16. What is the rate of tax on “Nutralite Table Margarine” – Whether the product of the applicant in the Category of Vanaspati (Hydrogenated Vegetable Oil), Vegetable Oil or Raw, Semi-cooked or Semi- processed food, would be Covered by the Schedule entry C-100, C-102 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 : 6-6-2006

Held : E-1, rate of tax @ 12.5%.

Facts in issue

Applicant is engaged in business of pharmaceutical formulations and reselling of pharmaceutical products, which can also be, used by the public in general, for their other than medical usage.

Relying on DDQ-1175/13/B-7 dt. 9-7-1975 in case of M/s. Berar Oil Industries, applicant have sold ‘Table Margarine’ under Trade name “Nutralite Table Margarine” charging VAT @ 4% under entry 100 in Schedule ‘C’ of MVAT Act 2002 relating to “Vanaspati (Hydrogenated Vegetable Oil)”.

Submissions of the applicant

The applicant submitted that the impugned product “Nutralite” is “Table Margarine” means an emulsion of edible oil and fats with water.

The main ingredient of “Nutralite” is Refined Vegetable Oil. Margarine can be produced either from Vegetable Oil or from Hydrogenated Vegetable Oil.

The applicant contended that product submitted for determination is “Nutralite” which is Table Margarine and is covered by Schedule entry C-100 under the heading “Vanaspati (Hydrogenated Vegetable Oil).” He cited certain decisions of Gujarat Tribunal as well as the DDQ in case of M/s. Berar Oil Industries.

He also argued that in case the product is not found fit for coverage under C-100, it be held as a “Vegetable Oil” under Schedule entry C–102. He further stated that the other probable entry to “Nutralite” is Schedule entry C-107(11)(f) as the expression foodstuff and food provisions covers it.

He further informed that “Nutralite” is not produced through the process of hydrogenation and this is done in order to keep it cholesterol- free.

Views of the department

The Commissioner examined the product sample, submitted by the applicant, and its packing cover, literature and also studied in detail the manufacturing process, its ingredients and use of the product. He considered the classification of the product with respect to schedule entries put forth by the applicant.

1. C-100 Vanaspati (Hydrogenated Vegetable Oil) he observed that it is not Hydrogenated Vegetable Oil

2. C-102, – Vanaspati Oil and observed that Nutralite may be made of Vegetable Oil and may share some uses with the Vegetable Oil but it is not a “Vegetable Oil” as it is not understood in common parlance as a Vegetable Oil.

3. The Schedule entry C-107(11)(f). The Commissioner observed that a plain reading of Schedule entry C-107(11)(f) shows that the category of ready–to-serve food is excluded from the main entry and the category of food served for consumption is excluded vide the explanation.

As regards judgments and DDQ’s quoted by the applicant, the Commissioner observed that, they are passed in different context or are not all relevant.

Held

The Commissioner held that the ‘Table Margarine’ supplied under the mark “Nutralite” gets covered by Schedule entry E-1 attracting tax at the rate of 4%.’

[M/s. Cadila Healthcare Ltd. DDQ No.7 DDQ/11/2006/Adm-2/40/B-1 dt. 22-10-2001.]