Bombay High Court
Prime Bond Industries vs The Commissioner Of Sales Tax on 15 February, 2023
Bench: Dhiraj Singh Thakur, Abhay Ahuja
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
MAHARASHTRA VALUE ADDED TAX APPEAL NO.56 OF 2017
IN
VAT APPEAL NO.278 OF 2015
Prime Bond Industries )
A Partnership Firm and having address at 3, )
Bharat Comp, Opp. Pravasi Industrial Estate )
Goregaon-Mulund Link Road Signal, )
Goregaon (East), Mumbai - 400 063, )
Maharashtra )... Appellant
V/s.
The Commissioner of Sales Tax )
Maharashtra State, Mumbai having address )
at 8th Floor, Vikrikar Bhavan, Mazgaon, )
Mumbai - 400 010 )...Respondent
WITH
MAHARASHTRA VALUE ADDED TAX APPEAL NO.73 OF 2017
IN
VAT APPEAL NO.278 OF 2015
4Mann Industries Pvt. Ltd. )
A company incorporated under the provisions )
of Companies Act, 1956 and having registered )
address at C-5, Gala & Shethia Enterprises )
Road No.11 (MIDC), Andheri (East), Mumbai )
400 093, Maharashtra )... Appellant
V/s.
Commissioner of Sales Tax )
th
Maharashtra State, Mumbai, 8 Floor, )
Vikrikar Bhavan, Mazgaon, Mumbai - 400 010 )... Respondent
1/40
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
AND
MAHARASHTRA VALUE ADDED TAX APPEAL NO.74 OF 2017
IN
VAT APPEAL NO.278 OF 2015
Kevin Impex Pvt. Ltd. )
A company incorporated under the provisions )
of Companies Act, 1956 and having registered )
address at C-5, Gala & Shethia Enterprises )
Road No.11 (MIDC), Andheri (East), Mumbai )
400 093, Maharashtra )... Appellant
V/s.
Commissioner of Sales Tax )
Maharashtra State, Mumbai, 8th Floor, )
Vikrikar Bhavan, Mazgaon, Mumbai - 400 010 )... Respondent
Mr.V. Sridharan, Senior Advocate alongwith Mr.Sahil Parghi and Mr. S. Sriram
i/by Mr.C.B.Thakur, Advocates for the Appellant in MVXA/56/2017.
Mr.Rafique Dada, Senior Advocate alongwith Mr.Vipinkumar Jain, Mr.Vishal
Agrawal, Mr.Ramnath Prabhu and Mr.Purushartha i/by Mr.Prabhakar K.
Shetty, Advocates for the Appellant in MVXA/73/2017.
Mr.Vikram Nankani, Senior Advocate alongwith Mr.Vipinkumar Jain,
Mr.Vishal Agrawal, Mr.Ramnath Prabhu and Mr.Purushartha Satish i/by Mr.
Prabhakar K. Shetty, Advocates for Appellant in MVXA/74/2017.
Ms.Naira Jejeebhoy, Special Counsel alongwith Mr.Himanshu B. Takke, AGP
for the State-Respondent.
CORAM : DHIRAJ SINGH THAKUR AND
ABHAY AHUJA, JJ.
PRONOUNCED ON : 15th FEBRUARY, 2023.
2/40
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
JUDGMENT :
1. These three appeals arise out of a common judgment dated 27 th
February, 2017 of the Maharashtra Sales Tax Tribunal at Mumbai ("MSTT
Mumbai"/"Tribunal") affirming the Determination of Disputed Question
("DDQ") order of the Commissioner of Sales Tax.
2 The subject matter of the present dispute is classification of
Aluminium Composite Panels ("ACP").
3 Three separate but similar applications for determination of DDQ u/s.
56(1)(e) of MVAT Act, 2002 were filed before Commissioner of Sales Tax
by three dealers namely M/s Eurobond Industries Private Limited, M/s.
Kevin Impex Private Limited and M/s Prime Bond Industries, the appellants
herein for classification of ACP which were sold by them in the State of
Maharashtra.
4 It is the contention of the Appellants that ACP is classifiable under
Entry C-6 of Schedule to the MVAT Act, 2002 read with Sr. No.6 of
Notification No. VAT- 1505/CR-113/Taxation-1 dated 1 st June, 2005 and the
sale was chargeable to 5% VAT and not 12.5 % as claimed by the State
Authorities.
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
5 Schedule Entry C-6 and relevant portion of the said Notification
dated 1st June, 2005 reads as follows-
6. Aluminium, its alloys and products as may be - 4% 1.4.2005 to
notified from time to time by the State 31.3.2010
Government in the Official Gazette - 5% w.e.f.
1.4.2010
NOTIFICATION
Finance Department
Mantralaya,
Mumbai 400 032,
Dated 1st April, 2005.
Maharashtra Value Added Tax Act, 2002.
No. VAT-1505/CR-113/Taxation-1 in exercise of the powers conferred by
entry 6 of Schedule C appended to the Maharashtra Value Added Tax Act,
2002 (Mah. IV of 2005) and in supersession of Government Notification,
Finance Department, No. VAT-1505/CR-113/Taxation-1 dated 1 st April, 2005,
the Government of Maharashtra hereby, specifies the following goods more
particularly described in the Schedule appended hereto, to be the
aluminium, its alloys and products for the purposes of the said entry 6,
namely:-
SCHEDULE
Aluminium, its alloys and products covered from time to time, under the
heading, listed below of the Central Excise Tariff Act, 1985 (5 of 1986):-
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
Sr.No. Central Excise Tariff Name of the Commodity
Heading
(1) (2) (3)
6 7606 Aluminium plates, sheets (including
circles) and strips, of a thickness
exceeding 0.2 mm
Note.-(1)
The Rules for the interpretation of the provisions of the Central Excise Tariff
Act, 1985 read with the Explanatory Notes as updated from time to time
published by the Customs Co-operation Council, Brussels apply for th
interpretation of this notification.
Note.-(2)
Where any commodities are described against any heading or, as the case
may be, sub-heading, and the aforesaid description is different in any
manner from the corresponding description in the Central Excise Tariff Act,
1985, then only those commodities described as aforesaid will be covered
by the scope of this notification and other commodities though covered by
the corresponding description in the Central Excise Tariff will not be covered
by the scope of this notification.
Note.-(3)
Subject to Note 2, for the purpose of any entry contained in this notification,
where the description against any heading or, as the case may be, sub-
heading, matches fully with the corresponding description in the Central
Excise Tariff, then all the commodities covered for the purposes of the said
tariff under that heading or sub-heading will be covered by the scope of
this notification.
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
Where the description against any heading or sub-heading is shown as
"other", then the interpretation as provided in Note 2 shall apply.
By order and in the name of the Governor of Maharashtra
Sudhakar Jamode
Deputy Secretary to the Government."
6 Goods covered by Schedule Entry C-6 of the MVAT Act are liable to
tax @ 4% till 31st March, 2010 and 5% w.e.f. 1st April, 2010.
