HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Reserved Trade Tax Revision No. 1417 of 2003 M/s Mafatlal Industries Limited, 2, Manoj Compound,4-A Dwarikapuri, Delhi Gate, Ghaziabad........................................................Applicant. Vs. The Commissioner of Trade Tax, U.P., Lucknow..........................Opposite Party. AND Trade Tax Revision No. 1425 of 2003 M/s Mafatlal Industries Limited, 2, Manoj Compound,4-A Dwarikapuri, Delhi Gate, Ghaziabad........................................................Applicant. Vs. The Commissioner of Trade Tax, U.P., Lucknow..........................Opposite Party. Hon'ble Rajes Kumar, J.
These are two revisions against the order of the Tribunal dated 13.10.2003 for the assessment years 2000-01 and 2001-02. The only dispute involved in the present revisions are whether the Mafron Gas is liable to tax under the entry of "All kinds of Chemicals" @ 10% or liable to tax as a refrigeration material at the higher rate of tax.
The brief facts of the case are that the applicant is a Company incorporated under the Indian Companies Act having its registered office at Ahemdabad (Gujarat). The manufacturing unit is also at Surat (Gujarat) and its head office at Bombay. The applicant has a branch office at Ghaziabad there from the applicant sells its products within the State of U.P. The chemical name of Mafron Gas is Fluorochloro hydrocarbon gas. In the market, it is marketed as Mafron Gas. It is mainly used in refrigerator, air-conditioner, etc. for the purpose of refrigeration, namely, to give cooling effect. It is a material used in the refrigeration. The claim of the applicant is that it is a chemical therefore, it is liable to tax as a "chemical" @ 10%. The assessing authority has taxed Mafron Gas as a "refrigeration material" for the period 1.4.2001 to 30.11.2001 @ 15% and for the subsequent period @ 16%.
Being aggrieved by the order of the assessing authority, the applicant filed two appeals before the Joint Commissioner (Appeals), Trade Tax, Ghaziabad. In the appeals, the view of the assessing authority has been upheld. The applicant filed second appeals before the Tribunal wherein also the view of the assessing authority has been confirmed. The Tribunal has held that in common parlance and in commercial sense it is known as refrigeration material. The Tribunal has placed reliance on the decision of Andhra Pradesh High Court in the case of M/s Om Refrigeration and Electricals Vs. State of Andhra Pradesh, reported in 107 S.T.C.-234 wherein Mafron Gas has been held as refrigeration material.
Heard learned counsel for the parties.
Learned counsel for the applicant submitted that Mafron Gas is manufactured out of the chemical reaction. It contains carbon chlorofluoro hydrofluoric acid. Therefore, it is a chemical. Under the Central Excise Tariff Entry 29.03 chlorofluoro hydrocarbon methane or ethane is classified as an organic chemical. The applicant had sold the Mafron Gas not only to the dealers, who were involved in the manufacturing or carrying on the business of refrigerator or air-conditioner for the use in the refrigeration only but it had also sold to the parties carrying on the business of medicines and also used in the propellants in the manufacture of aerosol such as hair sprays, mould release agents, room refreshers, body, blowing agents for plastics as a solvent, etc. Reliance is placed on the decision of the Apex Court in the case of Mauri Yeast India Limited Vs. State of U.P. and another, reported in 2008 U.P.T.C.-729 (paragraphs-41, 43, 44, 47 & 50), in the case of Commissioner of Central Excise, Delhi vs. Carrier Aircon Ltd., reported in (2006) 5 SCC-596 (paragraphs-13 & 14), in the case of Commissioner of Trade Tax Vs. S/s. Akash Chemical Corporation, Kanpur, reported in 2007 U.P.T.C.-1055 and Delhi Tribunal in the case of Commissioner of Sales Tax, Delhi Vs. Mafatlal wherein it has been held as a chemical. He submitted that merely because the commodity is mainly used for a particular purposes is not a relevant consideration to classify the goods. Reliance is placed in the case of Commissioner of Trade Tax Vs. S/s. Akash Chemical Corporation, Kanpur, (Supra).
Learned Standing Counsel submitted that Mafron Gas is mainly used in air-conditioner and in refrigerator. Its functional use is to create a cooling. Even if it is used elsewhere other than in air-conditioner and the refrigerator but the purpose is to give cooling effect. In the case of M/s Om Refrigeration and Electricals Vs. State of Andhra Pradesh (Supra), the Andhra Pradesh High Court has held that it is a refrigeration material. By no stretch of imagination it can be disputed that it is not a refrigeration material. The Tribunal has held that in common parlance the Mafron Gas is known as refrigeration material. The finding of the Tribunal in this regard is finding of fact. The entry of chemical is a general entry. The Mafron Gas may be one of the kinds of chemical but it falls under the specific entry of "refrigeration material" and liable to tax accordingly.
I have considered the rival submissions and have gone through the impugned orders.
It is useful to refer the relevant entries of the notifications:
Notification No. KA. NI-2-100/XI-9 (231)/94-U.P. Act-15-48-Order-2000 Dated : January 15, 2000.
22 (i) Chemicals of all kinds including fuel gases M or I 10%
but excluding natural gas Provided that in
the case of fuel
gases if the sale
is by any of the
undertakings
registered as
dealer in the name
and style of M/s
I.O.C. Ltd., H. P.C.
Ltds, and I.B.P.
Co. Ltd. the tax
shall be levied at
the point of sale by
such dealer to a
person other than
any of the afore-
said dealers.
