TMI Blog2015 (1) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Raw materials it is seen that the expression “and their compounds is applicable only to the natural and synthetic essential oils but not applicable to fragrance and flavour chemicals or industrial flavours and fragrance in concentrated form - a perusal of the definition of Aromatic Chemicals, Essential Oil and Essential Oil, Synthetic reveals that they can be combined with each other - Essential Oil Synthetic is shown as a composition of natural essential oils and aromatic chemicals etc. - The Tribunal was justified in negating the revenue's interpretation of the word “and their compounds” in schedule entry C-I-19 covers only the compounds of natural and synthetic oil and essential oils, to the exclusion of aromatic chemicals – thus, the perfumery compounds are compounds of aromatic chemicals within the meaning of entry C-I-19 and in view thereof, the perfume is covered under C-II-86 – Decided against petitioner revenue. - Sales Tax Reference No.47 Of 2009 With Sales Tax Reference No.48 Of 2009 With Sales Tax Reference No.49 Of 2009 With Sales Tax Reference No.34 Of 2009 With Sales Tax Reference No.1 Of 2012 With Sales Tax Reference No.7 Of 2012 With Sales Tax Referen - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Compounds, Natural and Synthetic Essential Oil and Fragrances, etc. The assessing authority levied a tax at 15% on the sales of flavouring compounds and perfumery compounds treating them as covered under entry C-II-78, with effect from 11th August,1988. Perfumery compounds were also taxed under C-II-86 as fragrances and penalties were also levied. 3. According to the Respondent-assessee, sales of flavouring compounds and perfumery compounds were covered under entry C-I-19. The assessee filed a first appeal before the Deputy Commissioner of Sales Tax, who considered the above submissions but rejected them, holding that the assessing officer had not erred in treating the impugned sale as covered in schedule entry C-I-19. The first Appellate Authority thus confirmed the order of the assessing authority with regard to levy of taxes. 4. Being aggrieved by the order of the first appellate authority, the appellant filed a second appeal before the Tribunal. The Appellate Tribunal, after hearing both sides, partly allowed the second appeal vide order dated 31st March, 2003 and held that during the period 11th August, 1988 to 31st March, 1994, the sale of flavouring compound was lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication creates a distinction between the terms of inputs before and after the semicolon. He relies upon the decision of the Supreme Court in Falcon Tyres V/s. State of Karnataka reported in (2006) 6 SCC 530 in support of his submission that in the impugned entry C-I-19, no such semicolon is used in the entry and there was no distinction between 'aromatic chemicals' on the one other and 'natural and synthetic essential oils' on the hand. Consequently, it is submitted that the words 'and their compounds' will refer to both, compounds of aromatic chemicals as well as compounds of natural and synthetic essential oils. Mr.Sridharan further submits that in Union of India V/s. Pesticides Mfg Formulators Assn. Of India reported in (2002) 7 SCC 410, the Apex Court has held that a compound is mixture of components and therefore, entry at C-I-19 includes mixtures of aromatic chemicals and 'natural and synthetic essential oils. The impugned products will not fall outside the entry merely on account of being a mixture. 7. As far as the second question is concerned, Mr.Sridharan has submitted that the second question was relevant only for matters pertaining to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d V/s. Asst. Sales Tax Officer, Akola reported in (1961) 12 STC 286 in support of his contention. He further submitted that the specification and standards prepared by the Bureau of Indian Standards as published have been considered strong indicators of commercial and consumer parlance and glossaries published by the Indian Standards Organization have been relied by Courts in various judgments. 10. In support of his contention, he placed reliance upon the decision of Chemical and Fibres of India Ltd.(supra), Warden Co. V/s. CCE, Thane reported in (1995 Suppl. 1 SCC 740 and CCE, Kanpur V./s. Krishna Carbon reported in (1989) 1 SCC 150. He further submitted that as per the Indian Standard Glossary of terms relating to natural and synthetic perfumery material, the term 'perfumery compound' has been specifically defined as a concentrated base which is further diluted and modified to suit various end uses. 'Perfume' has been distinctly defined as a solution of perfumery compound in ethanol or other suitable solvent meant for use as a personal adornment. 11. Mr.Sridharan further submits that there is a distinction between perfumery compound and perfume which clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ody as perfumes. Mr.Patkar, learned counsel appearing for the Petitioners in the Writ Petitions relied upon the judgment of this Court in Gordhandas Tokersey (supra) and adopted the submissions of Mr.Sridharan. 14. Mr.Sridharan further submits that it is well accepted that in cases of classification, the burden of proof is placed on the revenue which must be discharged in order to sustain an assessment as valid. In this behalf, he relied on the judgment of the Supreme Court in Hindustan Ferodo Vs. CCE reported in 1997 (89) ELT 16(SC) and Union of India V/s. Garware Nylons reported in (1996) 10 SCC 413. In his view, the revenue has failed to discharge its burden by placing evidence on the basis of which the impugned product can be classified as perfumery compounds under C-II-86. 15. Mr.Sonpal on the other hand supported the impugned order. Mr.Sonpal, learned counsel appearing for the revenue relied upon the decision of this Court in Bradma of India Limited V/s. State of Maharashtra reported in [1998] 110 339 and submitted that if there are two entries, one general and the other special, the special entry should be applied for the purpose of levying tax. The general entry shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -8-1988 and synthetic essential oils and their compounds 19. Aromatic chemicals and 4% 4% 1-8-1988 to their residue and natural 30-4-1992 and synthetic essential oils and their compounds (except the culinary and flavouring essences covered by entry 78 of Part II of this Schedule) 19. Aromatic chemicals and 4% 4% 1-5-1992 to their residue and natural 8-9-1992 and synthetic essential oils and their compounds except the perfumes and culinary and flavouring essences whether in a concentrated or diluted form. 19. Aromatic chemicals and 4% 4% 9-9-1992 to their residue and natural 31-3-1994 and synthetic essential oils and their compounds (except the culinary and flavouring essences covered by entry 78 of Part II of this Schedule) 19. (1) Raw materials for 4% 4% 1-4-1994 to preparation of perfumes, 30-9-1995 fragrances and flavors, that is to say- (a) Natural and synthetic oils and their compounds (b) Fragrance and flavour chemicals. (2) Industrial flavours and 4% 4% 1-4-1994 to fragrances in 30-9-1995 concentrated form. 18. A bare reading of the entry reveals that Aromatic chemicals and their compounds are not intended to be treated separately from natural and syn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r C-II-86, which is reproduced below:- 86. Perfumes(excluding those 15% 15% 1-7-1981 to covered by entry 19 of 31-3-1989 Part I of this Scheduled) depilatories, cosmetics, toilet articles and preparations whether medicated or otherwise (including hair creams, hair-tonic and liquid shampoo) but excluding those covered by any other entry of this or any other schedule. 22. In conclusion, we answer the three questions in the affirmative, namely in favour of the assessee and against the revenue. The References are disposed of accordingly. In view thereof Writ Petitions are also disposed off. Rule discharged therein. No order as to costs. 23. After the judgment was pronounced, the parties informed us that the Petitioners in two Petitions namely Writ Petition No.2055 of 2003 and Writ Petition No.2056 of 2003 have furnished bank guarantees pursuant to the interim orders of this Court. Since the issues raised in the Writ Petitions were subsequently considered as subject matter of Sales Tax References, the Writ Petitions moved do not survive and disposed of in this manner. In such circumstances, the request made by the Petitioners for discharging the bank guarantees is accepted. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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