Madhya Pradesh High Court
Fraternity Plastofab Pvt. Ltd. Through ... vs Department Of Commerce And Industries on 26 April, 2019
Author: Virender Singh
Bench: Virender Singh
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HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE
D.B.: HON'BLE MR. S. C. SHARMA AND
HON'BLE MR. VIRENDER SINGH, JJ
WRIT PETITION No. 8608 / 2016
SAFEFLEX INTERNATIONAL LTD.,
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 621 / 2017
SAFEFLEX INTERNATIONAL LTD.,
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 1100 / 2017
M/S. NAMAN MARKETING
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 20315 / 2018
POLYLIGIC INTERNATIONAL
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 29590 / 2018
NEO CORP INTERNATIONAL LTD.,
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 29591 / 2018
NEO CORP INTERNATIONAL LTD.,
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 29593 / 2018
NEOCORP INTERNATIONAL LTD.,
Vs.
STATE OF MP AND OTHERS
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WRIT PETITION No. 29594 / 2018
ELIXIR IMPEX PVT LTD.,
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 29595 / 2018
ZENITH METALS PVT. LTD.,
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 29596 / 2018
JAS PLY SACK PVT. LTD.,
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 29597 / 2018
NEO CORP INTERNATIONAL LTD.,
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 29598 / 2018
NEO CORP INTERNATIONAL LTD.,
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 29599 / 2018
FRATERNITY PLASTOFAB PVT LTD
Vs.
STATE OF MP AND OTHERS
WRIT PETITION No. 29604 / 2018
POLYLOGIC INTERNATIONAL LTD.,
Vs.
STATE OF MP AND OTHERS
AND
WRIT PETITION No. 4924 / 2019
DAZZLE DEALER PVT LTD.
Vs.
STATE OF MP AND OTHERS
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*****
Mr. P. M. Choudhary, learned senior counsel appearing with Mr. Anand
Prabhawalkar & Mr. Vaibhav Asawa; Mr. Ajay Bagadia; Mr. Hitendra Mehta and Mr.
Lokendra Joshi; and, Mr. Atindra Sathe, Advocates for the petitioner(s).
Mr. Abhishek Tugnawat, learned counsel for the respondent State.
*****
ORDER
( 26/04/2019) PER : S. C. SHARMA, J :-
Regard being had to the similitude in the controversy involved in the present cases, the writ petitions were analogously heard and by a common order, they are being disposed of by this Court. Facts of Writ Petition No. 8608/2016 are narrated hereunder.
02. The petitioner before this Court, a Company registered under the Companies Act, 1956, has filed this present writ petition challenging the order dated 26/12/2015 passed by the Dy. Commissioner, Commercial Tax, Indore Division III, Indore, imposing tax on Warp Knit Fabrics @ 5% (Value added tax). The contention of the petitioner is that the petitioner is engaged in the business of manufacture of Warp Knit Fabrics which fall under Heading No. 60059000 of the Central Excise Tariff. The said product is listed in the
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Goods of Special Importance under the additional duty of excise (Goods of Special Importance) Act, 1957. The petitioner has further stated that the Excise Duty payable on Warp Knit Fabrics is leviable @ 12%, however, on account of a Notification dated 9/7/2004 it is exempted from payment of Excise Duty. The petitioner has further stated that a dispute arose in respect of classification of the product and a company registered under the Companies Act - M/s. Neo Corp International Ltd., went in appeal before the Excise Commissioner and the Excise Commissioner by order dated 22/3/2012 has held the classification of Warp Knit Fabrics under heading 60053300 instead of heading No. 39269099 of the Central Excise Tariff Act, 1985. The order of the Commissioner Appeals, Central Excise & Service Tax is also on record. The petitioner has also brought on record an order passed by the CESTAT (West Zonal Branch) Ahemdabad in the case of Flora Agrotech wherein again it has been held that Warp Knit Fabrics are classified under Heading 60059000 Chapter 60 of the Central Excise Tariff Act, 1985. The contention of the
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petitioner is that respondent No.3 has erroneously treated Warp Knit Fabrics under Entry No. 34 of Schedule II and has erroneously levied tax @ 5%, whereas, the entry should have been treated under Entry 48 List 1, Schedule I. A prayer has been made for quashment of the impugned order.
