classified under two schedule entry appended to D schedule i.e. D-12 and D-14. Now, it is necessary to see whether the impugned product is classified in schedule entry D-12 or otherwise. 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 manufactured tobacco product. Hence the masher is manufactured tobacco product - the nature of impugned product, Masheri is roasted or burnt powdered tobacco with addition of salt is prepared from tobacco. It is applied on teeth and gums due to addiction of Nicotine. It is commonly used as tooth powder. In common parlance it is identified as tobacco product and is advertised accordingly. Even Hon. Apex court in the appellant case held that it is tooth powder and classified under CETH No.3306.10. Analysis of Schedule entry D-12 and schedule entry E-1 - Held that:- On analysis of both entries, we found that the schedule entry D-12 is most specific related to tobacco and tobacco products. The another entry is residuary entry, and it is settled principle the resort of residuary entry shall be considered when the goods not covered in any of the other schedules namely Schedule-A, B, C and D of MVAT ACT, 2002. The Hon. Apex court and various High courts have laid dawn the principle that in taxing statute, the specific schedule entry overrules general schedule entry - The product "shahin Bhajki Masheri" is covered by schedule entry, D-12 of MVAT ACT, 2002. It is settled principle for applicability of specific entry or residuary entry that "only such goods as cannot be brought under the various specific entries in the schedules should be attempted to be brought under the residuary entry". Prospective effect - Held that:- It is settled principle for applicability of specific entry or residuary entry that only such goods as cannot be brought under the various specific entries in the schedules should be attempted to be brought under the residuary entry". In present case, there is specific entry applicable to tobacco products so the ratio of various judgments relied upon are not applicable. Thus, the applicant cannot prove existence of circumstances which warrant us to use the discretionary power. In fact use of such discretionary powers in the absence of compelling circumstances would be detrimental to legitimate government revenue and would wipe out the legitimate tax liability. In these circumstances, we do not allow the use of prospective effect as a tool to protect or to wipe of legitimate tax liability. Ruling:- The product "shahin Bhajki Masheri" is covered by schedule entry, D-12 of MVAT ACT, 2002. Thus, the product is liable to tax at the prescribed schedule rate (20 %) as provided under the said schedule entry from time to time. The prayar to grant prospective effect to this order is rejected.
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