7 The Commissioner held that ACP is not covered under the Central
Excise Tariff ("CET") Heading 7606, but would fall within CET Heading
7610 and therefore, the same is not covered by the notification issued for
the purpose of Schedule Entry C-6 of the MVAT Act. The two competing
entries of Chapter 76 with respect to Aluminium are set out below :
CETH Aluminium plates, sheets and strips, of a thickness exceeding 0.2
7606 mm
CETH Aluminium structures (excluding prefabricated buildings of
7610 heading 94.06) and parts of structures (for example, bridges and
bridge-sections, towers, lattice masts, roofs, roofing frameworks,
doors and windows and their frames and thresholds for doors,
balustrades, pillars and columns); aluminium plates, rods,
profiles, tubes and the like, prepared for use in structures.
8 The Commissioner held that the rate of tax applicable to the product is
12.5%, as it is covered by residual Schedule Entry E-1 under the MVAT Act.
Further the Commissioner also rejected the request of the appellants to grant
prospective effect to the ruling. Operative portion of the order is reproduced
as under:-
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
"a. The product 'Aluminium composite Panel' is not covered
under the Central Excise Tariff Heading 7606 and therefore,
not covered by the notification issued for the purposes of the
schedule entry C-6 of the Maharashtra Value Added Tax Act,
2002.
b. The rate of tax applicable to the product is 12.5 %
being covered by the schedule entry E-1 under the Maharashtra
Value Added Tax Act, 2002.
c. For reasons as discussed in the body of the order, the
request for prospective effect is rejected."
9 The order of the Commissioner was challenged by the appellants
before the Tribunal in three different appeals registered as VAT appeals
bearing Nos. 278 of 2015, 279 of 2015 and 280 of 2015 respectively.
Before the Tribunal, the appellants raised an alternative contention, that if
ACP is not covered by CET Heading 7606, then it would fall within the
purview of CET Heading 3920. Statedly, the alternative contention that ACP
would fall under Heading 3920 has been given up by the Appellants in the
Appeals before us.
10 By common order dated 27 February 2017, the Tribunal dismissed the
appeals filed by appellants and confirmed the order passed by the
Commissioner. The present appeals have been preferred against the order
dated 27th February 2017 passed by the Tribunal.
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
11 By order dated 24th August, 2022 the appeals have been admitted on
following substantial question of law-
"Whether in facts and circumstances of the case, the
aluminium composite panel in question is classifiable
under Schedule Entry C-6 read with Entry No.6 of
Notification dated 01.06.2005 issued thereunder read
with Heading 76.06 of Schedule to Central Excise Tariff
Act, 1985 as claimed by the assessee or Heading 76.10 of
the said Schedule and Schedule Entry E-1 as claimed by
the revenue?
12 We have heard Mr.Rafique Dada, Mr.Sridharan, and Mr.Vikram
Nankani, learned senior Counsel for the appellants and Ms.Naira Jejeebhoy,
Special Counsel for the State and with their able assistance we have perused
the papers and proceedings in the matters and considered the rival
contentions. We have also considered the written submissions tendered on
their behalf.
13 We observe that the primary issue between the Appellants and the
Revenue is on the interpretation of Heading 7606 and Heading 7610. While
the Appellants have argued that the appropriate classification of ACP is under
Heading 7606, the Tribunal has accepted the arguments of the Revenue
holding the ACP to be under Heading 7610. Various arguments have been
advanced in support of the rival contentions. Learned Counsel have also
relied upon the Harmonized Commodity Description and Coding System
published by the World Customs Organization contained in the Harmonized
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
System Compendium of 30 years which comprises of the following :
(i) General Rules for the interpretation of the Harmonized
System;
(ii) Section and Chapter Notes, including Subheading Notes;
(iii) A list of headings arranged in systematic order and,
where appropriate, subdivided into subheadings.
(iv) Explanatory Notes to the HS published separately by the
World Customs Organization
(v) The Compendium of Classification Opinions
The said material inter alia elaborately discusses Headings 7606, 7610 and
how the various heads are to be read and / or construed with respect to the
subject products.
14 Learned Counsel have also drawn our attention to the technical
manual in respect of the product to advance arguments in support of their
respective contentions. The manual contains the description of ACP, the
various sizes in which the same is manufactured and sold/used, its essential
characteristics as well as the end predominant use.
15 While the Appellants have argued that the products that they have
sold are aluminium plates, sheets of a thickness exceeding 0.2 mm and
therefore to be classified under the Heading 7606, the Revenue argues that
these are either parts of structures or prepared for use in structures
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
considering the technical manual and the scope of application mentioned
therein and would fall under the Heading 7610.
16 The Tribunal, as mentioned earlier, has passed a common judgment.
As the issue with respect to Heading 3920 has been statedly not pressed, the
relevant portion of the Tribunal order which is germane to our discussion is
quoted as under :
"33. Lastly, we must also consider alternate argument of
the appellants that their product falls under CET Heading
7606, if not under residuary sub-heading 3920 as claimed
above. So far as this argument is concerned, Mr. Thakar, the
learned Advocate, has relied upon the observations in the
case of Commissioner of Customs (Import), Chennai V/s. ICP
India Ltd. reported in 2012 (284) E.L.T. 106 (Tri-Chennai)
decided on 02/05/2012. Wherein following observations are
recorded by CESTAT in para 2 and 3 of its judgment:-
2. The respondents have imported the impugned goods
describing the same as 'aluminum composite panels'
seeking classification under CTH 7606 and claiming
concessional rate of duty under Notification No.
21/2002. The original authority held the impugned
goods to be classifiable under CTH 7610. On an appeal
from the respondents, the lower appellate authority
has, however classified the impugned goods under CTH
7606 leading to the present appeal by the Department,
3. CTH 7606 covers aluminum plates, sheets and strip,
of a thickness exceeding 0.2 mm. On the other hand,
CTH 7610 includes aluminum structure and parts
thereof, and aluminum plates, profiles, rods, tubes and
the like prepared for use in structures. The impugned
goods are not aluminum plates, sheets and strip
simplicitor, and hence, prima facie their classification
under CTH 7606 appears to be ruled out. On the other
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
hand, the impugned aluminum composite panels
bearing the trade name Alpolic is composed or metal
skins, a core and surface finish. Prima facie, such panels
under impart are processed and prepared material
meant for use in structures and not mere aluminum
plates, sheets or strip. Though normally use of a
material by itself is not a determinant for classifying a
product, CTH 7610 particularly refers to materials
"processed for use in structure". Hence, the impugned
goods which are prepared and used for cladding in
structures, prima facie appear to be classified under
CTH 7610. Further, we find that similar goods have
been classified under Heading 7610 in the case of Ram
Enterprises v. Commissioner of Customs, Mumbai-2011
(267) E.L.T. 546, though in that case the competing
entries considered were CTH 7610 and CTH 3920, out
of which CTH 7610 was preferred by the Tribunal.
34. Further we find that even under CET Heading 7606
in the case of Rana Enterprises (cited supra), these
observations of CESTAT South Zonal Bench, Chennai are also
supporting the views taken by us that item of the appellant
falls within the purview of CET Heading 7610. Here at this
juncture, we mush make reference to the argument of Mr.
