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2017 (3) TMI 1695 - HC - VAT and Sales TaxClassification of goods - Potato Chips - processed vegetables - Whether the Tax Board is justified in holding that ‘Potato Chips’ are not classifiable as ‘Processed Vegetable’ under entry 107 of Schedule IV, just because of the fact that branded namkeen (including dried potato chips), are kept outside the purview of entry 131 of the same Schedule, a general entry dealing with sweetmeats and unbranded namkeen? Held that:- It cannot be disputed that Potato is a vegetable, and after going through the process of slicing, frying and spicing, “Potato Chips” does not cease to be a vegetable. It is irrelevant as to whether it becomes a snack item or not, but then it does not take a snack item outside the entry of 'Processed Vegetables'. The characteristics of Potato does not change and merely because by processing Potato, “Potato Chips” are produced/manufactured, it will certainly remain as Potato and would be a 'Processed Vegetable'. Material is available on record that the Ministry of Food Processing Industry has understood processing of Potato Wafers or Chips as Vegetable Processing Industry and even the Govt. of India has understood “Potato Chips” to be a Vegetable Product for the purposes of classification under the Central Excise Tariff Act - “Potato Chips” can certainly be taken within the definition of entry 107 taking within its compass all other species including “Potato Chips” belonging to the common genus of the 'Processed Vegetables', and if any particular item is classifiable under a specific entry in a Schedule, such item or commodity must not be relegated to the Residuary entry. Even if common parlance test is applied, it can always be noticed that it would certainly fall within the category of 'Processed Vegetables'. The claim of the petitioner is justified - “Potato Chips” would fall in the category of entry 107 to be charged with tax @ 4%, and once rate of 4% has been held to be well reasoned and justified, which was claimed by the petitioner, then question of levy of interest and penalty does not arise. Petition allowed - decided in favor of assessee.
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