Transaction date: 24-4-2002
Held – Covered by C-II-46
Rate of tax 4% + TO + SC
Facts in issue
The applicant is a trader of synthetic thread. He has been
assessed to tax under Schedule entry C-I-16 of the Schedule appended to BST
Act, 1959, and was exempted from the payment of whole of surcharge and
turnover tax vide notification entry A-7.
The Enforcement Branch, however, pointed out that the
product was covered under Schedule Entry C-II-46 and was exigible to levy of
turnover tax and surcharge. The applicant has therefore, applied for
determination of the rate of tax for the product.
Submissions of the applicant
The applicant submitted that there were four schedule
entries prevalent for ‘sewing thread’ which engendered confusion regarding
correct classification of the product. In none of the entries, specific
mention of ‘synthetic thread’ was made.
Chapter 54 of the Central Excise Tariff referred to the
heading of ‘ man-made fibres’. ‘Synthetic Thread’ was covered by the term
‘man-made fibres’ e.g. staple fibre produced by manufacturing process.
Sewing thread of man-made filaments was covered by heading
54.01 and thus ‘synthetic thread’ was covered by the expression ‘staple fibre
thread’ appearing in Schedule entry C-I-16.
Further Schedule entry C-II-46 which covered the artificial
silk thread, staple fibre thread and cotton thread was a general entry and
excluded the special entries C-I-12 and C-I-16.
The applicant also made an alternative prayer for grant of
prospective effect since earlier assessments were completed under Schedule
Entries C-I-12 and C-I-16 and the application made on 18-12-2002 was being
decided after four years.
Views of the Department
The Commissioner examined the definition of fibre in the
Webster’s dictionary to understand the meaning of ‘staple fibre thread’. As
per the dictionary meaning the fibre can be natural or man-made. Man-made
fibres can be synthetic or artificial. A fibre is then twisted to form a yarn
and the blending and twisting together of more than two types of yarn produces
thread.
The HSN Code also defines ‘sewing thread’.
There are different types of threads depending upon the
types of yarns which go into the making of it.
A staple fibre is a fibre cut into a specific length. Thus
the term ‘staple fibre’ refers to specific length of a fibre, be it natural or
synthetic. Thus ‘staple fibre thread’ is a thread made from a ‘staple fibre’
of any product.
The applicant has urged the inclusion of his product under
the Schedule entry C-I-16 as the product is made of polyester of staple fibre
length and that the schedule entry is a specific entry compared to Schedule
entry C-II-46 which is a general entry.
However, the Commissioner felt that if the legislative
intention was considered when the Schedule entry
C-II-46 was introduced, it was mainly to stem the confusion arising out of
various entries, that the legislature carved out the schedule entry for sewing
thread under the entry C-II-46. Thus, this Schedule entry would include all
types of sewing thread, irrespective of the length and constitution of the
fibre. This entry, thus, subsumes Schedule entries C-I-12, C-I-14 and C-I-16.
Since a specific entry for ‘Sewing thread’ was carved out,
the other entries which included ‘sewing thread’ would become redundant.
Sewing threads made from all types of fibre, whether cut
into specific length or of continuous length would fall under Schedule entry
C-II-46.
Considering the various judgments on specific entry vs.
general entry, the Commissioner observed that the term ‘staple fibre thread’
is a term of wider import than the term ‘sewing thread’ since the former would
include all threads – sewing or otherwise while the latter would include only
‘sewing thread’.
Even the use based theory would not influence the
classification of the product as the thread is known as sewing thread.
As for the plea for grant of prospective effect the
Commissioner observed that the applicant was aware that the classification of
the product was not clear. Also, since a separate entry existed for sewing
thread, there was no ambiguity in the taxability of the product. Therefore,
the Commissioner rejected this plea.
Held
The Commissioner held the product ‘synthetic thread’ as
covered by Schedule entry C-II-46 exigible to tax at 4% and attracting levy of
turnover tax and surcharge.
[M/s. Kesha Sales Pvt. Ltd. DDQ No DDQ-11-2002/Adm-5/77/B-2
dated 22-12-2006]
Transaction date: 21-2-2005
Held – Yes, the product is exempted.
Facts in issue
The applicant is a small manufacturing unit of baked
biscuit cones. The applicant himself does not manufacture the cones but gets
the baking done by job work.
All the raw materials are supplied by the applicant. The
battered mix is then baked in cone shaped cylinders and delivered in open
trays to the applicant for further process of cooling, sorting and packing.
Submissions of the applicant
The applicant contended that his product was classified
under Schedule entry C-II-9 of the BST Act, 1959 and was eligible for
exemption under a notification issued for the purpose of the said entry.
The applicant also informed that his product was classified
under Central Excise Tariff heading 1905.11. His turnover was below the
exempted limit of Rs. 60 lakhs and his investment in plant and machinery was
up to
Rs. 25,000/-.
The applicant argued that ice cream cones were covered by
the notification entry A-10 as a bakery product. The term ‘bakery products’
including cakes, biscuits and pastries under the BST Act, was an inclusive
definition. The product ‘baked biscuit’ cones satisfied the condition of
bakery products.
Views of the Department
The Commissioner observed that the product ‘baked biscuit
cone’ was an edible cone treated as part and parcel of ice-cream and got
consumed along with it and not independently. The ice-cream scoops were poured
in the cones and the same were eaten along with the
ice-cream.
The issue of classification of ice cream cones as biscuits
and thereby a bakery product has been decided by the Allahabad High Court and
upheld by Supreme Court.
Case Laws relied on
-
4 STL (All) 16 – Commissioner of Sales Tax vs. Gulati
& Co.
Ice–cream cones were held as biscuits for the purpose of
levy of sales tax
-
1997-(095) – ELT – 0590 – TRIB – Commissioner of
Central Excise, Hyderabad vs. Magic Products.
The term waffles and wafers as set out in the HSN cover
ice–cream cones.
-
1989 (42) ELT 409 (Tribunal) – Ashoka Foods Ltd. vs.
Collector of Customs.
Resort was made to Webster’s dictionary which defined
‘ice–cream cone’ as a crisp conical wafer usually five inches long holding
‘ice cream’. Therefore, ice cream cone was held as a bakery product.
The Commissioner thus observed that the sale of bakery
products for the first 15 lakh rupees of the total turnover of sales was
exempt from tax since the turnover of sales did not exceed the prescribed
limit in the relevant years.
Held
The Commissioner held the product as exempt up to first 15
lakhs of rupees of turnover by a notification issued under section 41 of BST
Act, 1959 for the purpose of Schedule entry C-II-9.
[M/s Sanjay Food Products. DDQ No. DDQ-11-2006-Adm-5/20/B-I
dated 22-12-2006]