Thakar, that the item in question cannot be used as part of
the structure. According to him it is used for giving better
look/appearance to the structure from outside. Therefore, it
is not a part of the structure. It was contended by him that if
the item were intended to be used in the structure, it would
have certain additional indications such as holes for fitting
screws, holes for fixing hinges etc. No such provision is made
in it, and therefore, the item cannot be said to be
manufactured for the use as a part of the structure.
35. The essential characteristics of the product are
required to be taken into consideration, while ascertaining
appropriate Heading for taxing the commodity. In the case of
Rana Enterprises, identical material was under consideration.
In that case, also no extra work has been done on the panels
which would have indicated that material was meant for use
as a part of the structure. Still the CESTAT observed that the
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essential characteristics of the product were indicating that
the same was meant for the use of giving better look to the
structure from the outside. Since there is absolutely no
difference between the description in the item before us and
description in the item that was before the CESTAT for
consideration, we are not inclined to take a different view.
36. Shri. Thakar in respect of his contention that his
product is not a part of structure, placed his reliance on the
judgment of the Hon'ble Bombay High Court in the case of
Permasteelisa (India) Pvt. Ltd. V/s. State of Maharashtra and
Others reported in (2016) 91 VST 129 (Bom) decided on 6 th
May, 2016. It must be mentioned that issue for consideration
before the Hon'ble High Court was whether on the facts and
circumstances of the case of Tribunal was justified in holding
that the contracts of construction of glass curtain wall
executed by the appellant would not constitute contracts for
construction of buildings, as mentioned in para A of the
notification dated March 8, 2020, issued for the purpose of
section 6A(1) of the Works Contract Act, nor would it
constitute contracts incidental nor ancillary to the contract
mentioned in paragraph B of the said notification. Ultimately
the High Court has been pleased to hold that-
"The fabricated structural glazing prepared by the applicant
are transported to the site by the applicant and affixed on the
exterior portion of the building, which building is
constructed by the building contractor who is a third party.
There is no dispute that the applicant is not a building
contractor, it is not in the business of construction and
erection of buildings. The activity of affixing glass and
erecting glass walls with aluminum framework requires an
altogether different expertise, and is ordinarily sub-
contracted by the building contractor. The contention that
some of the walls in the building are not required to be
constructed by laying bricks and they are substituted by
affixing the glass would not carry the case of the applicant
further. We are also unable to accept the contention that the
work of the applicant would be covered under the term
"incidental or ancillary activity to the construction of the
building" as that would have to have a direct nexus to the
construction of the building itself. Therefore, the alternative
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
argument that the contract would get covered by paragraph
B of the said notification which includes incidental or
ancillary contract to the contract of construction also cannot
be accepted. What meaning is to be attached to the word
"building" as mentioned in the notification would have to be
determined considering the facts and circumstances of each
case. In our view, the reliance on the definition of "building"
in the regulation 2(3)(11) of DCR is misplaced and would
not assist the applicant in any manner. The definition is in
the context and purposes of DCR and cannot be imported
and applied in the facts and circumstances of the present
case".
37. We fail to understand as to how this judgment is
relevant for ascertaining if the item of the appellant falls
within the purview of CET Heading 7606. In our considered
opinion, this judgment is absolutely not useful for resolving
the controversy before us arising for adjudication.
38. Mr. Thakar, strongly relied upon the opinion
expressed by Harmonized System Committee, World Customs
Organization, Brussels. He placed reliance on Volume
published by the Committee in the year 2002 for the relevant
periods 1998-1999 and 1999-2000. He invited our attention
to entry No. 327 on page no. 140. The entry reads as
follows:-
DESCRIPTION OF HS CLASSIFICAT CLASSIFICATION RELEV DECISI CLAS
GOODS HEADINGS ION RATIONALE AND ANT ON SIFIC
UNDER DECISION OBSERVATIONS DOCU TAKEN ATIO
CONSIDERAT MENTS N
ION OPIN
ION
327 Laminated 76.06/76.13 1606.11 to It was agreed that 42.100 HSC/ YES
aluminum products, 7606.92 the product at G/11 + 20
consisting of two issue was a 41.800
flat rolled sheets of composite goods F/13
aluminum which consisting of two 41.304
constitute the outer flat rolled 41.348
layer of the products of
terminated product aluminum and an
and one sheet or inner layer of
layer or core. The plastics. The
outer layers usually classification of
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
have individual composite goods
thicknesses up to was governed by
2.54 mm, and the General
core thickness may Interpretative
range from Rule 3(b). IT was
approximately 0.02 the visible part
mm to 2.29 mm. i.e. the flat rolled
The products are product, which
usually in colls with gave the whole
the width up to its essential
approximately 1600 character. The
mm or may be cut General
into sheets. The Explanatory Note
core imparts to Chapter 72,
superior sound which is referred
damping quality to to in Chapter 76,
the products. The made clear that
products are used the product of
for external that chapter 76,
cladding of made clear that
buildings, internal the product of
decoration, that chapter
automotive body could be
panels, home combined with a
appliances, business coating of plastic,
machines etc. (C.O. moreover, there
7606.11 to was no legal
7606.92/1) provision
See also No. 319 preventing flat
(File 2843) rolled product s
from being
combined or
laminated with a
layer of plastics.
Since the product
consisted of clad
plated or coated
material sheet the
committee agreed
that they
corresponded
to the texts of
heading 76.08
and should be
classified in that
heading
(subheading
7600.
11 to 7608.92)
thus precluding
the possibility of
classification in
Heading 76.13
which was only a
residual heading
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
39. In our considered opinion, the opinion given by the
Harmonized System Committee, Brussels is required to be
followed as it is, provided the description of the item is
exactly same. Mr. Thakar placed his reliance on the judgment
delivered by Delhi high court in the case of Manisha Pharma
Plasto Pvt. Ltd. V/s. Union of India reported in 1999 (112)
E.I.T.22 (Del.) decided on 20/05/1999. It is clearly observed
by Hon'ble Delhi High Court that the Harmonized Systems
Committee is the high-powered body to ascertain
International practice of classification of a particular product
referred to it and recommends to the member nations the
most appropriate classification of the product under HSN. We
also find force in the submission made by the petitioner that
opinion of Harmonized Systems Committee has lot of weight
and the same should ordinarily be taken as binding. As its
very name suggests, that the committee is constituted to
harmonize the conflicting interpretations of the entries in the
excise statutes, descriptions of various products and their
formulae, in the member countries with a view to bring
uniformity in taxation in international trade.
