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TMI Blog2023 (2) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... ebruary, 2017 of the Maharashtra Sales Tax Tribunal at Mumbai ("MSTT Mumbai"/"Tribunal") affirming the Determination of Disputed Question ("DDQ") order of the Commissioner of Sales Tax. 2. The subject matter of the present dispute is classification of Aluminium Composite Panels ("ACP"). 3. Three separate but similar applications for determination of DDQ u/s. 56(1)(e) of MVAT Act, 2002 were filed before Commissioner of Sales Tax by three dealers namely M/s Eurobond Industries Private Limited, M/s. Kevin Impex Private Limited and M/s Prime Bond Industries, the appellants herein for classification of ACP which were sold by them in the State of Maharashtra. 4. It is the contention of the Appellants that ACP is classifiable under Entry C-6 of Schedule to the MVAT Act, 2002 read with Sr. No.6 of Notification No. VAT- 1505/CR-113/Taxation-1 dated 1st June, 2005 and the sale was chargeable to 5% VAT and not 12.5 % as claimed by the State Authorities. 5. Schedule Entry C-6 and relevant portion of the said Notification dated 1st June, 2005 reads as follows- 6. Aluminium, its alloys and products as may be notified from time to time by the State Government in the Official Gazette - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hakar Jamode Deputy Secretary to the Government." 6. Goods covered by Schedule Entry C-6 of the MVAT Act are liable to tax @ 4% till 31st March, 2010 and 5% w.e.f. 1st April, 2010. 7. The Commissioner held that ACP is not covered under the Central Excise Tariff ("CET") Heading 7606, but would fall within CET Heading 7610 and therefore, the same is not covered by the notification issued for the purpose of Schedule Entry C-6 of the MVAT Act. The two competing entries of Chapter 76 with respect to Aluminium are set out below : CETH 7606 Aluminium plates, sheets and strips, of a thickness exceeding 0.2 mm CETH 7610 Aluminium structures (excluding prefabricated buildings of heading 94.06) and parts of structures (for example, bridges and bridge-sections, towers, lattice masts, roofs, roofing frameworks, doors and windows and their frames and thresholds for doors, balustrades, pillars and columns); aluminium plates, rods, profiles, tubes and the like, prepared for use in structures. 8. The Commissioner held that the rate of tax applicable to the product is 12.5%, as it is covered by residual Schedule Entry E-1 under the MVAT Act. Further the Commissioner also rejected the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading 7610. While the Appellants have argued that the appropriate classification of ACP is under Heading 7606, the Tribunal has accepted the arguments of the Revenue holding the ACP to be under Heading 7610. Various arguments have been advanced in support of the rival contentions. Learned Counsel have also relied upon the Harmonized Commodity Description and Coding System published by the World Customs Organization contained in the Harmonized System Compendium of 30 years which comprises of the following : (i) General Rules for the interpretation of the Harmonized System; (ii) Section and Chapter Notes, including Subheading Notes; (iii) A list of headings arranged in systematic order and, where appropriate, subdivided into subheadings. (iv) Explanatory Notes to the HS published separately by the World Customs Organization (v) The Compendium of Classification Opinions The said material inter alia elaborately discusses Headings 7606, 7610 and how the various heads are to be read and / or construed with respect to the subject products. 14. Learned Counsel have also drawn our attention to the technical manual in respect of the product to advance arguments in support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma facie, such panels under impart are processed and prepared material meant for use in structures and not mere aluminum plates, sheets or strip. Though normally use of a material by itself is not a determinant for classifying a product, CTH 7610 particularly refers to materials "processed for use in structure". Hence, the impugned goods which are prepared and used for cladding in structures, prima facie appear to be classified under CTH 7610. Further, we find that similar goods have been classified under Heading 7610 in the case of Ram Enterprises v. Commissioner of Customs, Mumbai-2011 (267) E.L.T. 546, though in that case the competing entries considered were CTH 7610 and CTH 3920, out of which CTH 7610 was preferred by the Tribunal. 