03. On the other hand, reply has been filed in the matter by the respondent State and it has been stated that the Commissioner of Commercial Tax in exercise of powers conferred u/S. 70 of the MP VAT Act, 2002, in the case of M/s. SR Polyimpex Pvt. Ltd., and in the case of M/s. Neo Corp International Ltd., has rightly imposed tax @5% by treating it as Entry No.34 of Schedule II. The respondents have stated that the goods in question ie., Warp Knit Fabrics/ agro shed net is not covered by Entry No. 48 of Schedule I of the MP VAT Act, because the said goods, even though it can said to be a textile is not included in the I Schedule of the Act of 1957, hence the same is taxable under Entry 34 of Part 2, Schedule II of the MP VAT Act, which relates to other fabrics other than those specified in Schedule I because Warp Knit Fabrics / agro net does not
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fall in first schedule to the Additional Duties of Excise (Goods of Special Importance Act, 1957 (No. 58 of 1957) which is a condition precedent for being covered by Entry No. 48 of Schedule I of the MP VAT Act 2002. The respondents have also stated that the petitioner is having an alternative remedy to approach the Additional Commissioner and thereafter again a remedy is available to approach the Tribunal, hence, the petition deserves to be thrown out on the question of alternative remedy also.
04. Heard learned counsel for the parties at length and perused the record.
05. In the present case, the preliminary objection raised by the respondents is that there is a remedy of appeal before the Additional Commissioner. The respondents in the return have categorically stated that the Commissioner, Commercial Tax has decided the issue of classification in exercise of powers conferred u/S. 70 of the MP VAT Act, 2002 in the case of M/s. SR Polyimpex and in the case of M/s. Neo Corp International. It has been held that Warp Knit Fabrics cannot be treated under Schedule I, Entry 48
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(tax free goods) and it has to be treated under Entry 34 of Schedule II (duty @ 5%) hence, once the Commissioner has classified the goods to fall under Entry 34 of Schedule II of the MP VAT Act, 2002, an appeal before an authority subordinate to the Commissioner is going to be a futile exercise.
06. The sole question before this Court is whether the Warp Knit Fabrics is included under Schedule I, Entry 48 or Schedule II Part 2 Entry 34 of the MP VAT Act, 2002. The relevant statutory provisions relating to the entries in question reads as under :
48. Fabrics specified in the First Schedule to the additional Duties of Excise (Goods of Special Importance) Act, 1957 (No. 58 of 1957) as it stood prior to the date on which the Finance Act, 2011 (No. 8 of 2011) came into force... ... ...".
07. The goods which can be included in Schedule I, Entry 48 are certainly the fabrics specified in First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (No. 58 of 57) as it stood prior to the date on which Finance Act 2011 (No. 8 of 11) came into force. Thus, it is necessary to refer the first Schedule of the Act of
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1957. The First Schedule of the Act of 1957 reads as under:
APPENDIX-1 THE ADDITIONAL DUTIES OF EXCISE (GOODS OF SPECIAL IMPORTANCE) ACT, 1957 (58 OF 1957) THE TENTH SCHEDULE of the Finance Bill, 2005 (see section 116) 'FIRST SCHEDULE' [See section 3 (1)] NOTES
1. In this Schedule, "tariff item", "Heading", "Sub-heading" and "Chapter"
mean respectively a tariff item, heading, sub-heading and Chapter in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).
2. The rules for the interpretation of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), the Section and Chapter Notes and the General Explannatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this Schedule.