40. If ratio of this judgment is applied in the instant case
at hand, following facts are emerging. In the cited case, the
issue for consideration before the Delhi High Court was
about the classification of Nycil Prickly Heat Powder i.e.
whether it falls under Heading 30.03 as drug or it falls under
Heading 33.04 of the CET as a cosmetic. It was brought to
the notice of Delhi High Court that somewhat similar product
manufactured by Jonson and Johnson Ltd. was held to be a
product falling under CET Heading 33.04. It was argued
before the Delhi High Court that both products are similar
and Nycil Prickly Heat Powder should be classified under
CET Heading 33.04. In both the cases i.e. in the case of Nycil
Prickly Heat Powder as well as Jonson's Prickly Heat Powder,
opinion was given by Harmonized System Committee,
Brussel. For making this distinction between two products,
Harmonized Systems Committee looked into all components
of both the products. In Nycil Prickly Heat Powder, the
following components were present:-
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
Chloroprene's IP - 1% w/w
Zink Oxide IP - 16 % w/w
Starch IP - 51 % w/w
Talk Purified IP to - 100% w/w
Identical ingredients were not present in Johnsons Prickly
Heat Powder. The Committee opined that Nycil Prickly Heat
Powder would fall under CET Heading 30.03 and Johnson's
Prickly Heat Powder would fall within CET Heading 33.04.
This distinction made by the Committee is justified by the
Delhi High Court. It appears that opinion of the Committee is
relevant only when all ingredients of the items under
consideration are exactly identical. A slightest difference in
components can change the classification of the commodity.
41. Ms. Naira brought to our notice the technical
manual published by the appellant. It is specifically
mentioned on page no.2 that the Top Aluminum Sheet is
coated with either Polyester or PVDF Paint. The core is either
Low Density Polyethylene or a FR (Fire-Resistant) Core which
is specially treated for fire resistance. The Bottom Aluminum
Sheet comes with anti-corrosive primer or (6-8 micron)
backside paint (White wash or Light Grey Color. It is also
mentioned on page no. 4 that Aluminum Panel sheet is
sandwich with top and bottom layers of aluminum sheets,
nontoxic polythene cores materials. Both surface of coil
coated with special baking varnish. Flow chart of the product
Testing is at Page no.7 which indicates that coating is the
integral part of product. Page nos. 8 & 10 of the manual
provides information in respect of PVDF coating and page
no.11 describes the protective film. Furthermore it was
brought to our notice that item of the appellant's are cut to
size.
42. We have considered this submission. In our view,
these facts go to show that item which is described in Entry
no. 327 by Harmonized System Committee is different than
that of the item of the present appellants. For the reasons
already mentioned in this judgment, we think that we need
not refer to the opinions of lawyers produced by the
appellant on record. We have demonstrated how the Item
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
Entry No. 327 by Harmonized Systems Committee is
different from the item of the appellant.
43. Mr. Thakar, during the course of his argument,
heavily relied upon the Notification no. 71 of 2009- Customs
issued by the Government of India, Ministry of Finance
(Department of Revenue), New Delhi dt. 19 th June, 2009. By
this Notification, provisional safeguard duty on import of
Aluminum Flat Rolled Products falling under heading 7606
was imposed, excluding aluminum composite panels. By
placing reliance of this notification, attempt was made to
contend that this notification shows that Central Government
has classified ACP under 7606. While replying this
contention, Ms. Naira brought to our notice paragraph 66 of
the notification which reads as follows:-
"66. It has been contended by some of the
interested parties that at some places "Aluminum
Composite Panels" are being classified under 7606 and
thus the same also be excluded. On verification, it was
found that "Aluminum Composite Panels" are not
manufactured by Hindalco. Thus, without going into
the issue of classification of the same product, the
product has not been part of safeguard investigation."
44. These observations clearly go to show that
notification does not make any classification of the product
of the appellant.
45. Mr. Thakar during the course of the argument
placed reliance on the judgment of the State of Andhra
Pradesh and Another V/s. Concap Capacitors and Others
reported in (2007) 10 VA ST 204 decided on 12 th October,
2007. The ratio of this judgment is that once the item is
classified as per the classification done by some other
authorities, then Sales Tax Department cannot have its own
interpretation. We have already distinguished the opinion of
the Harmonized System committee and it is not necessary to
go into the details of the judgment of the Hon'ble Supreme
Court.
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
46. Mr. Thakar also placed his reliance on the judgment
of Hon'ble Bombay High Court in the case of Samruddhi
Industries Ltd. V/s. State of Maharashtra in Sales Tax
Reference No. 20 of 2006 decided on 23 rd December, 2014,
wherein the Hon'ble High Court has been pleased to hold
that if the specific heading is covered under the relevant
entry then irrespective of its use, item is required to be held
falling in the said entry. Similarly he has also placed reliance
on the judgment of the Bombay High Court in the case of The
Addl. Commissioner of Sales Tax V/s. M/s Sun Systems in
Maharashtra Value Added Tax Appeal No. 20 of 2015 in VAT
Appeal No. 658 of 2013 decided on 24th November, 2015. In
our considered opinion, this argument cannot be accepted for
the following reasons.:-
47. There are two entries before us for consideration
under CET Heading 7606 and 7610. If the product appears to
fall within the description of two different entries within two
Heading, then Rule 3(c) comes into picture. It reads that
when goods cannot be classified by reference to (a) or (b),
then the same shall be classified under the heading which
occurs last in numerical order among those which equally
merit consideration. If this rule is considered, in our
considered opinion, the product would fall within CET
Heading 7610 and not 7606.
48. For these reasons, we do not find any merit in the
contentions of the Appellant that the judgments of
Samruddhi Industries Ltd. and M/s. Sun Systems (cited
supra) are relevant and applicable in the present case.
49. The Appellant has placed reliance upon the
judgment in the case of State of Maharashtra vs. Bradma of
India Ltd. reported in 140 STC 17 decided on 16 th February
2005, wherein it was held that specific entry overrides
general entry and specific entry always prevails. After
applying the above said ratio, in our consideration, Central
Excise Tariff Heading 7610 is more specific entry than
Central Excise Tariff Heading 7606. Central Excise Tariff
Heading 7606 generally speaks about the plastic material,
whereas CET Heading 7610 specifically speaks about part of
the structure.
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
50. Mr. Thakar also placed reliance on Bharat Forge &
Press Industries (P) Ltd. reported in 84 STC 414 (SC)
decided on 16th January, 1990. We have carefully gone
through the facts of this case. The Appellants were engaged
in manufacturing pipe fittings; cutting it into different sizes.
They were giving them shapes and they used to turn them
into pipe fittings in their factories by heating in a furnace at
temperature between 65 degrees Centigrade and 900 degrees
Centigrade hammering and pressing. According to Revenue,
the Appellants were bringing a new product into existence,
and as such they were taxing it under tariff entry no.68 and
the Appellants were claiming that their products were falling
under Schedule entry 26AA (iv). The entry was in respect of
"pipes and tubes including (including blanks therefor) all
sorts, whether rolled, forged, spun, cast, drawn, annealed,
welded or extruded." The question before the Hon'ble
Supreme Court was whether the pipe fittings manufactured
by the Appellants constitute different item or they remained
same, which were items falling within the purview of
Schedule Entry 26AA(iv). In our view, following observations
of the Hon'ble Supreme Court are most relevant -
"In other words unless the department can establish that
the goods in question can by no conceivable process of
reasoning be brought under any of the tariff items,
resort cannot be had to the residuary item. We do not
think this has been done. Looking at tarrif item
26AA(iv), it encompasses all sorts of pipes and tubes. It
is also clear that it is of no consequence whether the
pipes and tubes are manufactured by rolling, forging,
spinning, casting, drawing, annealing, welding or
extruding."
