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Meera Metal Industries Versus Commissioner of Sales Tax, Mumbai

2016 (11) TMI 1079 - BOMBAY HIGH COURT

Interpretation of the Schedule Entries C-II-17 and C-II-46A appended to the Bombay Sales Tax Act, 1959 - hard-anodised utensils - whether Tribunal legally justified in holding that the hard-anodised utensils sold by the appellant under his sale invoice dated 12.01.1995 is a heat-resistent cookware under the Schedule Entry C-II- 46A and hence does not get covered by the Schedule Entry C-II-17? - Held that: - if cookware, serveware and kitchenware (which would obviously include utensils) is heat r .....

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- Whether the Tribunal legally justified in holding that the hard-anodised utensils sold by the appellant under his sales invoice dated 06.02.1996 falls under Schedule Entry C-II-26 and hence would not get covered by the Schedule Entry C-II-24? - Held that: - satilon coating is a hard anodizing coating which is not brushed or sprayed on. It is an integral part of the metal built up molecule to the thickness of more than 50 microns, under very carefully controlled conditions, through electro .....

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esitation in holding that the products of the Applicant sold under its invoice dated 12th January, 1995 would fall under Schedule Entry C-II-46B and the Applicant’s products sold under its invoice 6th February, 1996 would fall under Schedule Entry C-II-26. The Sales Tax References are answered in the aforesaid terms. - SALES TAX REFERENCE NO. 7 OF 2009 & SALES TAX REFERENCE NO. 15 OF 2009 - Dated:- 22-11-2016 - S. C. DHARMADHIKARI & B.P. COLABAWALLA, JJ. Mr. S. P. Surte for the Applicant in .....

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instance of the Applicant. The question of law referred for our opinion are as under:- (i) Whether on the facts and circumstances of the case and on true and correct interpretation of the Schedule Entries C-II-17 and C-II-46A appended to the Bombay Sales Tax Act, 1959, was the Tribunal legally justified in holding that the hard-anodised utensils sold by the appellant under his sale invoice dated 12.01.1995 is a heat-resistent cookware under the Schedule Entry C-II- 46A and hence does not get co .....

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been referred for our opinion are whether the products of the Applicant sold under their invoices dated 12th January, 1995 and 16th February, 1996, fall under Schedule Entries C-II-17 or C-II-46A (prior to 30.09.1995) and Schedule Entries C-II-24 or C-II-26 (after 30.09.1995), Mr Nair, learned counsel appearing on behalf of the Revenue contended that as far as the Applicant's products are concerned, prior to 30.09.1995, the same would fall under Schedule Entry C-II-46B as held by the Commiss .....

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.1995, the Schedule Entry C-II-17 read as under:- Sr.No. Description of Goods Rate of Sales Tax Rate of Purchase Tax Period 17. Utensils made of non-ferrous metals (other than those covered by any other entries in this schedule or any other schedule), but excluding utensils made of gold and silver (Sales or purchases of utensils made of aluminium of this Entry: Rate of tax is reduced to 4 % by Entry (235) G by STA-1086/103/RES-8 dt. 30.6.1986 w.e.f. 1.7.1986 to 31.3.1994 and w.e.f. 1.4.1994 the .....

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.1995 46B Non-stick cook-ware, that is utensils and other kitchenware made of aluminium or other non-ferrous metals and treated with stick-resistant coatings 12% 10% 1.7.1982 to 30.9.1995 5. Thereafter, on 1 October, 1995 substantial amendments were made to the BST Act, as a result of which the Schedules appended to the BST Act underwent radical changes. In fact they were replaced by entirely new Schedules altogether. Schedule Entry C-II-17 relating to utensils made of non-ferrous metals was rep .....

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n-ferrous metals, entry A-54(2) of Noti. u/s. 41 w.e.f. 27.9.96) 4% 4% 1.10.1995 to date Sr.No. Description of Goods Rate of Sales Tax Rate of Purchase Tax Period 26 Cookware, serveware and kitchenware coated with any material to make heat resistant or non-stick 12% 12% 1.10.1995 to 30.9.1996 6. On a comparison of Schedule Entries C-II-46A and C-II- 46B on the one hand (before amendment) and Schedule Entry C-II-26 on the other hand (after amendment), it is clear that with effect from 1.10.1995 t .....

