TMI Blog2018 (3) TMI 1683X X X X Extracts X X X X X X X X Extracts X X X X ..... e Schedule, i.e., Part IV is normally referred to as residuary entry. Whether the toast or rusk would fall under the residuary entry under Part IV, the burden of proof is on the State Government and the onus also lies on them to first establish conclusively that by no conceivable process of reasoning can the said product be brought under any of the tariff items and hence the product was being brought under the residuary item. Bringing an item under the residuary entry - Held that:- It is the primary and paramount responsibility of the State to first convincingly prove and establish that the item under no circumstances can be brought under any of the tariff items under the Schedule of the VAT Act. Only then could the Government claim a particular product to be one which would come under the residuary entry - It is settled law that the onus or burden to show that a product falls within a particular tariff item is always on the Revenue. There is substantially no change in the basic physical properties used for manufacturing of bread as well as toast and rusk. It is only the manufacturing process and that too restricted to the time required for baking of the two products every ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the filing of the present writ petitions. So far as W. P. T. No. 98 of 2013 is concerned it was filed straightaway at the first instance itself when the notice before assessment was issued by the respondents. 6. Claiming rusk/toast to be a variety of bread, the petitioners claimed that the said item also has to be construed as if it is an item which would fall under entry 7 of Schedule I, i.e., within the ambit of bread. 7. It was the contention of the petitioners that rusk/toast so also bread is made up of the same ingredients and the method of manufacturing also is the same. According to the petitioners, it is the difference in the moisture contents which differentiates a bread with a toast. The moisture content in bread is very high and the moisture content in toast/rusk is very low. The dough which is used for its preparation and the method of manufacturing, i.e., the baking process, is similar except that toast/rusk is baked for a longer period so that moisture content gets evaporated with which the self- life of the product gets enhanced. Likewise, the bread is baked for a very short duration so that it does not loose moisture contents and it is this moisture contents b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can a toast or a rusk be called a bread or vice versa so as to treat all these items as one and the same bringing it under the umbrella of bread. 13. According to the State under the normal practice there are two tests which are required to determine a product. Those are the common par- lance test and the commercial use test. According to the State counsel applying both the tests to determine the product even on conducting the two tests it would be explicitly clear that bread is entirely different from rusk and toast, so far as the common parlance test is concerned, it was the contention of the State Counsel that when a person goes shop to purchase bread, the shopkeeper would not offer him toast or rusk at the same time when a person goes to buy a toast and rusk, he would not be offered bread. 14. So far as the second test of commercial uses is concerned, the contention of the State Counsel was that the two products, i.e., bread and rusk/ toast are also used for entirely different purpose and occasion. According to the State Counsel the ingredients used for manufacturing of the two pro- ducts, i.e., bread and toast or rusk are also entirely different and the process of manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chedule I and rusk and toast not having been expressly given in any of the entries under any of the Schedule, under such circumstances, what is required to be ascertained is whether the rusk or toast can be brought within the ambit of entry 7 under Schedule I to make these products also tax-free. Further, what also requires consideration is that in the absence of any specific entry so far as rusk and toast is concerned under the Act or in the Schedule, whether it will fall under residuary clause. 19. Now for better understanding the submissions put forth in the preceding paragraphs or for proper determination of the issues framed in the preceding paragraphs, it would be relevant at this juncture to refer to the definition of rusk and toast. According to Black's Law Dictionary, the definition of toast so also definition of rusk is as under : Toast-Sliced bread that has been browned by heat. Rusk-A slice of sweet raised bread dried and cooked again in the oven. 20. So far as Webster Dictionary is concerned, Toast has been defined as sliced bread browned on both side by heat . Likewise, rusk has also been defined as the sweet or a plain bread baked until dry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment can establish that the goods in question can by no conceivable process of reasoning be brought under any of the tariff items, resort can be had to the residuary item. 25. It is also well-settled principle of law that when two views are possible, one which favours the assessee should be adopted. 26. So far as, whether the toast or rusk would fall under the residuary entry under Part IV, the burden of proof is on the State Government and the onus also lies on them to first establish conclusively that by no conceivable process of reasoning can the said product be brought under any of the tariff items and hence the product was being brought under the residuary item. 27. So far as the issue of bringing an item under the residuary entry, it is the primary and paramount responsibility of the State to first convincingly prove and establish that the item under no circumstances can be brought under any of the tariff items under the Schedule of the VAT Act. Only then could the Government claim a particular product to be one which would come under the residuary entry. The honourable Supreme Court in this regard dealing on the classification of goods and the onus of proof in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple and held that (page 205 in 145 STC) : . . . It is settled law that the burden of showing correct classification lies on the Revenue. . . . If we look at the facts of the instant case there does not appear to have been any strong evidence led by the revenue before the authorities to establish the fact that the matter would not fall within the entry item bread as is reflected under Schedule I, entry 7 of the VAT Act. 29. In 1953, the High Court of Hyderabad dealing with a similar issue in a matter which is reported in [1953] 4 STC 387 (Hyd) in the case of Kayani and Co. v. Commissioner of Sales Tax , while considering the definition of bread under the provisions of Hyderabad General Sales tax Act in para- graph No. 2 held as under (page 389 in 4 STC) : . . . . When the Legislature uses a term relating to any article of food, we must construe it in the sense in which it is understood in this country and not elsewhere. In fact bread which is commonly labelled as a loaf of bread in Europeon countries has a particular name in this country and is called a 'double roti' thereby distinguishing it from ordinary 'roti' which is synonymous with a loaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual details about the components and the process have been given in the additional affidavit dated July 30, 1990. It is stated : 'The ingredients of bread and bun are maida, sugar, salt, fat, yeast, glycerine mono stala, vitamin premix, potassium bromate, acetic acid and calcium propionate. The manufacturing process is also the same. The flour is sifted and the raw materials are mixed with water to form a dough. It is then fermented and remixed. The remixed dough is allowed a short resting period before it is divided to form each bread or bun. It is then founded, moulded, panned, pruned to the required volume and baked. The baked bread is cooled to room temperature and sliced and packed. The cooled bun is directly packed without slicing. In bun the percentage of yeast is more than bread.' The variety of the breads made and sold by the petitioners is reflected in the enumeration : 'White bread, sweet bread, Kairali special, milk bread and fruity'. The ingredients are virtually the same with marginal difference in their percentage. Bun contains more of yeast. Additional ingredients are there in milk bread and in fruity. A document-daily production and raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in all its forms and varieties'. It was accordingly observed that 'milk in powder form can be looked upon as a result of this continually evolving technology. There is no reason why it should be excluded from the generic term milk .' 42. In Dunlop India Ltd. v. Union of India [1983] 13 ELT 1566 (SC), it was reiterated that 'when an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause. . . .' 43. In H. P. L. Chemicals Ltd. v. Commissioner of Central Excise [2006] 6 RC 508 ; [2006] 197 ELT 324 (SC), the question was of classification of 'denatured salt'. The court disagreed with the Department of Excise in that case that the said product was classifiable under the residuary heading No. 38.23 and not heading 25.01 of the Central Excise Tariff Act, 1985 which was a specific heading. The court observed as under (pages 519 and 520 in 6 RC) : 'This apart, classification of goods is a matter relating to charge ability and the burden of proof is sq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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