-
What is the classification and rate of tax applicable to
the product ‘Silpaulin’ which is a multi utility plastic sheet?
Transaction Date: 10-5-2005
Held: E-1, rate of tax 12.5%
Facts in Issue
The applicant deals in various varieties of plastic goods
manufactured by their principal, one such item being, ‘Silpaulin’. Silpaulin
is a multi utility sheet and is used for various purposes, such as
agriculturists using it for covering their crops, industries using it for
packing of goods and as pond lining in irrigation.
The product has high tensile strength and high elongation
which makes it very flexible. It can cover any odd shaped object. It has no
leakage, no seepage. After use, the product can be easily folded.
Submissions of the applicant
The applicant submitted that the product was covered by
entry at Sr.No.164 of the notification issued under Schedule entry C-54 of
MVAT Act, 2002, wherein articles for conveyance or packing of goods are
described.
‘Silpaulin’ was cleared under entry 39269099 of Excise
tariff. The product was used as packing material as the same was waterproof.
Another entry under which ‘Silpaulin’ could be classified was entry C-1 which
pertained to agricultural implements since it was useful in agricultural
operations
such as ‘Green Houses and agricultural tunnels’.
The applicant also submitted that in case the issue was
decided otherwise, prospective effect may be granted.
Views of the Department
The Commissioner observed that the applicant had made two
claims as regards the schedule entry being applicable to the impugned product;
i.e., Schedule Entries C-1 and C-54.
The entry C-1 pertained to agricultural machinery or
agricultural implement. The product could not be said to be agricultural
machinery or implement since it could not be used to cultivate the soil or in
rearing of animal. Hence, the product was not covered by Schedule Entry C-1.
The Schedule Entry C-54 pertained to industrial inputs and
packing materials which have been notified by the State Government.
The applicant’s product was covered by the Excise heading
39269099. The description under Excise heading 3926 which was for ‘other
articles of plastics and articles of material of heading 3901 to 3914 was not
similar to the description against the heading notified for the purpose of
schedule entry.
The description against the notification under schedule
entry was of ‘Plastic fabrics of the type used for making plastic woven sacks
and plastic woven sacks’.
The Commissioner after going through the definitions of
terms ‘woven fabric‘ and ‘weaving’ came to the conclusion that the product was
an extruded plastic film comprising several layers of plastic film placed
criss cross over one another and bonded by a cold roll technique. There was no
process of weaving involved. The product could not be said to be a fabric from
which a plastic woven sack was capable of being made. Thus, the product could
not be covered by heading 39.26 notified for the purpose of notification dated
1-9-2005.
The product would be covered by Schedule entry E-1,
attracting rate of tax at 12.5%.
As regards prospective effect, the Commissioner held that
since there was no misunderstanding as regards the coverage of the product
under the notification, the prayer for prospective effect could not be
considered favourably.
Held
The Commissioner held the product as covered by Schedule
entry E-1 with rate of tax at 12.5% and rejected the request for prospective
effect.
[M/s. Adhunik Plastics & Industries (P) Ltd.
DDQ-11-2005/Adm-5/22/B-22 dated 30-5-2007]
-
Whether the products of the applicant in the category of
‘Ready to cook’ and ‘Ready to eat’ would be covered by the Schedule entry C-91
or C-107(11) (f) of the MVAT Act, 2002? If not, then under which schedule
entry would it be covered and the tax rate applicable thereon?
Transaction Date: 12-9-2005
Held: C-107(11)(f), 4% and E-1, 12.5%.
Facts in issue
The applicant is a manufacturer of a variety of spices. The
applicant is under the impression that, sales of his products are liable to
tax at the rate of 4% under the MVAT Act, 2002. The products are sold under
the following heads:
These include Tandoori Chicken mix, Biryani mix, Veg. Tawa
mix, Paneer Makhanwala mix etc. The ultimate consumer uses the product in
cooking food by adding this mixture of spices to vegetables or to
non-vegetarian items like fish, mutton or chicken.
