Transaction Date: 9-12-2005
Held : Covered by C-54, Rate of Tax is 4%
Facts in Issue
The applicant is a private limited company manufacturing
fibreglass reinforced plastic products. One of its units is manufacturing
“Three Piece Eye Dropper” made of plastic consisting of bottle, nozzle and
cap used as presterilised primary packing for eye formulations.
The raw material required for manufacturing the “Three
Piece Eye Dropper” are mainly LDPE, HDPE, pigment, etc. The raw materials
are mainly imported.
All the three components; i.e., bottles, nozzles & caps are
manufactured and packed independently in equal quantities and dispatched to
customers. After the medicine manufacturing companies fill the medicine in the
bottle, the nozzle is fitted and the bottle is sealed with the cap.
The applicant charges VAT @ 4% on the product being covered
by entry at Sr. No. 164 of Excise heading 3923 of the notification dated
1-4-2005 under Schedule entry C-54 of the MVAT Act, 2002.
Submissions of the applicant
The applicant submitted that the products are exclusively
purchased by the medicine manufacturing units. The product of the applicant is
specially designed to pack the medicine so as to ensure long-term stability of
storage in normal condition and to retain the original ingredients. There are
no sales at all directly to consumers/traders or non-manufacturing units.
The applicant contended that his product was exclusively
used for primary packing of medicines manufactured by pharmaceutical
manufacturing companies used for conveyance in the distribution channels to
the consumers. Thus, his product was covered by Sr. No. 164 of the
notification dated 1-4-2005 and Sr. No. 203 of the notification dated 1-9-2005
issued under Schedule entry C-54.
Views of the department:
The Commissioner observed that Schedule entry C-54
pertained to industrial inputs and packing materials as may be notified from
time to time.
Thus, it was essential that the product was not only an
industrial input and packing material but the same was also notified for the
purposes of Schedule entry C-54.
To qualify as an “industrial packing material” the
product had to have an application in industries as a packing material.
The Commissioner observed that the applicant submitted that
his product was mainly used in pharmaceutical industries. The product was used
for packing of medicines/formulations to be administered in drops. Thus the
impugned product qualified as an industrial packing material.
To find out if the product was notified for the purposes of
Schedule entry C-54 , it could be seen that the heading 3923.50.90 was
notified for the purposes of Schedule entry C-54.
The description against the heading 3923 in the
notification covered articles for conveyance or packing of goods of plastics,
stoppers, lids, caps and other closures excluding insulated wares and carry
bags.
Since the description against the main heading under the
Excise Tariff was reproduced in the notification, the sub-classification was
also covered. Thus the product was covered by Schedule entry C-54 of MVAT Act,
2002.
Held :
The Commissioner held that the product “Three Piece Eye
Dropper” was covered by notification issued for the purpose of Schedule
entry C-54 of MVAT Act, 2002, attracting tax at the rate of 4%.
[M/s Thermodors Pvt. Ltd. DDQ No.
DDQ-11/2005/Admn-2/106/B-1 dated 22-8-2007]
-
V-Secura ARIES (Electronic Intelligent Security system
with wireless Modem)
-
Two way communication electronic device.
Transaction date: 20-5-2005, 30-3-2006
Held: Covered by C-54, rate of tax 4%
Facts in issue:
There are two applicants. One of the applicants is a
company engaged in the design, manufacture, supply and installation of various
types of high-tech electronic and IT equipments and systems. They have
recently developed intelligent vehicle tracking and security systems by brand
names “V-Secura” and “Logis”. The product is a microprocessor
based equipment connected to GSM/GPRS network to provide functions like
locating the vehicle, monitor speed, fuel level and allow remote locking and
unlocking of vehicles.
The other applicant is engaged in the business of sale of
“Two way communication electronic device”, known as Micro VBB; i.e., Micro
Vehicle Blast Box.
The device is used for vehicle safety and it works on two
way system of telecommunication. On reception of the command from the
registered user, VBB acts in locking /unlocking of the vehicle door, engine
immobilization, etc.
Submissions of the applicant:
The first applicant submitted that his product fell under
Sr. No. 9 (Central Excise Tariff heading 85.17) of the notification dated
1-4-2005 issued for the purpose of Schedule entry C-56 of the MVAT Act, 2002.
The entry C-56 covers Information Technology products and
since the impugned product functioned on microcomputers and electronic
components for sending commands and receiving information, it was covered by
Schedule entry C-56.
The applicant further submitted that his product was an
electronic intelligent security system with wireless modem. The modem got
covered by 85.17 notified for the purpose of Schedule entry C-56.
Alternatively, the product could be considered as telephone
sets which include mobile phones covered under heading 85.17.
The other applicant informed that his product was cleared
under Excise Tariff sub-heading 85252019. This heading was covered by the
notification dated 17-10-2005 issued for the purposes of Schedule entry C-56
and the product attracted tax at 4%.
Views of the department:
The Commissioner observed that the description against the
heading 8525 for the purpose of notification dated
1-4-2005 & 17-10-2005 covered transmission apparatus incorporating reception
apparatus.
Further, the description under Central Excise heading 8525
covered transmission apparatus for radio telephony, radio telegraphy, radio
broadcasting or television, whether or not incorporating reception apparatus.
The heading 852520 was for transmission apparatus incorporating reception
apparatus which is described as “two way radio communication equipment”.
The description as per notification dated 1-4-2005 was not
similar to description under Central Excise. However it covered transmission
apparatus described as ‘two way radio communication equipment’
The present products used for two way radio communication,
got covered by the heading 8525 of the notification dated 1-4-2005 issued for
the purposes of Schedule entry C-56 of MVAT Act, 2002.
In case of notification dated 17-10-2005, the description
in respect of transmission apparatus incorporating reception apparatus had an
inclusion clause. The word ‘including’ was used to illustrate and was
not for expansion purposes. Heading 8525 also included transmission apparatus
for radio telephony, radio telegraphy and radio broadcasting.
Thus transmission and reception of signals was a necessary
condition to include a product under the heading. As the impugned product
fulfilled the condition, it was covered against the heading 8525.20 of the
notification dated 17-10-2005 for the purposes of Schedule entry C-56 of the
MVAT Act, 2002.
Held:
The Commissioner held both the products, ‘V-Secura ARIES’
(Electronic Intelligent Security system with wireless Modem) and “Two way
communication electronic device” as covered by entry C-56, attracting tax at
the rate of 4%
[M/s Hakotronics Pvt. Ltd., M/s Micro Alfa Technologies
Pvt. Ltd. DDQ No. DDQ-11/2005/adm-5/48/-B-2 dated 24-8-2007]