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) The Applicant is a Partnership Firm and manufactures aluminium utensils used for the household purposes. According to the Applicant, the utensils sold by it are not coated with any material so as to make them heat resistant or non-stick. Be that as it may, since the Applicant wanted some clarity in respect of the products sold by it, namely, Anodized Concave Tawa and Anodized Kadai , the Applicant filed two Applications both dated 10th October, 1997 ( the DDQ Applications ) under Section 52 of .....

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er rejected the contentions of the Applicant and held that the products of the Applicant sold under their invoice dated 12th January, 1995, would fall under Schedule Entry C-II-46B and the products sold under their invoice dated 6th February, 1996, would fall under Schedule Entry C-II-26. The reasoning given by the Commissioner was that considering the process of manufacturing as described by the Applicant and reading the advertisement of the said products, it was clear that the Applicant's .....

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eing aggrieved by the DDQ order, the Applicant filed two Appeals before the MSTT. These Appeals of the Applicant came to be disposed of by the MSTT vide its order and judgment dated 16th January, 2007. The MSTT inter alia held that the products of the Applicant sold under its invoice dated 12th January, 1995 would fall under Schedule Entry C-II-46A (and not under Schedule Entry C-II-46B as held by the Commissioner). As far as the products sold under its invoice dated 6th February, 1996 are conce .....

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off with mechanical abrasion and deteriorate rapidly with heat in excess of 260° C. Thus, on the basis of this reasoning, the MSTT classified the products of the Applicant sold under their invoice dated 12th January, 1995 under Schedule Entry C-II-46A instead of C-II-46B (as held by the Commissioner). Since after 1.10.1995, Schedule Entry C-II-26 took within its purview cookware, serveware and kitchenware coated with any material making it heat-resistant or non-stick, the MSTT held that the .....

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paragraph 1 above for the opinion of this Court. 8. In this factual backdrop, Mr Surte, the learned counsel appearing on behalf of the Applicant, submitted that the products of the Applicant in question were basically aluminium utensils on which an anodizing process was done. The said anodizing process was explained by Mr Surte as follows:- Aluminium utensils are put through a process of heating and anodizing whereby it acquires a quality of stick-resistance. The anodizing is done in order to g .....

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despite this anodizing process, the products of the Applicant continued to remain aluminium utensils covered by Schedule Entry C-II-17 for the period prior to and including 30.09.1995, and by Schedule Entry C-II-24 for the period commencing from 1.10.1995. Mr Surte contended that the products of the Applicant, in trade parlance, could never be classified as nonstick cookware. In any event, he submitted that anodizing is done to give a better finish and by virtue of this process its products beco .....

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ntry C-II-46B to contend that a separate coating has to be applied to the products which makes it heat resistant or non-stick before one can classify it under either of the said Schedule Entries. 10. According to Mr Surte, by carrying out the process of anodizing, the Applicant was not putting any coating on the product or treating it with any coating which makes it either heat-resistant or non-stick. Therefore, according to Mr. Surte, the Applicant s products would clearly fall outside the purv .....

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Schedule Entry C-II-46B (non-stick cookware) and under the second invoice dated 6th February, 1996 under Schedule Entry C-II-26. According to him, the products of the Applicant would squarely fall in the aforesaid two Entries as they have stick resistant properties. They acquire these stick resistant properties by virtue of a coating being formed on the utensils by virtue of it undergoing the process of anodizing. He submitted that the argument of the Applicant that no coating is found on the u .....

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or C-II-24. 12. He submitted that the dictionary meaning of the term anodizing is a process to produce a durable film on the surface by electrolysis action in which the metal acts as an anode. Mr Nair submitted that the durable film that is formed is nothing but a durable coating on the utensils and hence a coating is created on the utensils during the process of electrolysis. By virtue of this coating, the utensils achieve stick resistant properties, besides other properties such as being non- .....

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edium. Anodizing is accomplished by immersing the aluminium into an acid electrolyte bath and passing an electric current through the medium. A cathode is mounted on the inside of the tank and the aluminium acts as an anode, so that oxygen ions are released from the electrolyte to combine with the aluminium atoms at the surface of the part being anodized. It is by this process that a current is applied and the water in the electrolyte breaks down and oxygen is deposited at the anode. This oxygen .....

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and nonreactive with foods. It is highly abrasion resistant and will not scratch. The resulting finish, depending on the process, is the second hardest substance known to man, second only to diamonds. He, therefore, submitted that the products of the Applicant have been correctly classified by the Commissioner in its DDQ order under Schedule Entry C-II-46B (before amendment) and C-II-26 (after amendment). 14. Additionally, Mr Nair submitted that even under the common parlance test, the products .....