These include Chana Masala, Veg. Pulao, Pavbhaji, Aloo
Mutter etc. Here, the consumer has to put the contents in the microwave oven
or boiling water after which the product is ready for consumption.
The manufacturing process of the above products involve
collection of spices in specific proportion, mixing it with or without
grinding machine, adding oil for keeping the product in paste form, packing
the product in air tight plastic bags and in marketable packing pouches.
Submissions of the applicant
The applicant contended that all his products; i.e., ‘Ready
to cook’ as well a ‘Ready to eat’ were nothing but spices in the form of
paste. This was also supported by the Certificate granted by the Spices Board
to the applicant as an authorised exporter of spices. Hence his products fell
under entry C-91.
As regards the products in the category of ‘Ready to eat’,
the applicant contended that these were processed vegetables sold in sealed
containers and, therefore, got covered by Schedule entry C-107(11)(f) of the
MVAT Act, 2002 w.e.f. 1-2-2006.
The applicant further submitted that with the insertion of
the Schedule entry C-107(11)(f) w.e.f. 1-2-2006, ‘Ready to cook’ food products
became liable to tax at the rate of 4% w.e.f.
1-2-2006.
As for ‘Ready to eat’ products, the applicant submitted
that these also got covered by Entry C-107(11)(f) since these were semi
processed foodstuff requiring heating before eating and were not ‘Ready to
serve’ products. ‘Ready to serve’ products are one which are available for
serving to people in restaurants or eating houses.
The Commissioner observed that the applicant had contended
that his products in ‘Ready to cook’ category were covered by Schedule entry
C-107 (11)(f) w.e.f. 1-2-2006 and earlier to 1-2-2006 were covered by Entry
C-91 for spices.
Views of the Department
The Commissioner referred to the definition of the term
’Spices’ in the case of Kerala High Court judgment in the case of Dy. Commr.
of Sales Tax vs. Rani Food Products (68 STC 446) where the dictionary
meaning defined spices as "any of the aromatic or pungent vegetable substances
used to flavour food". It was the original product which is intended as spices
and not any manufactured product.
The products in the category ‘Ready to cook’ contained
amongst spices other ingredients such as oil, onion, coconut, skimmed milk
powder etc. ‘Spices’ as understood by Schedule entry C-91 would definitely not
mean spices along with ingredients as coconut, onion, milk powder, etc. Thus
for the period from 1-4-2005 to 31-1-2006, the products would be covered by
residuary entry E-1 attracting tax at 12.5%.
In case of ‘Ready to eat’ products, for the period 1-4-2005
to 31-1-2006 the same argument as in case of ‘Ready to cook’ products hold
good and, therefore, these got covered by Schedule entry E-1 with rate of tax
at 12.5%.
From 1-2-2006, Schedule entry C-107(11) (f) had been
inserted which included foodstuffs and food provisions including raw, semi
cooked or semi processed foods, ready to mix and ready to cook preparations,
food stuffs or food provisions which went into the making of food proper.
The products, ‘Ready to eat’ were ready finished products
which could be consumed directly without further process of cooking. The
process of heating was optional and the cooked food could be consumed in cold
state instead of hot.
Thus, the applicant’s products under the category of ‘Ready
to eat’ would be covered by the scope of the words ‘Ready to serve’ used in
the context of exception to Schedule entry C-107(11)(f). The products for the
period from 1-2-2006 onwards would be covered by the Schedule entry E-1,
attracting rate of tax at 12.5%.
The Commissioner held as follows:
|
Particulars |
Period |
Schedule Entry |
Rate of tax |
|
Ready to Cook |
1-4-2005 to 31-1-2006 |
E-1 |
12.50% |
|
|
1-2-2006 onwards |
C-107(11)(f) |
4% |
|
Ready to Eat |
1-4-2005 to 31-1-2006 |
E-1 |
12.50% |
|
|
1-2-2006 onwards |
E-1 |
12.50% |
(M/s. Parampura Food Products. DDQ No.
DDQ-11-2005/Adm-5/76/B-3 dated 31-5-2007)
