TMI Blog2009 (4) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment of the court was delivered by C.N. RAMACHANDRAN NAIR J. This is an appeal filed under section 62 of the Kerala Value Added Tax Act, 2003, hereinafter called the Act against annexure 5 order issued by the Commissioner of Commercial Taxes under section 94 of the Act, clarifying rate of tax on the products distributed by the appellant by name Ujala Supreme and Ujala Stiff and Shine . The products are manufactured by M/s. Jyothy Laboratories, and the appellant is the wholesale distributor of the products in Kerala. While Ujala Supreme is a fabric whitener, Ujala Stiff and Shine is a liquid fabric stiffner. The product samples produced by the appellant in bottles contain the description of the products as follows: Ujala Supreme: Fabric whitener For supreme whiteness of clothes. Ujala Stiff and Shine: Liquid fabric whitener for crisp and shining clothes. When the appellant applied for clarification before the Commissioner of Commercial Taxes on the rate of tax applicable to the above two products, the Commissioner clarified that both the products would fall under entry 27 of Notification S.R.O. No. 82 of 2006 dated January 21, 2006 issued under section 6(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s turned down by the Commissioner. It is against this order the appellant has filed this appeal. We have heard counsel appearing for the appellant and the Special Government Pleader appearing for the respondent. As already stated, Ujala Supreme is a product in liquid form sold in bottles for use as a fabric whitener. The appellant's main contention is that notification, namely, S.R.O. No. 82 of 2006 issued under section 6(1)(d) of the Act cannot cover any goods specifically covered by the Second or Third Schedule to the Act, which attracts tax at the rate provided therein by virtue of section 6(1)(a) of the Act. We do not think there can be any dispute on this proposition, because section 6(1)(d) itself expressly gives authority to the State Government to issue notification providing for rate of tax at 12.5 per cent only on goods not falling under clause (a) or (c) of section 6(1) of the Act. However, the question to be considered is whether the two items are covered by the specific entries of the Third Schedule as claimed by the appellant. Since the items involved are different, though use is similar, we consider the items separately and serially hereunder. Ujala Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) are essentially industrial inputs. The finding of the Commissioner of Commercial Taxes in the impugned order is that acid violet paste is purchased by the Jyothy Laboratories, a SSI unit, engaged in the manufacture of various products, including Ujala Supreme and the same is used to produce Ujala Supreme. In our view, the finding of the Commissioner is consistent with the appellant's own case that industrial input, namely, acid violet paste, is purchased by the Jyothy Laboratories and is converted into the final product, namely, Ujala Supreme for use as a fabric whitener. The appellant has produced several orders of the Central Excise Tribunal and Commissioners of Central Excise in support of their contention that there is no manufacture involved for payment of excise duty in the conversion of AVP into Ujala Supreme, which according to the appellant, is extremely diluted form of AVP. However, from the test report, namely, annexure 9, extracted above, it is clear that AVP is a synthetic organic dye for fabric dyeing and is used for dyeing silk/wool and dyeing of these fabrics can take place at elevated temperature in the presence of acid only. However, the further finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew that Ujala Supreme, which is admittedly used as laundry whitener for clothes, cannot be treated as AVP falling under entry 155(8)(d) under List A of the Third Schedule covering industrial inputs and packing materials because Ujala Supreme, the product made can no longer be identified with AVP in any manner and in the conversion process it has lost its property as an industrial input used for dyeing silk and woollen material. Moreover in the process of conversion, there is 99 per cent erosion in the concentration of AVP leaving only an insignificant percentage of the item in water with different properties and different use. In other words, what is done is that an industrial raw material which is used as a dyeing agent for silk and woollen clothes at high temperature is converted into a laundry whitener. Obviously an acid base industrial raw material cannot be used as a laundry whitener and it has to be necessarily subjected to processing or manufacture to make it fit for use as a laundry whitener which is exactly what is done by Jyothy Laboratories, the supplier of the items to the appellant. Since in the process, the original item lost its identity and a new commodit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is that the item falls under entry 118(5) of the Third Schedule. The group heading of entry 118 provides for plastic granules, plastic powder and master batches . Sub-entry (5) provides for rate of tax for polymers of vinyl acetate or of other vinyl esters, in primary forms; other vinyl polymers in primary forms. Annexures 17 and 18 are test reports obtained by the appellant from Shriram Institute for Industrial Research. In annexure 18 the test result of Ujala Stiff and Shine is given as follows: Sl. No. Tests Results 1. Polymerized vinyl acetate content, % w/w 42.98 2. Water content,% w/w 55.80 3. Solid content, % w/w 43.80 4. Fragrance (rose) Present According to the appellant, the processing done by Jyothy Laboratories which purchases raw materials and converts the same to Ujala Stiff and Shine, does not involve any manufacturing activity. However, the appellant does not deny the contents of the prod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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