34. Further we find that even under CET Heading 7606 in the case of Rana Enterprises (cited supra), these observations of CESTAT South Zonal Bench, Chennai are also supporting the views taken by us that item of the appellant falls within the purview of CET Heading 7610. Here at this juncture, we mush make reference to the argument of Mr. Thakar, that the item in question cannot be used as part of the structure. According to him it is used for givi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the applicant is not a building contractor, it is not in the business of construction and erection of buildings. The activity of affixing glass and erecting glass walls with aluminum framework requires an altogether different expertise, and is ordinarily subcontracted by the building contractor. The contention that some of the walls in the building are not required to be constructed by laying bricks and they are substituted by affixing the glass would not carry the case of the applicant further. We are also unable to accept the contention that the work of the applicant would be covered under the term "incidental or ancillary activity to the construction of the building" as that would have to have a direct nexus to the construction of the building itself. Therefore, the alternative argument that the contract would get covered by paragraph B of the said notification which includes incidental or ancillary contract to the contract of construction also cannot be accepted. What meaning is to be attached to the word "building" as mentioned in the notification would have to be determined considering the facts and circumstances of each case. In our view, the reliance on the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product s from being combined or laminated with a layer of plastics. Since the product consisted of clad plated or coated material sheet the committee agreed that they corresponded to the texts of heading 76.08 and should be classified in that heading (subheading 7600. 11 to 7608.92) thus precluding the possibility of classification in Heading 76.13 which was only a residual heading 42.100G/11 + 41.800 F/1341.304 41.348 HSC/ 20 YES 39. In our considered opinion, the opinion given by the Harmonized System Committee, Brussels is required to be followed as it is, provided the description of the item is exactly same. Mr. Thakar placed his reliance on the judgment delivered by Delhi high court in the case of Manisha Pharma Plasto Pvt. Ltd. V/s. Union of India reported in 1999 (112) E.I.T.22 (Del.) decided on 20/05/1999. It is clearly observed by Hon'ble Delhi High Court that the Harmonized Systems Committee is the high-powered body to ascertain International practice of classification of a particular product referred to it and recommends to the member nations the most appropriate classification of the product under HSN. We also find force in the submission made by the petitioner t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resistance. The Bottom Aluminum Sheet comes with anti-corrosive primer or (6-8 micron) backside paint (White wash or Light Grey Color. It is also mentioned on page no. 4 that Aluminum Panel sheet is sandwich with top and bottom layers of aluminum sheets, nontoxic polythene cores materials. Both surface of coil coated with special baking varnish. Flow chart of the product Testing is at Page no.7 which indicates that coating is the integral part of product. Page nos. 8 & 10 of the manual provides information in respect of PVDF coating and page no.11 describes the protective film. Furthermore it was brought to our notice that item of the appellant's are cut to size. 42. We have considered this submission. In our view, these facts go to show that item which is described in Entry no. 327 by Harmonized System Committee is different than that of the item of the present appellants. For the reasons already mentioned in this judgment, we think that we need not refer to the opinions of lawyers produced by the appellant on record. We have demonstrated how the Item Entry No. 327 by Harmonized Systems Committee is different from the item of the appellant. 43. Mr. Thakar, during the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of 2013 decided on 24th November, 2015. In our considered opinion, this argument cannot be accepted for the following reasons.:- 47. There are two entries before us for consideration under CET Heading 7606 and 7610. If the product appears to fall within the description of two different entries within two Heading, then Rule 3(c) comes into picture. It reads that when goods cannot be classified by reference to (a) or (b), then the same shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. If this rule is considered, in our considered opinion, the product would fall within CET Heading 7610 and not 7606. 48. For these reasons, we do not find any merit in the contentions of the Appellant that the judgments of Samruddhi Industries Ltd. and M/s. Sun Systems (cited supra) are relevant and applicable in the present case. 49. The Appellant has placed reliance upon the judgment in the case of State of Maharashtra vs. Bradma of India Ltd. reported in 140 STC 17 decided on 16th February 2005, wherein it was held that specific entry overrides general entry and specific entry always prevails. After applying the above said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in the Harmonized System Committee of World Customs Organization, Brussels. It is also demonstrated that appropriate description is given in CET Heading 7610 and that entry is not a residuary entry. In our view, therefore, reliance placed by Shri. C.B.Thakar on the case of Bharat Forge & Press Industries (P) Ltd. (supra) is misplaced. 