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The Commissioner of Sales Tax, Maharashtra Versus M/s. Polyfab Industries,

2017 (6) TMI 305 - BOMBAY HIGH COURT

Interpretation of any entry - filter fabrics - the competing entries are C­I­17 and A­15 and whether the product falls in one or the other is a question of law - whether the product HDPE woven cloth which is used as filter fabric can be said to be an impregnated, coated, covered or laminated textile fabrics or textile articles of a kind suitable for industrial use or technical usage? - Held that: - It is a settled position that the burden is on the department to prove that the product falling un .....

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ise Head 54.06 being manufactured out of raw material covered by Central Excise Heading 54.04? - Held that: - The Tribunal has considered the rival contentions and relied upon several decisions including the opinion of an expert tendered by the original appellant and the Tribunal has opined that it is not possible to accept the contentions of the Commissioner of Sales Tax that the impugned product is not obtained by either of the two processes referred to therein and that therefore cannot be con .....

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prayer, the said relief was not granted i.e. indirectly refused without giving reasons, it becomes the subject matter of Appeal, if such inaction on the part of Commissioner to consider the said relief has been challenged in Appeal. The opponent has taken a specific ground in the Appeal to grant prospective effect. The order further justifies the finding of the Tribunal in order dated 30th April, 2003 for granting prospective effect. - Sales Tax Reference No. 31 of 2009 is returned unanswer .....

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of 2003 before the said Tribunal with request to refer certain questions of law to this Court, which according to the learned Commissioner of Sales Tax have arisen out of the Judgment and order of the Tribunal in Appeal No.96 of 1998 decided on 30th April, 2003. 2 The relevant facts leading to the Reference are as follows: (a) The opponent (original appellant) is the manufacturer of HDPE yarn, HDPE cloth and filament products. According to the opponent, out of these products, the opponent is no .....

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x being described in the Column 3 of First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1958. (c) In order to get the doubt settled from the determining authority, the opponent filed an application on 3rd June, 1997 under Section 52 of the Bombay Act by posing the following question: Whether the sales of 48 width 72 mesh woven cloth and sales of 48 width 40 mesh woven cloth, as indicted under sale Bills No.97190 dated 8th December, 1996 and under Bill No.97186 d .....

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additional duties of Excise Act and is free from excise duty with effect from 25th July, 1996. The opponent tendered a letter in support of said submissions regarding the aforesaid product during the course of hearing before the determining authority. In the said letter it was stated that the process of manufacturing HDPE cloth out of HDPE filament is identical to that of textile cloth manufacturing as done on power looms. It was further stated that the opponent gets beams with various width 42, .....

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was further submitted that the excise heading 54.06 covered all woven fabrics of synthetic filament yarn and as HDPF, yarn was also a synthetic filament yarn it was covered by the scope of the above stated excise heading. (e) The determining authority disagreed with the submissions made by the opponent that the impugned HDPE cloth is covered by Schedule Entry A­15. The determining authority held that the product is covered by Schedule Entry C­I­17 and is accordingly liable to tax at .....

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al vide its judgment and order dated 30th April, 2003 set aside the determination order passed by the Commissioner of Sales Tax to the extent it holds the product to be covered under Entry 17 of the Schedule C Part­I. It is held that HDPE cloth is covered under Entry 15 of Schedule A except for the period from 1st October, 1996 to 30th April, 1998. The opponent was also granted prospective benefit for limited period from 1st October, 1996 to 30th April, 1998. (h) The revenue was not satisfie .....

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es of the case, was the Tribunal justified in holding that the impugned product i.e. Filter fabrics is covered by Schedule entry A­15 except for the period from 1st October, 1996 to 30th April, 1998? (ii) Whether on the facts and the circumstances of the case, was the Tribunal justified in holding that the impugned product is covered by Central Excise Head 54.06 being manufactured out of raw material covered by Central Excise Heading 54.04? (iii) Whether on the facts and the circumstances of .....