58 (i) Refrigeration and air conditioning M or I 15%
plants and all kinds of refrigerating
appliances and equipments including
refrigerators, deep freezers, mechanical
water coolers, air conditioners, bottle
coolers, walk in coolers, and components,
parts and accessories thereof and
refrigeration materials including polystyrene
foam.
Notification No. KA.NI-2--306/XI-9 (113)/99-U.P. Act-15-48-Order-(8)- 2000 Dated : January 29, 2001.
20 (i) Refrigeration and air conditioning plants M or I 16%
and all kinds of refrigerating appliances
and equipments including refrigerators,
deep freezers, mechanical water coolers,
air conditioners, bottle coolers, walk in
coolers, and components, parts and
accessories thereof and refrigeration
material including polystyrene foam.
Notification
No. KA.NI.-2-3626/XI-9 (668)/93-U.P. Act-15-48-Order-(68)-2001 Dated : November 29, 2001.
In exercise of the powers under clause (b) of sub-section (1) of Section 3-A of the Uttar Pradesh Trade Tax Act, 1948 (U.P. Act No. 15 of 1948) read with Section 21 of the Uttar Pradesh General Clauses Act, 1904 (U.P. Act No. 1 of 1904) the Governor is pleased to make, with effect from December 1, 2001 the following amendment in Government notification No. KA.NI-2-306/XI-9 (113)/99 U.P. Act-15-48- Order- (8)- 2001, dated January 29, 2001, as amended from time to time :-
AMENDMENT In the list to the aforesaid notification,-
(I)for entry at serial number 20, the following entry shall column wise be substituted, namely :-
Serial number Description of goods Point of tax rate of tax
percentage
1 2 3 4
20 (i)(a) Spare parts of refrigerator M or I 8%
all air conditioner and gas
used in them
20 (i)(b) Refrigeration and air conditioning M or I 16%
plants and all kinds of refrigerating
appliances and equipments including
refrigerators, deep freezers mechanical
water coolers, air conditioners, bottle
coolers, walk in coolers, and
components parts and accessories
thereof and refrigerating materials
including polystyrene foam other than
those mentioned in sub item (a).
ii.Room coolers and air coolers M or I 12%
(2) entries at serial numbers 30 and 54 shall be omitted ;
(3) after entry at serial number 64, the following entries shall column wise be inserted, namely :-
----------------------------------------------------------------------------------------------------------
Serial Description of goods point of tax rate of tax
number percentage
1 2 3 4
65 (i) Ball point pens with maximum M or I 4%
retail price of five rupees of less
and retail price is printed on it.
65(ii) All fountain pens, ball point pens M or I 8%
other than those mentioned in
item (i) and stylograph pens
propelling pencils.
It is undisputed that Mafron Gas is mainly used for the purposes of refrigeration and is a refrigeration material. Its functional use is cooling.
The Hon'ble Andhra Pradesh, High Court in the case of M/s Om Refrigeration and Electricals Vs. State of Andhra Pradesh (Supra) has held that Aegron 11 gas, the chemical name of which is (Trichloromono-fluoromethane) CFCI 3 ; Aegron 12, the chemical name of which is (Dichlorodifluoromethane) CCI 2 F 2 and Aegron 22, the chemical name of which is "Monochlorodifluoromethane" CHCIF 2 as a "refrigeration material". It has been held that these products are gases used in industrial and commercial refrigerating systems employing centrifugal type compressors and for various other purposes in connection with refrigeration, cooling and air-conditioning systems. The refrigeration material includes polystyrene foam. This denotes that the intention of the legislature is that like polystyrene foam which is also used for some other purposes but is nevertheless a refrigeration material within the entry. The Hon'ble Andhra Pradesh High Court has also considered that even if the product is used for some other purposes will nonetheless falls within the "refrigeration material". It is further held that entry of refrigeration material is a specific entry therefore the general entry would get excluded.
The Entries under the Andhra Pradesh General Sales Tax Act and the entries under the U.P. Trade Tax Act are almost similar.
The Tribunal has held that in common parlance and in commercial sense Mafron Gas is know as refrigeration material. No contrary material has been placed and shown to dispute the finding recorded by the Tribunal.
The Mafron Gas may be a chemical. The entry of all kinds of chemicals is a generic entry. This Court in the case of Commissioner of Trade Tax Vs. S/s. Akash Chemical Corporation, Kanpur, (Supra) has held that 'chemical" is a 'generic' word.
It is a settled principle of law that specific entry excludes general entry and be preferred.
In the case of Ramavatar Budhaiprasad vs. The Assistant Sales Tax Officer, Akola and another, reported in 12 STC-286, the Apex Court held that technical sense nor from the botanical point of view is relevant consideration but how the commodity is known or understood in common parlance is the relevant consideration.
In the case of Collector of Customs, Bombay vs. Swastic Woollen (P) Ltd. and others, reported in AIR 1988 SC-2176 the Apex Court has held that where no definition is provided for understanding of goods in opinion of those dealing with goods is the safest guide.
In the case of State of Maharashtra vs. M/s. Bradma of India Ltd., reported in AIR 2005 S.C. 956, the Apex Court held that specific entry would override a general entry, namely, specific entry excludes general entry.
In view of the above, I do not find any error in the order of the Tribunal classifying the Mafron gas as a "refrigeration material".
In the result, both the revisions fail and are dismissed.
Dated: 8th April, 2011 OP