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TMI Blog2023 (1) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. CCT, reported in 1996 Vol. 102 SCC page 106 wherein R.E.P. license were termed to be goods and is liable to be taxed on its transaction, stil the benefit of ITC can legally be rejected?" 4. The brief glimpse of the facts are necessary for better appreciation of the case which are as under : 5. The assessee was registered under the Act of 2008 as well as Central Sales Tax Act and is a proprietorship firm engaged in the business of trading of chemicals. The dispute relates to the assessment year 2009-10. The assessee, in its normal course of business, purchases chemicals both within the State of U.P. and also from outside the State of U.P. It also imports chemicals from outside the country. For importing chemicals from outside the country, he was required to get the license from the Custom Authorities. The license is known as R.E.P. License. 6. After purchasing the license from open market for Rs.43,89,000/-, the assessee imported goods from outside the country. The Assessing Authority while framing the assessment order dated 28.4.2012, accepted the books of accounts as well as turnover disclosed by the assessee but rejected the claim of Input Tax Credit (hereinafter called a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler has used the license and adapted as per his requirement and sold it to different dealers in different quantify. Thus, the adaption of the goods have been done which amounts to manufacture. 10. Reliance has been placed upon decision of Division Bench of Delhi High Court in case of Jagriti Plastics Limited vs. Commissioner of Trade & Taxes (ST.Appl 5/2015) connected with N.F. Impex Pvt. Ltd. vs. Commissioner of Trade & Taxes (ST.Appl 23/2015) decided on 1st October, 2015 wherein similar controversy came before the Delhi High Court and the Court granted benefit of I.T.C. to the assessee therein, who had used the import license and sold the commodity, so imported. Relevant paras 24 and 25 of the judgment are extracted hereas under : "24. The Court finds no reason why in respect of the input tax credit provided under Section 9(1) read with Section 9(4) of the DVAT Act a similar approach should not be adopted. The usage by the Assessees, who are registered dealers, of the DEPB scrips purchased by them from another registered dealer after paying the input tax for reducing the incidence of customs duty should be held to constitute use of such DEPB scrip for the purposes of sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ull amount of I.T.C. can be availed. 13. In the present case, it was not a case where the license, which was purchased by the assessee was resold. He then contended that according to second condition when purchased goods are used in manufacture of any taxable goods and such manufactured goods are sold either inside the State or in the course of inter-State trade or commerce then I.T.C. of full amount can be claimed, but, the case of the assessee did not fall in either of the cases and the Tribunal was correct in repelling the argument and not extending the benefit. He then contended that the case of the assessee is not of adapting goods, as mentioned in the definition of word "manufacturer". 14. I have heard the respective counsels for the parties and perused the material on record. 15. The small issue before the Court for consideration is : Whether the benefit of Input Tax Credit, as provided under Section 13(1)(a) of the Act of 2008, can be extended to a dealer who has purchased import license after paying the requisite tax under the Act and has imported the goods and sold the same is entitled for the claim or not? 16. The issue as regards R.E.P. license has already attaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of input tax credit (1) (2) (3) 1. If purchased goods are re-sold- (i) inside the State, or (ii) in the course of inter-State Trade or Commerce; or (iii) in the course of the export of the goods out of the territory of India. Full amount of input tax 2. If purchased goods are used in manufacture of- (i) any goods except non-vat goods and where such manufactured goods are sold in the course of the export of the goods out of the territory of India: or (ii) any taxable goods except nonvat goods and where such manufactured goods are sold either inside the State or in the course of inter-State trade or commerce. Full amount of input tax 3. If purchased goods are,- (i) transferred or consigned outside the State otherwise than as a result of a sale; or (ii) used in manufacture of any taxable goods except non-vat goods and such manufactured goods are transferred or consigned outside the State otherwise than as a result of a sale. Partial amount of input tax, which is in excess of rate prescribed under sub-section (1) of Section 8 of the Central Sales Tax Act, 1956 of the purchase price on which the dealer has paid tax either to the registered selling dealer or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 2(18) of the Act is itself indicated in entry 57 of List II of the Seventh Schedule to the Constitution, which confers a power on the State to tax vehicles whether propelled mechanically or not and uses the word "suitable" in relation to its use on the roads. The words "adapted for use" must therefore be construed as "suitable for use". At any rate, words "adapted for use" cannot be larger in their import by including vehicles which are not "suitable for use" on roads. In this sense, the words "is adapted" for use have the same connotation as "is suitable " or "is fit" for use on the roads." 27. From reading of definition and the decision of the Apex Court, it is clear that the word 'adapted' or 'adapting' means suitable for use in a given situation. The chemical, which was imported by the assessee from outside country using import license in bulk was sold as per the requirement in small quantity, adapting it to the requirement and situation. 28. Thus, the action of the assessee in adapting for use of the chemical brought in for the purpose of business would be encompassed under the definition 'manufacturer'. 29. In Vikas Sales Corporation (supra), the Apex Court had alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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