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termination and described is known as filter fabrics. The predominant use of the product is in filtering water to separate it from suspended particles. The use can be said to be distinct from the use that in common parlance is attached to fabrics. Hence, in that view of the matter the use may be said to be specialized, technical. (b) When a dispute over classification arises and when two or more headings are found proximately applicable to a given product, doctrine of harmonious construction com .....

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he question on the basis of the law applicable on the particular date. The appellate authority cannot decide in the Appeal in relation to the transactions taken place on any other date, because in the original order appealed against the original authority has not determined in relation to such transactions which were not impugned before it. (c) It was further submitted that the Appeal was against the order passed under Section 52(1)(e) of the Bombay Act. The appellate authority is not seized wit .....

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enue. The revenue has to forego the amount when assessee has no right to claim prospective effect. In the instant case, the Tribunal has decided that the sale transaction is liable to tax and is covered by the Schedule Entry C­I­17 liable to tax at 4%. The issue of giving prospective effect to the determination is the discretion of the Revenue. There is nowhere in the Act a right to have a prospective effect conferred on the assessee as of right by resorting to appeal proceedings. This p .....

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t the product falls under Entry 54.06 of the Central Excise Tariff, there is no further debate possible. No reference lies as no question of law arises. (ii) In the Reference Application, new arguments were advanced by the revenue. The arguments advanced in the reference application are uncalled for and beyond the jurisdiction of the application of Section 61 of the Bombay Act. The questions posed by the revenue were never before the Tribunal. (iii) The assessee has proved beyond doubt that the .....

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Commissioner also the plea of prospective effect was made. The order of Commissioner being silent on the said point means that he has not allowed the ground of prospective effect. The Tribunal in Appeal has the power to decide the issue of prospective effect. The submission of the department is that the Tribunal has traveled beyond its jurisdiction is devoid of merit. The Tribunal gave prospective effect till the date of its own order in the interest of justice. The prospective effect was given .....

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e other is a question of law. According to the revenue, the predominant use of the product is in filtering water to separate it from suspended particles. It is further their case that the use can be said to be distinct from the use that in common parlance is attached to fabrics. The controversy as to the classification of the product itself is debatable and it is certainly a substantial question of law and therefore, the question nos.(i) and (ii) in that behalf are required to be referred to the .....

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etency of the Tribunal to determine the classification of the product in the context of particular period or rather say beyond the period of disputed transaction. The said question would not arise in the present case because the Commissioner himself has clarified the legal position in respect of the product for the period prior to 1st October, 1996 and after 1st October, 1996 (i.e. for the transactions other than the specified transaction). Hence, the Tribunal's competence cannot be a questi .....

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order. The assessee has made the application for prospective effect but no order was passed on the said application. It was observed that Section 52(2) indicates that it is a prerogative of the Commissioner of Sales Tax to grant prospective effect, however, it may be noted that Appeal does not lie against any order passed by the Commissioner under Section 52. Section 56 specifies the non appealable order it has neither included the determination order passed under Section 52(1) nor the discreti .....

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s passed which means that the Commissioner of Sales Tax has refused to grant the said relief. When the orders are made by exercising powers under Section 55(6), the Tribunal has to pass the orders as it deems just and proper. When despite making specific prayers such relief was not granted that is impliedly refused without giving any reason, certainly it becomes a subject matter of Appeal if such inaction on the part of the Commissioner to consider the relief has been challenged in Appeal. The a .....

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plication for giving prospective effect was filed on 9th January, 1998 i.e. about 4 years and 8 months after the passing of determination order and, hence, it was observed that it is difficult to hold that the dealer can file such application any time after the determination order i.e. without having any time limit. It is further observed that in such an event, it may not be erroneous to hold that prayer for giving prospective effect has got to be made along with the application for determinatio .....

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n in the case of M/s. Ashish Enterprises is not applicable. 11 The Tribunal considered the following facts while determining the issue of grant of prospective effect: (i) On 1st May, 1998, retrospective effect was given to entry C­I­17 with effect from 1st October, 1996. (ii) Appellant has made application for determination on 21st January, 1997. (iii) The Commissioner of Sales Tax has decided the issue on 5th June, 1996 i.e. after one and half years and the Appellant has not collected a .....