In our considered opinion, basic distinction in the case before
the Hon'ble Supreme Court and the case before us is that the
process of manufacture makes difference in the application of
Schedule Entries. We have elaborately discussed this issue in
our judgment. It is pointed out that the description of the
item of the Appellant is different than that of the description
of the item mentioned in the Harmonized System Committee
of World Customs Organization, Brussels. It is also
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demonstrated that appropriate description is given in CET
Heading 7610 and that entry is not a residuary entry. In our
view, therefore, reliance placed by Shri. C.B.Thakar on the
case of Bharat Forge & Press Industries (P) Ltd. (supra) is
misplaced.
51. The Appellant also placed reliance on the judgment
of Hon'ble Bombay High Court in the case of Additional
Commissioner of Sales Tax, VAT-III, Mumbai V/s. Bunge India
Pvt. Ltd. reported in (2011) 39 VST 213 (Bom.) decided on
4th March, 2011. Reliance on this judgment is misplaced
since there is no question of interpretation of entries in the
CET Act.
52. The number of judgments were cited by both the
sides. We have gone through it. They are not dealing with
the issues arising before us for consideration. We have dealt
with the relevant judgments. We have referred them and we
have expressed our opinion about their relevance and
probative value.
53. Lastly Mr. Thakar contended before us that initially
the Appellant was assessed and the product of the Appellant
was held falling within purview of Central Excise Tariff
Heading 7606 for levy of tax at concessional rate.
Specifically the assessment order was confirmed in first
Appeal by the First Appellate Authority. Thereafter there was
visit of officers of Investigation Branch. They suggested the
Appellant to make reference to the Commissioner of Sales
Tax for correct classification of his product and accordingly,
the Appellant was constrained to apply for classification
U/s.56(1) (e) of the MVAT Act. In view of this fact,
considering the decision given by the Commissioner of Sales
Tax, the Appellant may be protected and he should be
assessed for concessional rate of tax as per the notification
dt. 1st June, 2005 issued under Schedule Entry C-I of the
MVAT Act. In support of the contention, Mr. Thakar strongly
relied upon the judgment of Gujrat VAT Tribunal in the case
of M/s. Umiya Flexifoam Pvt. Ltd. V/s. The State of Gujarat
in Appeal No.11 of 2007 decided on 17/08/2009 and the
judgment of Delhi VAT Tribunal in the case of M/s. Gurind
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
Traders V/s. Commissioner, Trade & Taxes, Delhi in Appeal
No.06/ATVAT/06-07 decided on 29th April, 2013. According
to him,these decisions are under VAT provisions and
therefore, they are binding.
54. We have gone through those judgments. The
Notification dt.31/12/2006 published by Government of
Gujrat bearing No.GHN-33D/VAT-2006/SCH-II/(42A)(5) is
reproduced by the Appellant. Sr. No.172 of the notification
describes a product namely "Other plates, sheets film, foil,
tape and strip of plastics, non-cellular, whether lacquered or
metalised or laminated and not reinforced laminated
supported or similarly combined with other materials" and
attempt was made by Mr. Thakar to contend that product
falls within purview of entry pertaining to industrial input.
We are not inclined to accept the contention of Mr. Thakar.
The entry at sr. no.172 of the notification issued by
Government of Gujrat, there is no reference in Central Excise
Tariff Heading and therefore the general rules of
interpretation are different as applied by Gujrat VAT Tribunal.
55. So far as the contention of Mr. Thakar in respect of
granting prospective effect is given, Ms. Naira contended
before us that Sec. 56(2) of the MVAT confers the power
upon the Commissioner of Sales Tax to resolve on disputed
question and has power to direct that the determination not
to affect the liability of the Appellant or other person till the
date of order. The sub-section 2 of Sec.56 makes it
abundantly clear that discretion is vested with the
Commissioner either to grant prospective effect or to refuse
to grant such prospective effect depending upon the facts and
circumstances of the case. As far as the case at hand is
concerned, the contention of the Appellant that he was mis-
guided by the order dt.22 September, 2010 in the case of
Kevin Impex Pvt. Ltd. appears to be incorrect, because the
judgment in the case of Rana Enteprises (cited supra) was
delivered on 8th February, 2011. It is settled position of the
law that ignorance of law has no excuse, particularly in the
field of taxation. It also appears that Reference is made to
the Commissioner under Sec.56(1) on 10/12/2012 i.e.
almost after two years. In such circumstances, we do not
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find force in the contention of the Appellant that the
Appellant is entitled to claim protection till date of
determination order. Further, it would be profitable to see the
observations of the Hon'ble Bombay High Court in the case of
Lalbaugcha Raja Sarwajanic Ganeshotsav Mandal (MVAT Tax
Appeal No.10 of 2015), wherein prospective effect was
claimed. The Court observed as under :
"10. On plain reading of both the sub-sections (1)
and (2) of Section 56, it is apparent that the
Commissioner may direct that the determination shall
not affect the liability under the MVAT Act of the
applicant or if the circumstances so warrant, of any
other persona similarly situated, as respects any sale or
purchase effected prior to a determination. Therefore,
this is not a mandate but a discretionary power vested
in the Commissioner. This discretionary power has to be
exercised and while exercising it, the Commissioner, has
to be guided by certain inbuilt checks and safeguards.
He cannot in the garb of giving relief of the nature
contemplated by sub-section (2) totally wipe out the
liability of any and every dealer.
11. The Commissioner is expected to exercise this
discretionary power so as not to defeat the law or
render its provisions meaningless or redundant. The
power must be exercised bearing in mind the facts and
circumstances in each case. No general rule can be laid
down. The exercise of this discretionary power must be
bonafide and reasonable so also subserving the larger
public interest. The highest officer in the hierarchy is
chosen by the legislature as there is a presumption that
this executive functionary will exercise the discretion in
genuine and bonafide cases. He must be satisfied that
there is a real need and the circumstances warrant
exercise of the same. The power being wide the
satisfaction must be backed by cogent and strong
reasons which can be tested in a Court of law.
12. The words are of wide amplitude and if the
Commissioner exercises the discretion injudiciously or
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
arbitrarily and contrary to the object and purpose
sought to be achieved by the enactment itself, his
exercise of the discretionary power is always capable of
being questioned. Therefore, when the Commissioner
finds that there was never a disputed question to be
determined and the law is very clear and free of doubt,
equally its applicability, then, refusal by the
Commissioner to exercise the discretion is rightly upheld
by the Tribunal. Just as the Commissioner was obliged
to assign reasons for not exercising his discretionary
power equally the Tribunal was in upholding his order.
The Tribunal in paragraph 22 of its order found that the
entire process was utilized so as to delay compliance
with the mandate of the Act. The Tribunal has also
found that the Commissioner refused to grant relief
holding that there is no ambiguity in the provisions and
there is no scope, for any doubt arising out of the
provisions and relevant for the purpose of the
determination. The reasons that are assigned by the
Commissioner for refusing to give prospective effect to
his determination order, have not been found to be
suffering from any error of law apparent on the face of
the record or perversity warranting interference in the
appellate jurisdiction of the Tribunal."
