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Showing contexts for: intermediate component in Hindustan Lever Ltd vs State Of Karnataka on 2 September, 2016Matching Fragments
80. Raw materials component parts and inputs which are used in the manufacture of an intermediate or finished product.”
3. Under Section 11A of the Act, a Notification dated 31.3.1993, exempting raw materials, component parts, and inputs entering a local area for use in the manufacture of an intermediate or finished product, was promulgated. It reads as under:
“Entry tax on raw materials, etc. for use in manufacture of goods by new industrial units – Exemption (Karnataka) Notification III No.FD.11.CET 93 dated the 31st March,1993 [Public in Karnataka Gazette, Extraordinary No. 201, Part 4- C(ii) dated 31st March, 1993] In exercise of the powers conferred by section 11-A of the Karnataka Tax on Entry of Goods Act, 1979 the Government of Karnataka being of the opinion that it is necessary in the public interest so to do, hereby exempts with effect from the first day of April, 1993 the tax payable under the said act, on the entry of raw materials, component parts and inputs and machinery and its parts into a local area for use in the manufacture of an intermediate or finished product by the new industrial units mentioned in column (2) of the Table below located in the zones specified in column (3) and for the period mentioned in Column (4) thereof.
(vi) Glass bottles, jars and carboys and the like;
2%
(vii) Laminated packing materials, such as bluminised 2% paper and hessian-based paper and the like;
4. Raw materials, component parts and inputs 1% are used in the manufacture of an intermediate of finished product.
Explanation I – The words “raw materials, component parts and any other inputs” do not include exempted goods which are specified in the Schedule, horticultural produce, cereals, pulses, oil seeds including copra and cotton seeds, timber or wood of any species, newsprint, silk cocoons, raw, thrown or twisted silk, tobacco (whether raw or cured) and blended yarn, man-made filament yarn, man-made fibre yarn, man-made fibre, woolen yarn and woolen blended yarn, washed cotton seed oil, non- refined edible oil, rice bran and oil cake and such other goods as may be notified by the State Government from time to time.
Explanation II – If any of the goods liable to tax under this Act are brought into a local area for use or consumption as raw materials, component parts and inputs in the manufacture of an intermediate or finished product, the tax payable on such goods shall be at the rate of one percent.”
5. All the authorities under the Entry Tax Act i.e. the Assessing Authority, the First Appellate Authority and the Karnataka Appellate Tribunal have held that packing material cannot be regarded as raw material, component parts or inputs used in the manufacture of finished goods and, therefore, in the context of the Entry Tax Act read with Schedule I, such packing material is neither exempt nor chargeable at the rate of 1% on a true construction of the aforesaid notifications of 1993 and 1998. The High Court in turn has dismissed the revision petitions filed under the statute by the assessee following their own judgment in Nestle India Ltd. v. State of Karnataka, a Division Bench judgment of the Karnataka High Court dated 22.3.2006. This is how the appellants have come before us in the present civil appeals.
9. However, on a perusal of the definition of “goods” in Section 2(A)(4a) of the Entry Tax Act, the said definition is an exhaustive one including all kinds of movable property and livestock. It is obvious from a reading of this definition that marketability does not appear to be a sine qua non for something to qualify as “goods” under the Entry Tax Act, unlike the Central Excise Act, and this basic fact will have to be kept in view while dealing with some of the judgments that have been cited before us. This is for the reason that anything that is tangible, without more, and enters a local area for consumption, sale or use therein is taxable, the taxable event being ‘entry’ and not ‘manufacture’ of goods, which, as has been noticed hereinabove, brings in the concept of marketability in the context of a duty of excise, which is absent in the context of entry tax. We might also add that Section 2(A)(8a) wherein the “value of the goods” is defined, also makes a distinction between “goods” as such, and “packing material”, making it clear that charges borne by a dealer as cost of packing would have to be included in the “value of goods”. In the context of the Entry Tax Act, the difference between ‘goods’ used in the manufacture of goods and “packing material” is also brought out by Schedule I. Packing materials are separately defined in Entry 66. On the other hand, raw materials, component parts and inputs, which are used in the manufacture of an intermediate or finished product, are separately and distinctively given in Entry 80 thereof. The context of the Entry Tax Act therefore is clear. When raw materials, component parts and inputs are spoken of, obviously they refer to materials, components and things which go into the finished product, namely, tea in the present case, and cannot be extended to cover packing materials of the said tea which is separately provided for by the aforesaid Entry 66.