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according to Mr. Nair, the Commissioner has correctly classified the products of the Applicant sold under their invoice dated 6th February, 1996 under Schedule Entry C-II-26. 15. We have heard the learned counsel for respective parties at length. We have perused the papers and proceedings in both the References as well as given our careful consideration to the relevant Schedule Entries. Schedule Entry C-II-17, as it stood during the period 1st September 1990 to 30th September 1995, deals with u .....

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is concerned, the same was covered under Schedule Entry C-II-46B and provides that non-stick cookware, that is utensils and other kitchenware made of aluminium or other non-ferrous metals and treated with stick-resistant coatings, would fall within this Entry. These Entries related to a period upto 30th September, 1995 and which would govern the Applicant's invoice dated 12th January, 1995. 16. As far as the invoice dated 6th February, 1996 is concerned, the relevant Schedule Entries under w .....

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cookware, serveware and kitchenware (which would obviously include utensils) is heat resistant or non-stick by virtue of any coating (whether formed, applied or treated), on the utensils, then the same would clearly fall within Schedule Entries C-II-46A (heat resistant) or C-II- 46B (non-stick) [before amendment], and C-II-26 [after amendment], as the case may be. Therefore, they cannot be classified under Schedule Entries C-II-17 (before amendment) or C-II-24 (after amendment). This is the cle .....

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fore amendment) and C-II-24 (after amendment), respectively. 19. We are afraid we are unable to accept this submission. For the Applicant's product to fall within either Schedule Entry C-II- 17 (before amendment) or C-II-24 (after amendment), the following basic conditions are to be fulfilled:- (1) the utensil is made of non-ferrous metal; and (2) this utensil made of non-ferrous metal should not be covered in any other Entry either in Schedule 'C' or any other Schedule to the Bombay .....

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uld be squarely covered by Schedule Entries C-II-46B (before amendment), and C-II-26 (after amendment). 21. Hawley's Condensed Chemical Dictionary describes the process of anodizing as an electrolytic treatment of Aluminium, Magnesium and a few other metals as a result of which heavy, stable films of oxide are formed on their surfaces . It is an electrochemical process and is accomplished by immersing the aluminium into an acid electrolyte bath and passing an electric current through the med .....

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lectrochemical process thickens and toughens the naturally occuring protective oxide. The coating thickness and surface characteristics are tightly controlled to meet the end product specifications. In other words, anodizing is a matter of highly controlled oxidation. The end result of this highly controlled process is that the anodized aluminium cookware is coated with oxide so that base of the metal does not come in contact with food. 22. Looking to all this, what is clear is that the anodizin .....

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ted with any coating to fall either under Schedule Entry CII- 46B or C-II-26. We are clearly of the view that by the anodizing process, a coating is formed on the products of the Applicant which gives it stick resistant properties and would therefore definitely fall within Schedule Entry C-II-46B (prior to amendment) and C-II-26 (after amendment). 23. Even from the advertisement of the Applicant s products (pg 67 of the paperbook), it is clear that this is how even the Applicant understood it. T .....

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thus combines the superior heat conductivity of aluminium with the corrosion resistance of stainless steel. Armour Finish does not develop hot-spots like in stainless steel. Armour Finish: Stays Looking Good:- It does not tarnish and with a little proper cleaning, stays looking good for years. Stays tough:- It will not scratch. It is highly abrasion resistant - in fact harder than stainless steel. Provides Convenience:- It is stick resistant and its fine smoothness provides for absolute ease in .....

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s Ltd. v/s State of Kerala.(2008) 12 SCC 447 The issue which arose for consideration before the Supreme Court was whether the satilon brand cookware sold by the Appellants therein was an aluminium household utensil made of aluminium and aluminium alloys classifiable under Entry 5 of the First Schedule under the Kerala General Sales Tax Act, 1963, or whether the said product would fall under Entry 104 which pertained to pressure cooker, cook and serve ware to keep food warm, casseroles, water fil .....

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parlance, no one would describe satilon coated aluminium products as aluminium household utensils. 6. We do not agree with the submission made on behalf of the assessee that coating of satilon on the surface of the metal product does not bring about any change in the nature and utility of the product. By no stretch of imagination, satilon coated cookware can be treated as ordinary aluminium household utensils. Price of the satilon coated cookware is much more than the aluminium household utensil .....

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