In view of the above observations of the Hon'ble Bombay
High Court, we do not find it necessary to discuss in detail
the decision relied by the Appellant of this Tribunal in respect
of granting prospective effect. Suffice it to say that these
decisions are based on the facts and circumstance of those
individual cases and they cannot be said to have laid any
binding precedent. Whether to grant prospective effect or
not is a discretion vested in the Commissioner of Sales Tax
and the same is required to be used judiciously. In our
considered opinion, there is no reason to interfere with this
discretionary power of the Commissioner of Sales Tax unless
there are pressing reasons such as legal ambiguity in the
interpretation of the entry or statutory misguidance. There is
no such case. The prospective effect can't be granted on the
ground that some other importers/ traders also paid tax @
4% or 5%. Whether the revenue has regarded the item @
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
4% or 5% is relevant to grant prospective effect, and not
what other importers / traders have done. It is clear that
Appeal orders in the case of Appellant M/s. Kevin Impex Pvt.
Ltd. are revised by the appropriate Authorities. Therefore, it
is clear that revenue has not regarded ACPs taxable @ 4% or
5% as the case may be. In view of this, we hold that the
Commissioner of Sales Tax has rightly rejected the request of
the Appellant to grant prospective effect. Therefore, we pass
the following order :
ORDER
VAT Appeals Nos.278, 279 and 280 of 2015 are dismissed.
Request of the Appellants to grant prospective effect is also
rejected.
No order as to costs.
Copy of this judgment and order be kept in all the above
proceedings."
17 Learned Senior Counsel for the Appellants have argued that the
decision of the Tribunal that the classification of aluminium composite panel
is under the Heading 76.10 since ACP is either parts of structure or products
prepared for use in structure is incorrect. It is submitted that the Tribunal has
relied upon the last leg of the Heading i.e. prepared for use in structure to
decide the classification of ACP under CET 7610. That ACP is neither
prepared for use in structure nor is ultimately used in structures. That in the
present case ACP is manufactured and cleared in sheet form of standard
sizes, specifications including 4 feet x 8 feet or 4 feet x 10 feet etc. from its
factory without undertaking any process on it such as drilling, bending,
notching etc. Further, after clearing ACP from its factory various other
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
processes are performed on the ACP by the customers. It is submitted that
the explanatory notes for Heading 7610 explain the details which are covered
under the heading. Explanatory notes for Heading 7610 state that the
provisions of Explanatory Note to Heading 7308 will apply mutatis mutandis.
18 The Explanatory Note to Heading 7610 reads as follows :
"The provisions of the Explanatory Note to Heading 73.08 apply,
mutatis mutandis to this heading"
Both, Heading 7308 and Heading 7610 fall under Section XV of the HSN
which covers "Base Metals and Articles of Base Metal." Section Note (c) to
Section XV reads as follows :
"In general, identifiable parts of articles are classified as such parts
in their appropriate headings in the Nomenclature."
19 The Explanatory Note under Heading 7308 inter alia reads as under :
"This heading covers complete or incomplete metal structures, as
well as parts of structures. For the purpose of this heading, these
structures are characterised by the fact that once they are put in
position, they generally remain in that position. They are usually
made up from bars, rods, tubes, angles, shapes, sections, sheeets,
plates, wide flats including so-called universal plates, hoop, strip,
forgings or castings, by riveting, bolting, welding, etc.
Parts of structures include clamps and other devices specially
designed for assembling metal structural elements of round cross-
section (tubular or other). These devices usually have
protuberances with tapped holes in which screws are inserted, at
the time of assembly, to fix the clamps to the tubing.
The heading also covers parts such as flat-rolled products, "wide
flats" including so-called universal plates, strip, rods, angles,
shapes, sections and tubes, which have been prepared (e.g.,
drilled, bent or notched) for use in structures."
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20 It is submitted that the items covered are those which are essentially
prepared for use in structures in such form and therefore Heading 7610
covers goods that are specifically prepared for use in structures by
undertaking further processes such as drilling, bending, notching etc.
Without such processes, such items cannot be covered under Heading 7610.
That could be the meaning of specifically prepared for use in structures.
Unless the processes as above are performed on the products and such
products are cleared with standard sizes, then such products will not fall
under the Heading 7610. Therefore, the carrying out of any of these
processes before clearing from the factory is a must in order to classify such
products under the Heading 7610. It is submitted that, therefore, the ACP
cleared by the Appellants cannot be treated as item prepared for use in
structures classifiable under the Heading 7610 under Central Excise Act
1985.
21 Further, it has been submitted that the contention that ACP would fall
within CET Heading 7610 as Aluminium plates prepared for use in structure
has been raised by Revenue without leading any evidence and that impugned
goods do not fall under the expression "prepared for use in structure". That,
the burden to prove classification claimed by the Revenue is on the Revenue.
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22 Without prejudice to the foregoing, it is submitted that Heading 7610
covers (i) structures, (ii) parts of structures and (iii) aluminium plates, rods,
profiles, tubes and the like, prepared for use in structures. The last part of
the expression "aluminium plates, rods, profiles, tubes and the like" do not
cover "aluminium sheets". That the Glossary of Terms relating to aluminium
and aluminium alloys, published by the Bureau of Indian Standards defines a
"Plate" as 6 mm or thicker and a "Sheet" as between 0.15 mm and 6 mm
which also suggests that Heading 7610 only includes "plates, rods, profiles,
tubes and the like" which are capable of bearing a load, and not "sheets"
which are not load bearing. It is submitted that ACP Sheets are expressly
mentioned in Heading 7606 and cannot be brought into Heading 7610 by
using the phrase "and the like".
23 It is submitted that even assuming that ACP "Sheets" fall within the
"expression plates, rods, profiles, tubes and the like, prepared for use in
structures" even then plain unworked ACP sheets are not covered by Heading
7610. The HSN Explantory Notes to Heading 7308 point to the fact that
"prepared for use in structures" means drilling, bending or notching the
article of aluminium. Admittedly, the Appellant's do not carry out any such
activities on the impugned goods. For ease of reference, the HSN Explanatory
Note is extracted below :
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
"The heading also covers parts such as flat-rolled products ... ...
which have been prepared (e.g.. drilled, bent or notched) for use
in structures."
(emphasis supplied)
24 Referring to the case of D&M Building Products Pvt. Ltd. vs.
Commissioner of Customs, Bangalore1 relied on by the Revenue, it is
submitted that the product i.e. "cut to size" aluminium profiles (not Sheets)
were imported as per the specifications requested for by the customer. All
that was to be done at the site was to assemble it by drilling and punching.
The Tribunal held that cut-to-size aluminium profiles imported by the
assessee met the exact specific requirement i.e. "cut-to-size" and hence, was
"prepared for use" in structure.
25 That, further, in the case of D&M Building Products Pvt. Ltd. vs.
Commissioner of Customs, Bangalore, the article in question was Aluminium
"Profiles", which is specifically mentioned in Heading 7610 under "plates,
rods, profiles, tubes and the like, prepared for use in structure", whereas,
"Sheets" are not. Though Heading 7606 covers aluminium plates, sheets and
strips, of a thickness exceeding 0.2 mm, Heading 7610 contains no reference
to "sheets and strips".