51. The Appellant also placed reliance on the judgment of Hon'ble Bombay High Court in the case of Additional Commissioner of Sales Tax, VAT-III, Mumbai V/s. Bunge India Pvt. Ltd. reported in (2011) 39 VST 213 (Bom.) decided on 4th March, 2011. Reliance on this judgment is misplaced since there is no question of interpretation of entries in the CET Act. 52. The number of judgments were cited by both the sides. We have gone through it. They are not dealing with the issues arising before us for consideration. We have dealt with the relevant judgments. We have referred them and we have expressed our opinion about their relevance and probative value. 53. Lastly Mr. Thakar contended before us that initially the Appellant was assessed and the product of the Appellant was held falling within purview of Central Excise Tariff Heading 7606 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The sub-section 2 of Sec.56 makes it abundantly clear that discretion is vested with the Commissioner either to grant prospective effect or to refuse to grant such prospective effect depending upon the facts and circumstances of the case. As far as the case at hand is concerned, the contention of the Appellant that he was misguided by the order dt.22 September, 2010 in the case of Kevin Impex Pvt. Ltd. appears to be incorrect, because the judgment in the case of Rana Enteprises (cited supra) was delivered on 8th February, 2011. It is settled position of the law that ignorance of law has no excuse, particularly in the field of taxation. It also appears that Reference is made to the Commissioner under Sec.56(1) on 10/12/2012 i.e. almost after two years. In such circumstances, we do not find force in the contention of the Appellant that the Appellant is entitled to claim protection till date of determination order. Further, it would be profitable to see the observations of the Hon'ble Bombay High Court in the case of Lalbaugcha Raja Sarwajanic Ganeshotsav Mandal (MVAT Tax Appeal No.10 of 2015), wherein prospective effect was claimed. The Court observed as under : "10. On plain r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to grant relief holding that there is no ambiguity in the provisions and there is no scope, for any doubt arising out of the provisions and relevant for the purpose of the determination. The reasons that are assigned by the Commissioner for refusing to give prospective effect to his determination order, have not been found to be suffering from any error of law apparent on the face of the record or perversity warranting interference in the appellate jurisdiction of the Tribunal." In view of the above observations of the Hon'ble Bombay High Court, we do not find it necessary to discuss in detail the decision relied by the Appellant of this Tribunal in respect of granting prospective effect. Suffice it to say that these decisions are based on the facts and circumstance of those individual cases and they cannot be said to have laid any binding precedent. Whether to grant prospective effect or not is a discretion vested in the Commissioner of Sales Tax and the same is required to be used judiciously. In our considered opinion, there is no reason to interfere with this discretionary power of the Commissioner of Sales Tax unless there are pressing reasons such as legal ambiguity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection Note (c) to Section XV reads as follows : "In general, identifiable parts of articles are classified as such parts in their appropriate headings in the Nomenclature." 19. The Explanatory Note under Heading 7308 inter alia reads as under : "This heading covers complete or incomplete metal structures, as well as parts of structures. For the purpose of this heading, these structures are characterised by the fact that once they are put in position, they generally remain in that position. They are usually made up from bars, rods, tubes, angles, shapes, sections, sheeets, plates, wide flats including so-called universal plates, hoop, strip, forgings or castings, by riveting, bolting, welding, etc. Parts of structures include clamps and other devices specially designed for assembling metal structural elements of round cross-section (tubular or other). These devices usually have protuberances with tapped holes in which screws are inserted, at the time of assembly, to fix the clamps to the tubing. The heading also covers parts such as flat-rolled products, "wide flats" including so-called universal plates, strip, rods, angles, shapes, sections and tubes, which have been prep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... structures" even then plain unworked ACP sheets are not covered by Heading 7610. The HSN Explanatory Notes to Heading 7308 point to the fact that "prepared for use in structures" means drilling, bending or notching the article of aluminium. Admittedly, the Appellant's do not carry out any such activities on the impugned goods. For ease of reference, the HSN Explanatory Note is extracted below : "The heading also covers parts such as flat-rolled products ... ... which have been prepared (e.g.. drilled, bent or notched) for use in structures." (emphasis supplied) 24. Referring to the case of D&M Building Products Pvt. Ltd. vs. Commissioner of Customs, Bangalore CESTAT Bangalore decision dated 28 June 2019 relied on by the Revenue, it is submitted that the product i.e. "cut to size" aluminium profiles (not Sheets) were imported as per the specifications requested for by the customer. All that was to be done at the site was to assemble it by drilling and punching. The Tribunal held that cut-to-size aluminium profiles imported by the assessee met the exact specific requirement i.e. "cut-to-size" and hence, was "prepared for use" in structure. 