TMI Blog2012 (10) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the fifth schedule to the Act. Therefore no different from the one taken by the learned Single Judge can be taken - in favour of assessee. - W.A No.154/2011 - - - Dated:- 3-9-2012 - MR. ADARSH KUMAR GOEL AND MR. UJJAL BHUYAN JJ. Appellants: By Advocates : K.N. Choudhury, Senior Advocate, Senior Additional Advocate General, Assam Mr. R. Dubey Respondent : By Advocate: Mr. M.P. Devnath JUDGMENT AND ORDER (CAV) (UJJAL BHUYAN,J.) - This appeal by the State is directed against the judgment and order dated 15-03-2011 passed by the learned Single Judge in W.P. (C) No.5428/2010 allowing the writ petition filed by the respondent holding that the respondent s product Ujala Supreme is entitled to be included in Entry No.114 of Schedule II C to the Assam Value Added Tax Act, 2003 with corresponding rate of duty and quashing the decision of the taxing authority to the contrary. 2. The facts of the case may be briefly noted. 3. Respondent herein as the writ petitioner had filed the related writ petition challenging the order dated 11-08-2010 passed by the Commissioner of Taxes, Assam (Commissioner) under section 105 of the Assam Value Added Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Commissioner and the matter was heard. Thereafter, the Commissioner passed order dated 11-08-2010 under section 105 of the Act. Detail reference to the order dated 11-08-2010 would be made in the subsequent part of the judgment. At this stage, suffice it to say, the Commissioner held that the product cannot be treated as AVP as by dilution it loses the characteristics of AVP and that the product does not fall under any Entry in the 1st, 2nd, 3rd and 4th schedule to the Act, thus it will be covered under the Entry at Serial No.(1) of the 5th schedule to the Act and therefore taxable @ 12.5%. 7. The appellants who were the respondents in the writ proceeding resisted the writ petition by filing counter affidavit. The stand taken in the counter affidavit was that the respondent was taking contradictory position. To avail concessions under the concession scheme framed in terms of the industrial policy it had contended that it had been manufacturing the product by using AVP as raw material. Now, it has made a somersault by asserting that the said product does not involve any manufacturing process and is only a dilution of AVP alone. According to the department, the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Single Judge had elaborately examined all aspects of the matter and thereafter had arrived at a reasonable conclusion. Asserting that there is no error or infirmity in the view taken by the learned Single Judge, learned Counsel for the respondent supports the judgment of the learned Single Judge and prayed for dismissal of the appeal. 12. The submissions made have received the due consideration of the Court. 13. The issue involved in this case is as to whether the product of the respondent is substantially the same as its original material AVP or has it undergone a manufacturing process to transform itself into a commercially distinct identifiable end product. Corollary to that issue is the question of inclusion of the product in Entry 114 of the schedule-II C to the Act attracting a lower rate of tax at 4%. 14. Before proceeding further, reference may be made to Entry 114 of schedule II C to the Act. The 2nd schedule to the Act contains a list of goods which are taxable at 4%. Part-C of 2nd schedule furnishes the list of industrial inputs and packing materials. The description of Entry 114 of schedule-II C with corresponding heading No. of 32.04 in the Central Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of tax/fiscal incentives under the Assam Industrial Policy, 2003 at the relevant point of time. The policy was formulated amongst others to ensure industrial development in the industrially backward regions of the State and to generate more employment opportunities. It offered a package of incentives for promotion and setting up of industrial units and revitalization of sick industrial units and to promote investment in the State. The eligibility criteria for availing the incentives offered thereunder visibly envisaged a date of commencement of commercial production of the unit concerned whether existing or new and a finished product was contemplated to mean and include the item manufactured by the eligible units. Raw materials similarly were envisaged to mean and include all industrial components, intermediate goods, substances, consumable stores including furnace oil and light diesel oil used for captive generating sets required in the process of manufacture and packing materials utilized for packing of finished products by an eligible unit. The applications for grant of Eligibility Certificate and the Certificate of Entitlement with the particulars furnished therein thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wool at elevated temperatures in the presence of acid. AVP is uniform and having standard strength which is formulated and prepared as ready for use. The AVP as well as Ujala purchased from the market are subject to instrumental analysis (High Performance Thin Layer Chromatography) that the result are observed as below. 1. The chemical composition of AVP and Ujala are the same except for the dilution in Ujala . 2. It can be observed from the chromatogram that Ujala is a heavily diluted form of AVP with water. 3. As such Ujala cannot be used as a dye or a colouring matter as it is. 4. From the technical literature it can be understood that diluted acid violate 49 is used in the fabric finishing industries for imparting brightness to while fabrics ( The mechanism being the fabric absorbs all the colours in the visible light and transmits the bluish / purplish tint). .. .. .. .. As per the technical report and the HPTLC report, it can be conclusively said that Ujala is nothing but a diluted form of Acid Violet Dye. The observations of the HPTLC analysis are as follows. a. All the components present in diluted sample of AVP are also prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act and relatable to HSN Number 3204 12 94 for the purpose of excise duty under the Tariff Act. If, however, it is regarded as a new product independent of its constituent AVP irrespective of its end use, in absence of any other entry available to accommodate it, it is liable to be assessed as a residuary item contemplated under Schedule V of the Act. Admittedly, Ujala Supreme is a mixture or combination of AVP and water. Entry 114 of the Schedule II-C of the Act is assigned inter alia to synthetic organic colouring matter whether or not chemically defined as well as preparation based on synthetic organic colouring matter as specified in Note 3 of Chapter 32 of the First Schedule of the Central Excise Tariff Act, 1985. It is relatable to heading No.3204 in Chapter 32 of the Tariff Act dealing with Tannig or Dyeing Extracts Tannins and their Derivatives; Dyes, Pigments and other colouring matter; paints and varnishes; putty and other mastics; inks Note-3 of Chapter 32 as above, extends amongst other the application of heading 3204 to preparations based on colouring matter of a kind used for colouring any material or used as ingredients in the manufacture of colouring prepar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cannot be subscribed to. Not only the clarification provided in the report dated 22-10-2007 by Prof. V.R. Karnetker neutralizing the earlier observations in the report dated 30- 08-2006 that Ujala cannot be sued as a dye or a colouring matter, is of definite significance for the ultimate classification of the product, its structural composition as well enjoins its inclusion under Entry 114 of Schedule II-C of the Act earning for it HSN Code Number 3204 12 94 to determine its tax liability. 37. On a totality of the above considerations, this Court is of the unhesitant view that the petitioner s product Ujala Supreme is entitled to be included in Entry 114 of Schedule II-C of the Act with corresponding rate of duty prescribed by HSN Code No. 3204 12 94. This Court, for the reasons recorded hereinabove, is thus in respectful disagreement with the observations and the conclusions recorded in M/s M.P. Agencies (Supra). The impugned order dated 11-08-2010 when judged by the above touchtone is thus unsustainable in law and on facts. It is thus, quashed. 20. We are in agreement with the line of reasoning adopted by the learned Single Judge. The product Ujala Supreme though ..... X X X X Extracts X X X X X X X X Extracts X X X X
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