26 Further it is submitted that the expression "parts of structures" is not
the same as parts for general use. The same has to be understood as per the
1 CESTAT Bangalore decision dated 28 June 2019
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HSN Explanatory Note to Heading 7610 where such expressions appear,
applies mutatis mutandis to Explanatory Note to Heading 7608.
27 Therefore, for a product to be covered under Heading 7610, it has to
be an "identifiable part of a structure". It is submitted that the expression
"parts of structures" means identifiable parts of structures, that have
acquired a shape or characteristic, such that they can be recognised only as a
part of that structure, and not otherwise.
28 The example of "parts of structures" in the HNS explanatory notes to
Heading 7308 (Bridges and Bridge Section, doors and windows and their
frames, thresholds for doors, roofs, roofing frameworks etc.) makes it clear
that reference to "parts of structures" is only to those parts which are
identifiable with that structure. A bridge Section is identifiable with a bridge.
Similarly, doors and windows are identifiable with a building.
29 That, a bridge Section has no other use/purpose, other than becoming
a part of a structure viz. a bridge. Another example is the door of a car, which
when customized and designed for a particular car, becomes clearly
"identifiable" as a "part" of a car, and has no other use/purpose.
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
30 In view of the above, it is submitted that plain ACP sheets are not
"identifiable parts of structure" and it is only after cutting, drilling, grooving
etc., they may become an "identifiable part of a structure", which is not the
case here.
31 It is submitted that the Hon'ble Supreme Court in the case of CCE,
Delhi vs. Insulation Electrical (P) Ltd.2 inter alia held that "a part is an
essential component of the whole without which the whole cannot function".
32 It is submitted that if the aforementioned test is applied, it is clear that
the ACP Sheets sold by the Appellant are not parts of a building, since a
building is complete even without ACP cladding. However, a building is not
complete without doors and windows and therefore, these products are
"parts of structure". Similar are the examples given under 7610 viz. bridges
and bridge sections, roofs, roofing frameworks etc. ACP cladding only gives
an aesthetic look to the building and therefore, is not a "part of a structure".
33 It has also been submitted that ACP does not have load bearing
capacity and is typically used as decorative material.
34 For the aforementioned reasons, it is submitted that the impugned
goods cannot be classified under Heading 7610, either as "parts of structures"
or "aluminium plates prepared for use in structures".
2 2008 (224) ELT 512 (SC)
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35 Ms. Jejeebhoy, learned Special Counsel for the Revenue supports the
MSTT judgment and submits that the question of classification is a question
of law and requires consideration of this Court.
36 Learned Special Counsel relies upon the Technical Manual described as
Eurobond Manual to submit that none of the Appellants raised any objection
to the said Manual before the Tribunal. She further submits that as can be
seen from the Manual, which she submits is not advertising material, that the
subject product is not being sold in running length sheets or coils but in fact
is being subjected to processes such as coating and cutting to desired size so
as to prepare it for use as part of a structure.
37 Learned Special Counsel would submit that the Appellants DDQ
annexed a note of manufacturing process of the ACP and the Appellants have
admitted that the product has aluminium coated coils, that the final ACP is
trimmed and cut to the desired sizes and that the composite sheets are
eventually laminated with protection film on the top. All this, learned
Special Counsel submits, is further elucidated in the Technical Manual on
record. She would submit that before using the composite panel there is a
coating of Polyvinylidene difluoride (PVDF) to be applied which is to prepare
the ACP for use in an exterior structure. Learned Special Counsel refers to
the Eurobond Manual and submits that the coating is an essential component
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
of the ACP which is the subject matter of these Appeals. That the coating is
applied so as to prepare the ACP for use as an external part of a structure as
can be seen from the description of the coating as well as he predominant use
of the ACP. Learned Special Counsel submits that ACP is admittedly trimmed
and cut to the desired size as can be seen from the Manual. It is not the case
that the ACP is sold by the Appellants as a standard product, even though it
may have a standard size which is most commonly used. She would submit
that it is an admitted fact that the predominant use of the ACP is for external
cladding or facades of buildings and refers to the Manual in support of her
contention.
38 Learned Special Counsel for the Revenue would submit that the ACP
falls under Heading 7610 and the same is borne out by the following facts :
"a.Classification tests to be applied - predominant use and
common parlance test bear out that the product ACP is part of a
structure;
b. Alternatively, the ACP has been "prepared for use in structures";
c. CETH 7610 is more specific and hence should be preferred to
CETH 7606;
d. The wording of CETH 7610 cannot be read in a restrictive
manner as contended by the Appellant;
e. Under Indian law, ACP has been classified under heading 7610.
The decision relied on by the Appellant is per incuriam and in
any event distinguishable from the facts of this case.
f. Under the Rules for interpretation of the CET Act ("the CET
Rules"), Heading 7610 is to be preferred to Heading 7606.
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39 With respect to ACP being part of a structure, learned Special Counsel
refers to the common parlance theory as elucidated by the Hon'ble Apex
Court in Alpine Industries vs. Collector of Central Excise 3 and submits that
the terms and expressions used in tariff have to be understood by their
popular meaning i.e. the meaning attached to them by those using the
product. She submits that where an entry links a taxable object with the
general or ordinary use, it is necessary for the authority to consider the
general use of the product and the deciding factor is the predominant or
ordinary purpose or use and it would not be enough to show that the article
can be put to other uses also. It is its general or predominant user which
determined the category in which an article would fall. Learned Special
Counsel refers to the decision of the Hon'ble Apex Court in the case of M/s.
Annapurna Carbon Industries Co. vs. State of Andhra Pradesh 4.
40 Learned Special Counsel would submit that considering the
predominant use of the product as can be seen from the Manual, the Heading
7610 which refers to the use of the product as part of a structure or prepared
for use in a structure, and therefore, the usage cannot be ignored.
41 Referring to the decision of the Lahore High Court in the case of Md.
Umar vs. Fayazuddin5, the learned Special Counsel draws our attention to
paragraph 3 thereof as under :
3 (2003) 3 SCC 111
4 (1976) 2 SCC 273
5 AIR 1924 Lah 172
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"3. ... The word "building" or "structure" is not defined in the Act
but it may be stated that every building is a structure though every
structure is not a building and the word "structure" can be applied
to a wall or shed or any other unsubstantial erection for which the
word "building" cannot be used."
(emphasis supplied)
She submits that the meaning of term structure is extremely wide and
includes not only buildings but also a wall, shed or other unsubstantial
erection.
42 She also refers to the decision of the Hon'ble Apex Court in the case of
Indian City Properties Ltd. vs. Municipal Commissioner of Greater Bombay 6
and particularly paragraph 19 thereof to submit that the word "structure" is
wider than the term building. The term structure is wide enough to include a
wall and certainly includes a building. It also includes the other structures
referred to in the Eurobond Manual in which ACP is a part (viz. Exteriors of
Multi Storey Apartment, Curtain Wall, Industrial & Commercial
Constructions, Wall Cladding, Hospitals, Parapet Walls / Copings etc). The
word building includes within its scope the fabric of which it is composed.