25. That, further, in the case of D&M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant are not parts of a building, since a building is complete even without ACP cladding. However, a building is not complete without doors and windows and therefore, these products are "parts of structure". Similar are the examples given under 7610 viz. bridges and bridge sections, roofs, roofing frameworks etc. ACP cladding only gives an aesthetic look to the building and therefore, is not a "part of a structure". 33. It has also been submitted that ACP does not have load bearing capacity and is typically used as decorative material. 34. For the aforementioned reasons, it is submitted that the impugned goods cannot be classified under Heading 7610, either as "parts of structures" or "aluminium plates prepared for use in structures". 35. Ms. Jejeebhoy, learned Special Counsel for the Revenue supports the MSTT judgment and submits that the question of classification is a question of law and requires consideration of this Court. 36. Learned Special Counsel relies upon the Technical Manual described as Eurobond Manual to submit that none of the Appellants raised any objection to the said Manual before the Tribunal. She further submits that as can be seen from the Manual, which sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this case. f. Under the Rules for interpretation of the CET Act ("the CET Rules"), Heading 7610 is to be preferred to Heading 7606. 39. With respect to ACP being part of a structure, learned Special Counsel refers to the common parlance theory as elucidated by the Hon'ble Apex Court in Alpine Industries vs. Collector of Central Excise (2003) 3 SCC 111 and submits that the terms and expressions used in tariff have to be understood by their popular meaning i.e. the meaning attached to them by those using the product. She submits that where an entry links a taxable object with the general or ordinary use, it is necessary for the authority to consider the general use of the product and the deciding factor is the predominant or ordinary purpose or use and it would not be enough to show that the article can be put to other uses also. It is its general or predominant user which determined the category in which an article would fall. Learned Special Counsel refers to the decision of the Hon'ble Apex Court in the case of M/s. Annapurna Carbon Industries Co. vs. State of Andhra Pradesh (1976) 2 SCC 273. 40. Learned Special Counsel would submit that considering the predominant use of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant's product is cut to the desired size and coated. 44. It is submitted that apart from the fact that the ACP is prepared for use in structures by application of the PVDF coating, it is also cut to the requisite size by the Appellants which is a further act of preparing it for use in the structure. Learned Special counsel would submit that the Appellants' have contended that the cutting is only to make the ACP a standard size. She submits that this contention appears to be an afterthought and is contrary to their assertion in the Appellants' own Process Description that the ACP "is trimmed and cut to the desired sizes". She submits that the Technical Manual and website of 4Mann Industries Pvt. Ltd. bear out that the ACP is trimmed / cut to the desired size before sale. 45. With respect to the Appellants reliance upon the Explanatory Note to HS Heading 7308 to contend that the word "prepared" means "drilled, bent or notched" learned special Counsel would submit that these are merely examples of means of preparation. This is not an exhaustive definition of the word prepared nor does the listing of such examples preclude other means of preparation from bringing a product within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for use in a structure. Learned Senior Counsel refer to paragraph 41 quoted above and submit that there is no independent finding nor any application of mind to the factual aspects except dealing with judgments. It is also submitted that the technical manual referred to in paragraph 41 is not a manual published by the industry but by one of the Appellants viz. M/s. Eurobond Industries Private Limited. It is further submitted that on the basis of the said manual, the Tribunal has erroneously come to a conclusion that the said aluminium sheet falls under Heading 7610 and that too on the basis that it was "cut to size". Learned Senior Counsel submit that there is no reasoning given to distinguish the opinions of the Worlds Customs Organisation as cited on behalf of the Appellants, except paragraph 41. 49. We observe from the impugned decision that although many of the arguments with respect to the two Headings 7606 and 7610 have been recorded by the Tribunal and undoubtedly, classification of a product would be a question of law, the factual findings as to whether the subject ACP was prepared for use in structure or part of structure which was a critical finding, which the MSTT app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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