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discretion judiciously granted prospective effect for the limited period of 1st October, 1996 to 30th October, 1998. 13. The Tribunal, however, in the reference order held that on the facts and circumstances the question may arise, wherein the Commissioner had not given any specific decision in his original order on the appellant s prayer for prospective effect under Section 52(2) of the Bombay Act, the Tribunal was legally justified in holding that the Commissioner has rejected the said prayer .....

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hether on the facts and the circumstances of the case, was the Tribunal justified in holding that the impugned product is covered by Central Excise Head 54.06 being manufactured out of raw material covered by Central Excise Heading 54.04? (iii) Whether on the facts and the circumstances of the case, was the Tribunal justified in holding that the Commissioner has rejected the said prayer and in adjudicating upon that prayer in exercise of the appellate powers under Section 55 of the Bombay Act? 1 .....

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whole of the State or the Commissioner), may by application in writing (accompanied, where the application is made by that person, by a fee of One Hundred rupees) require the Tribunal to refer to the High Court any question of law arising out of such order and where the Tribunal agrees, the Tribunal shall as soon as may be after the receipt of such application, draw a statement of the case and refer it to the High Court. It is implicit that a reference can be made to the High Court with regard t .....

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ot arise. In the present case, the opponent approached the determining authority by preferring an application under Section 52 of the Bombay Act. The issue which was considered by the determining authority was whether the sales of 48 width 72 mesh woven cloth and sales of 48 mesh woven cloth, as indicated under sale bills are taxable under any entry under the Bombay Sales Tax Act, 1959 and, if taxable, the rate of tax thereof. The determining authority had opined that the products are covered by .....

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nted prospective effect for the limited period from 1st October, 1996 to 30th April, 1998. Pursuant to the said order, the application under Section 76 was preferred requesting the Tribunal to refer certain questions of law. Apparently the reference was sought beyond the scope of order dated 30th April, 2003. We do not find that there was any question of law to be referred to this Court pursuant to the Tribunal s order dated 30th April, 2003. The findings of the Tribunal were reaffirmed in the r .....

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merated in reference order. He advanced the submissions which were raised by Deputy Commissioner of Sales Tax Legal representing the applicant before the Tribunal. Ms. Badheka, the learned advocate representing the respondent/opponent also reiterated the submissions advanced by her before the Tribunal and submitted that, this reference is unwarranted and no question of law is involved in the proceedings. 17. The first question of law referred to by the Tribunal is whether on the facts and circum .....

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2003 has dealt with such issue in detail from paragraph 22 onwards. In paragraph 22, the Tribunal has observed that the question since arose whether the product HDPE woven cloth which is used as filter fabric can be said to be an impregnated, coated, covered or laminated textile fabrics or textile articles of a kind suitable for industrial use or technical usage. The inspection of the sample makes it clear that it is not an impregnated, coated, covered or laminated textile fabric. It is a settl .....

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ambers Dictionary as relating to or consisting in industry and the word Industry has been defined as the quality of being diligent, assiduity, steady application . The word Technical is defined as pertaining to art or applied science, industrial, department of knowledge or skill . There is nothing to show that Filtered Fabric is a textile article of a kind suitable for use in a factory or an industry or an article of technology and, therefore, it is difficult to agree that the impugned product f .....

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mpugned product was not falling under Schedule entry A­15. 18. The second question referred to is whether the impugned product is covered by Central Excise Head 54.06 being manufactured out of raw material covered by Central Excise Heading 54.04. In respect to this issue also there is no reasoning assigned as to why this question is required to be referred to this Court. In the order dated 30th April, 2003, the issue has been dealt with in depth from paragraph 14 onwards. The Tribunal has co .....

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served that the Tribunal finds good deal of substance in the contention made on behalf of the appellant that the impugned product HDPE woven cloth fulfilled the necessary conditions of heading 54.04 and, therefore, covered by the Central Excise Tariff heading 54.06. The Tribunal had also considered the opinion of expert which was relied upon by the opponent. The reference is apparently silent as to why said issue is considered as a question of law. 19. The third question as to whether the Tribun .....

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