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M/s Mysore Polymers And Rubber Products Ltd. Versus Assistant Commissioner of Commercial Taxes, The Commissioner of Commercial Taxes, The State of Karnataka

2016 (2) TMI 5 - KARNATAKA HIGH COURT

Entry tax - KTEG Act - Rubber Process Oil, which is used as a lubricating agent in the manufacture of rubber products - Appellant contended that the levy of entry tax at 5% on the value of Rubber Process Oil is lacking in jurisdiction and opposed to law - Held that:- the classification under the Central Excise Act would have no application under the KTEG Act. - the notification issued under the Central Excise Tariff could not be the basis to conclude that the Rubber Process Oil could be classifi .....

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the learned Government Advocate. 2. The petitioner is a Company engaged in the manufacture and sale of automotive tubes and other rubber products at its factory in Mysore. It is a registered dealer under the provisions of the Karnataka Value Added Tax Act, 2003 (hereinafter referred to as the "KVAT Act", for brevity) and also under the Karnataka Tax on Entry of Goods Act, 1979 (hereinafter referred to as the "KTEG Act", for brevity). It has filed monthly returns in Form VAT- .....

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d 30.06.2015 and levied entry tax at 5% on the value of Rubber Process Oil of ₹ 2,80,60,569/-. The 1st respondent, according to the petitioner, has without any independent application of mind, merely referred to and relied upon the clarification issued by the 2nd respondent dated 05.12.2012 to the effect that Rubber Process Oil, which is used as a lubricating agent in the manufacture of rubber products was liable to entry tax at 5% under notification No.FD 11 CET 2002(I) dated 30.03.2002. .....

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ification No.FD 11 CET 2002 (I) dated 30.03.2002 at Annexure 'C'. The levy of entry tax at 5% on the value of Rubber Process Oil is lacking in jurisdiction and opposed to law and therefore, the impugned assessment orders lack jurisdiction and are opposed to law. 4. The central point in issue is whether the clarification issued by the Commissioner of Commercial Taxes holding that Rubber Process Oil is a lubricating agent is justified. In this regard, the learned Government Advocate has ma .....

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cation issued under Section 3(1) of the KTEG Act dated 30.03.2002 listing the following petroleum products, namely, (a) Lubricating oil (b) Transformer oil (c) Brake fluid or clutch fluid (d) Bitumen (asphalt) and (e) Tar and others excluding Liquefied Petroleum Gas (LPG), Aviation fuel and Kerosene, the Deputy Commissioner has concluded that Rubber Process Oil could be classified under Sl. No.1(viii)(e), namely, "Tar and others". Therefore, it has been opined that Rubber Process Oil w .....

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TAET No.7/2011 decided on 17.04.2013, while dealing with a similar situation when 'IPOL Cylinder Oil 1200' was sought to be treated as a petroleum product with reference to the notification issued under the Central Excise Tariff, has opined that the classification under the Central Excise Act would have no application under the KTEG Act. By the same token of reasoning, it could straightaway be said that the relevance placed on the notification issued under the Central Excise Tariff could .....

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mulated from highly refined solvent extracted base stock of low sulphur content and is manufactured by distillation, solvent extraction and subsequent re-waxing high base oil, specifically for use in the manufacture of rubber products. RPO contains Hydro carbon at 30-55% that is saturates contained in the oil and polar content 4-10% by weight. RPO is used in the manufacture of rubber products to serve primarily as a processing aid and constitutes a necessary ingredient in the manufacture of rubb .....

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d for keeping surfaces separate under all loads, temperature and speed, thereby minimizing friction. Lubricants are used to minimize friction between metal contacts which ultimately reduces heat generated when surfaces move. This property is known as Lubricity. However RPO is not a lubricating agent at all, but a plasticizer in the manufacture of rubber products. Additives used in the manufacture of lubricants are detrimental to performance of rubber products. It is certified that RPO is used in .....

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