Where ACP is used in the building, this is part of the structure. Accordingly,
since the predominant use of ACP is as part of buildings, it follows that ACP
is part of a structure. Since the predominant use of the ACP is as part of a
wall / structure, it would fall within CETH 7610.
6 (2005) 6 SCC 417
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
43 Learned Special Counsel addresses this Court with respect to ACP
prepared for use in structures as well and clarifies that that an article like
ACP may be both prepared for use in structures and part of a structure as it is
logical that a part of a structure would be prepared, as required, to be used in
the structure. However, even assuming the ACP is not held to form part of the
structure, the ACP sold by the Appellants has clearly been prepared for use in
structures as, in the present case, it is an admitted position that the
Appellant's product is cut to the desired size and coated.
44 It is submitted that apart from the fact that the ACP is prepared for use
in structures by application of the PVDF coating, it is also cut to the requisite
size by the Appellants which is a further act of preparing it for use in the
structure. Learned Special counsel would submit that the Appellants' have
contended that the cutting is only to make the ACP a standard size. She
submits that this contention appears to be an afterthought and is contrary to
their assertion in the Appellants' own Process Description that the ACP "is
trimmed and cut to the desired sizes". She submits that the Technical Manual
and website of 4Mann Industries Pvt. Ltd. bear out that the ACP is trimmed /
cut to the desired size before sale.
45 With respect to the Appellants reliance upon the Explanatory Note to
HS Heading 7308 to contend that the word "prepared" means "drilled, bent
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
or notched" learned special Counsel would submit that these are merely
examples of means of preparation. This is not an exhaustive definition of the
word prepared nor does the listing of such examples preclude other means of
preparation from bringing a product within the purview of CETH 7610. In the
case of ACP, the preparation has taken place by coating the ACP for external
use and/or cutting it to the requisite size. This, learned Special Counsel
submits, is further borne out by Department Clarifications by which such flat
rolled products of aluminium subjected to a process like trimming for being
used as building materials are parts of structures and fall within heading
7610.
46 Learned Special Counsel further submits that the mere fact that there
may be some further drilling or size adjustment at the site would not change
the essential character of the product and it would still be classifiable under
CETH 7610. Learned Special Counsel relies upon the case of D&M Building
Product Pvt. Ltd. vs. Commissioner of Customs (supra) where she submits
that at para 8 the CESTAT held that the product, aluminium profiles, would
fall under CETH 7610 even though they were being cut, drilled etc at the site.
Reliance has also been placed upon the decision in Commissioner of Central
Excise v Pushpadeep Enterprises 7. At para 9 the Court held that the process
of "cutting, grooving and routing of aluminium sheets to make composite
panels amounts to manufacture as a new product emerges. The goods in the
7 2010 SCC Online Kar 5363
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
instant case cannot be equated with the aluminium sheets in running length
used for manufacturing of the aluminium composite panels." Since the
Appellants in the present case are admittedly cutting the sheets to the
"desired size" and then selling them for use in structures, the ACP sold by the
Appellants fall within the scope of CETH 7610, even assuming some
additional work may be done at the site.
47 Learned Special Counsel would submit that, therefore, the entry 7610
is more specific and should be preferred to entry 7606 as per the Rules of
Interpretation of Entries. She relies upon the decision cited by the Tribunal
in support of the Revenue's case that the subject ACP falls under entry 7610.
Learned Special Counsel would submit that the decision of the Tribunal,
therefore, needs to be upheld and the question to be answered in favour of
the Revenue and against the Appellants.
48 Learned Counsel for the Appellants have strenuously argued that the
Tribunal being a final fact finding body ought to have, at the least, given a
finding whether cutting to size of the subject aluminum sheet would make it
prepared for use in a structure. Learned Senior Counsel refer to paragraph
41 quoted above and submit that there is no independent finding nor any
application of mind to the factual aspects except dealing with judgments. It
is also submitted that the technical manual referred to in paragraph 41 is not
a manual published by the industry but by one of the Appellants viz. M/s.
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
Eurobond Industries Private Limited. It is further submitted that on the basis
of the said manual, the Tribunal has erroneously come to a conclusion that
the said aluminium sheet falls under Heading 7610 and that too on the basis
that it was "cut to size". Learned Senior Counsel submit that there is no
reasoning given to distinguish the opinions of the Worlds Customs
Organisation as cited on behalf of the Appellants, except paragraph 41.
49 We observe from the impugned decision that although many of the
arguments with respect to the two Headings 7606 and 7610 have been
recorded by the Tribunal and undoubtedly, classification of a product would
be a question of law, the factual findings as to whether the subject ACP was
prepared for use in structure or part of structure which was a critical finding,
which the MSTT appears to have missed out. Except paragraph 41, the
learned Tribunal has failed to give any finding with respect to subject ACP in
the context of the product description, its manufacture, its end use, the
various principles including essential characteristics as well as the
predominant use. There is no finding as to whether the subject aluminium
panel is not a aluminum plate or sheet or a strip of thickness exceeding 0.2
mm nor a finding that the same is part of a structure or prepared for use in
structures to come to a conclusion that it falls under Heading 7610. Nowhere
the Tribunal has distinguished the opinions published by the Worlds Customs
Organization.
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
50 In our view, it was necessary for the Tribunal to consider the
submissions made on behalf of the Appellants as well as the Respondent
Revenue and give factual findings with detailed reasoning before confirming
the orders of the Commissioner and dismissing the Appeals. The Tribunal is
the last fact finding authority and is expected to come to a conclusion of a
product under a Heading after a detailed factual analysis of the product in
question and not merely on the basis of judgments cited before it. In our
view, the Tribunal ought to have independently come to a conclusion after
considering and exhaustively dealing with the material furnished by the
Appellants. To this extent, we agree with the submissions made on behalf of
the Appellants. We are, therefore, not inclined to express any opinion on
merits.
51 In this view of the matter, we deem it appropriate to remand the
matters back to the Tribunal. Accordingly, the common judgment of the
Tribunal dated 27th February, 2017 is hereby set aside. The Tribunal is
directed to pass a fresh order / judgment after considering and dealing with
all the factual submissions made on behalf of the Appellants as well as the
Respondent Revenue and particularly a finding on whether or not the
aluminum composite panel as used in the context of the business of the
Appellants would simply be aluminum plates or strips of a thickness
exceeding 0.2 mm or aluminum plates, rods, profiles, tubes and the like,
Priya Soparkar MVAT-56-2017-73-2017-74-2017.doc
prepared for use in structures or parts of structures. All questions and
contentions are left open. The question of law is returned unanswered. The
Appeals, accordingly, stand disposed. No costs.
(ABHAY AHUJA, J.) (DHIRAJ SINGH THAKUR, J.)
PRIYA
RAJESH
SOPARKAR
Digitally signed by
PRIYA RAJESH
SOPARKAR
Date: 2023.02.15
18:29:05 +0530