Tariff Description of goods Unit Rate of
Item Additional
Duty
1 2 3 4
1701 - CANE OR BEET SUGAR AND
CHEMICALLY PURE SUCROSE, IN SOLID FORM Raw sugar not containing edded flavouring or colouring matter :
1701 11 - Cane sugar
1701 11 10 - Cane jaggery Kg. Rs. 37 Per
Quintal
1701 11 90 - Other Kg. Rs. 37 Per
Quintal
1701 12 00 - Beet Sugar Other: Kg. Rs. 37 Per
Quintal
1701 91 00 - Refined sugar containing added flavouring or Kg. Rs. 37 Per
colouring matter Quintal
1701 99 - Other:
1701 99 10 - Sugar cubes Kg. Rs. 37 Per
Quintal
1701 99 90 - Other Kg. Rs. 37 Per
Quintal
1701 90 10 - Palmyra sugar Kg. Nil
2401 UNMANUFACTURED TOBACCO:TOBACCO
REFUSE
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2401 10 - Tobacco, not stemrned or stripped:
2401 10 10 - Flue cured virginia tobacco Kg. 10.00%
2401 10 20 - Sun cured country (natu) tobacco Kg. 10.00%
2401 10 30 - Sun cured virginia tobacco Kg. 10.00%
2401 10 40 - Burley tobacco Kg. 10.00%
2401 10 50 - Tobacco for manufacture of biris, not stemmed Kg. 10.00%
2401 10 60 - Tobacco for manufacture of chewing tobacco Kg. 10.00%
2401 10 70 - Tobacco for manufacture of cigar and cheroot Kg. 10.00%
2401 10 80 - Tobacco for manufacture of bookah tobacco Kg. 10.00%
2401 10 90 - Other Kg. 10.00%
2401 20 - Tobacco, partly or wholly stemmed or stripped :
2401 20 10 - Flue cured virginia tobacco Kg. 10.00%
2401 20 20 - Sun cured country (natu) tobacco Kg. 10.00%
2401 20 30 - Sun cured virginia tobacco Kg. 10.00%
2401 20 40 - Burley tobacco Kg. 10.00%
2401 20 50 - Tobacco for manufacture of biris Kg. 10.00%
2401 20 60 - Tobacco for manufacture of chewing tobacco Kg. 10.00%
2401 20 70 - Tobacco for manufacture of cigar and cheroot Kg. 10.00%
2401 20 80 - Tobacco for manufacture of hookas tobacco Kg. 10.00%
2401 20 90 - Other Kg. 10.00%
2401 30 00 - Tobacco refuse Kg. 10.00%
2402 CIGARS, CHERROTS, CIGARILLOS AND
CIGARETTES OF TOBACCO OR OR
TOBACCO SUBSTITUTES
660 55
1 2 3 4
5903 10 - With polyvinyl chloride:
5903 10 10 - Imitation leather fabrics of cotton m2 5.00%
5903 10 90 - Other m2 5.00%
5903 20 - With polyurethane:
5903 20 10 - Imitation leather fabrics, of cotton m2 5.00%
5903 20 90 - Other m 2
5.00%
5903 90 - Other:
5903 90 10 - Of cotton m2 5.00%
5903 90 20 - Polyethylene laminated jute fabrics m2 5.00%
5903 90 90 - Other m 2
5.00%
5907 - FABRICS COVERED PARTIALLY OR
FULLY WITH TEXTILE FLOCKS, OR WITH PREPARATION CONTAINING TEXTILE FLOCKS:
- Fabrics covered partially or fully with textile flocks, or with preparation contaning textile flocks:
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5907 00 11 - On the base fabrics of cotton m2 5.00% 5907 00 12 - On the base fabrics of man-made textile m 2 5.00% 6001 - PILE FABRICS, INCLUDING "LONG PILE"
FABRICS AND TERRY FABRICS, KNITTED OR CROCHETED 6001 10 - "Long pile" fabrics:
6001 10 10 - Of cotton Kg. 8.00%
6001 10 20 - Of man-made fibres Kg. 8.00%
- Loooped pile fabrics:
6001 21 00 - Of cotton Kg. 8.00%
6001 22 00 - Of man-made fibres Kg. 8.00%
- Other:
6001 91 00 - Of cotton Kg. 8.00%
6001 92 00 - Of man-made fibres Kg. 8.00%
6002 KNITTED OR CROCHETED FABRICS OF A
WIDTH NOT EXCEEDING 30 CM,
CONTAINING BY WEIGHT 5% OR MORE
OF ELASTOMERIC YARN OR RUBBER
THREAD, OTHER THAN THOSE OF
HEADING 6001
6002 40 00 - Containing by weight 5% or more of Kg. 8.00%
Elastomeric yarn but not containing rubber thread 6002 90 00 - Other Kg. 8.00% 6003 KNITTED OR CROCHETED FABRICS OF A WIDTH NOT EXCEEDING 30 CM, OTHER THAN THOSE OF HEADING 6001 OR 6002 6003 10 00 - Of wool or fine animal hair Kg. 8.00% 6003 20 00 - Of cotton Kg. 8.00% 6003 30 00 - Of synthetic fibres Kg. 8.00% 6003 40 00 - Of artificial fibres Kg. 8.00% 6003 90 00 - Other Kg. 8.00% 6004 KNIMED OR CROCDHETED FABRICS OF A WIDTH EXCEEDING 30 CM, CONTAINING BY WEIGHT 5% OR MORE OF ELASTOMERIC YARN OR RUBBER THREAD, OTHER THAN THOSE OF HEADING 6001 6004 10 00 - Containing by weight 5% or more of Kg. 8.00% elastomeric yarn but not containing rubber thread 6004 90 00 - Other Kg. 8.00% 6005 - WARP KNIT FABRICS (INCLUDING THOSE MADE ON GALLOON KNITTING MACHINES), OTHER THAN THOSE OF HEADINGS 6001 TO 6004
- Of cotton:
6005 21 00 - Unbleached or bleached Kg. 8.00% 6005 22 00 - Dyed Kg. 8.00%
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6005 23 00 - Of yarns of different colours Kg. 8.00%
6005 24 00 - Printed Kg. 8.00%
- Of synthetic fibres :
6005 31 00 - Unbleached or cleached Kg. 8.00%
6005 32 00 - Dyed Kg. 8.00%
661 56
1 2 3 4
6005 33 00 - Ofyarns of different colours Kg. 8.00%
6005 34 00 - Printed of artificial fibres :
6005 41 00 - Unbleached or bleached Kg. 8.00% 6005 42 00 - Dyed Kg. 8.00% 6005 43 00 - Of yarns of different colours Kg. 8.00% 6005 44 00 - Printed Kg. 8.00% 6006 OTHER KNITTED OR CROCHETED FABRICS Of cotton :
6006 21 00 - Unbleached or bleached Kg. 8.00%
6006 22 00 - Dyed Kg. 8.00%
6006 23 00 - Of yarns of different colours Kg. 8.00%
6006 24 00 - Printed Kg. 8.00%
Of synthetic fibres :
6006 31 00 - Unbleached or bleached Kg. 8.00%
6006 32 00 - Dyed Kg. 8.00%
6006 33 00 - Of yarns of different colours Kg. 8.00%
6006 34 00 - Printed Kg. 8.00%
Of artificial fibres :
6006 41 00 - Unbleached or bleached Kg. 8.00%
6006 42 00 - Dyed Kg. 8.00%
6006 43 00 - Of yarns of different colours Kg. 8.00%
6006 44 00 - Printed Kg. 8.00%
08. The Warp Knit Fabrics is falling under Heading 60059000 of the Central Excise Tariff. The said product is listed in the goods of special importance under the Additional Duty of Excise (Goods of Special Importance) Act, 1957. The duty is leviable @ 12%, however, on
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account of the notification dated 9/7/2004, it is exempted from payment of duty. The Central Excise & Service Tax Appellate Tribunal, (CESTAT) West Zonal, while deciding the appeal has classified Warp Knit Fabrics under Heading 60059000, Chapter 60 of the Central Excise Tariff. There was a confusion regarding classification so far as the payment of Excise Duty is concerned and the Commissioner, Central Excise appeals, by order dated 22/3/2012 has again held that Warp Knit Fabrics falls under heading 6005300 and thus falls in the list of Additional Duties of Excise (Goods of Special Importance Act, 1957) hence the rate of duty is 12%.
09. Thus, this Court is of the considered opinion that respondent No.3 has failed to consider that the Warp Knit Fabrics fall under Heading 60059000 of the Central Excise Tariff Act, as held by the Commissioner Appeals, Central Excise, Indore. By passing the impugned order, respondent No.1 has brushed aside the vital fact that the product in question is included in the list of I Schedule of the goods of Special Importance under the Additional Duty of Excise
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(Goods of Special Importance Act) 1957 and, therefore, again the impugned order deserves to be quashed.
10. In the present case, there is no dispute that Schedule I, Entry 48 refers to a classification provided under the I Schedule to the Additional Duties of Excise (Goods of Special Importance Act) 1957 and, therefore, the classification done under the Central Excise Tariff has to be accepted especially when MP VAT Act, 2002 Schedule refers to the Tariff Heading / classification under the Central Excise Act. The findings arrived at by the Assessing Officer in holding that the goods are not included in Entry 48 of Schedule I of the MP VAT Act, 2002 is therefore, bad in law. By no stretch of imagination, the goods can be treated to be included under Entry 34 List 2 of the MP VAT Act, 2002 hence, the question of payment of duty @ 5% does not arise.
11. The apex Court in the case of Asstt. Commissioner, Commercial Tax and another Vs. Amara Raja Batteries reported in (2009) 15 STJ 601 (SC) was dealing with an issue of alternative remedy.
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12. In the aforesaid case, the issue involved was decided by the higher authority ie., the Tribunal and it was held that the High Court was justified in entertaining the Writ Petition directly against the assessment order as an appeal would have been an idle formality.
13. In the present case, the classification issue has been decided u/S. 70 of the MP VAT Act, 2002 by the Commissioner and appeal to the Addl. Commissioner is certainly going to be an empty formality.
14. A similar view has been taken by this Court in the case of Ratlam Straw Board Mills Pvt. Ltd., Ratlam Vs. Commissioner of Sales Tax and others reported in [1996] 29 VKN 127. In the aforesaid case, there was a Circular issued by the Commissioner which was binding upon all subordinate authorities and in those circumstances, the alternative remedy was held to be a futile exercise.
15. Again, the apex Court in the case of Filterco and another Vs. Commissioner of Sales Tax MP reported in [1986] 19 VNK 150 has held a Writ Petition to be maintainable. The apex Court in the case of Commissioner
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of Income Tax and others Vs. Chhabil Dass Agarwal reported in (2014) 1 SCC 603 permitted interference of the High Court even though efficacious alternative remedy was available.
16. Keeping in view the aforesaid, this Court is of the considered opinion that the present petitions cannot be thrown out on the ground of availability of alternative remedy before the Asstt. Commissioner as the higher authority ie., the Commissioner has already decided the issue of classification under Section 70 of the MP VAT Act, 2002 on 14/1/2003 in the case of Neo Corp International holding that Warp Knit Fabrics falls under Entry 34 Schedule 2 Part 2 and the appeal will certainly go before an authority, subordinate to the Commissioner and, therefore, the petitioners cannot be thrown out on this ground . In the light of the aforesaid, this Court is of the considered opinion that the Writ Petition deserves to be allowed and is accordingly hereby allowed. The impugned order dated 26/12/2015 passed by the respondent No.3 Dy. Commissioner, Commercial Tax, Indore Division No.3 is
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hereby set aside as the goods in question (Warp Knit Fabrics) falls under Entry 48 of Schedule I of the MP VAT Act, 2002.
17. All other connected Writ Petitions are allowed. The impugned orders in other connected Writ Petitions are also quashed.
A copy of this order be placed in the record of the connected Writ Petitions.
(S. C. SHARMA) (VIRENDER SINGH)
JUDGE JUDGE
KR
Digitally signed by Kamal Rathor
Date: 2019.04.26 15:50:38 +05'30'