2011 (1) TMI 1193 - HC - VAT and Sales Tax

Exemption - sale of item under brand name double mazza in pouch having two parts, one containing tobacco and the other pan masala - According to the assessing authority, the disputed item consisted of two commodities, zarda , a Schedule I item, and pan masala , a Schedule IV item, poured in a single pouch marking two parts separately but the customer had no option to buy either the zarda or the pan masala alone, and therefore, the disputed item should be treated as taxable under Schedule IV - Held that - definition of pan masala or pan masala with tobacco , the General Rules for Interpretation given in the First Schedule to the Central Excise Tariff Act, 1985 have to be followed. Therefore, the disputed item manufactured by the dealer containing two separate folders, one for pan masala and the other for tobacco , but not offered to sale separately, was really a pan masala containing tobacco classified in Chapter 24 under the Tariff Heading 2404.49 although it was presented as the unassembled or disassembled article which had the essential character of the complete or finished article. The Tribunal erred in holding that the sale price of tobacco included in the total price of the disputed item should merit exemption in terms of the entry 82 of Schedule 1 of the West Bengal Sales Tax Act, 1994.

Summary

Issues Involved:
Interpretation of Schedule entries under West Bengal Sales Tax Act, 1994 for a disputed item containing both "Pan Masala" and "Tobacco" in a single pouch under the brand name "Double Mazza".

Detailed Analysis:

Issue 1: Classification of the Disputed Item
The petitioner sells a product named "Double Mazza" containing both "Pan Masala" and "Tobacco" in a single pouch. The Assessing Authority classified it as a taxable item under Schedule-IV, disallowing the claim of Schedule-I goods. The Appellate Authority and Revisional Authority upheld this classification. The Tribunal, however, noted that "Pan Masala" with "Tobacco" could not fall under Schedule-I and decided it should be taxed as an unspecified item under the 1994 Act. The court disagreed with the Tribunal, holding that the disputed item should be assessed under Tariff Heading 2404.49 of Chapter 24 as "Pan Masala containing tobacco."

Issue 2: Interpretation of Excise Tariff Definitions
The court referred to the amended definitions of "Pan Masala" and "Pan Masala containing tobacco" under the Excise Tariff. It highlighted the rule of interpretation that incomplete or unfinished articles should be classified based on their essential character. Applying this rule, the court concluded that the disputed item, despite being presented as separate parts, should be classified as "Pan Masala containing tobacco" under Tariff Heading 2404.49.

Issue 3: Tribunal's Error in Exemption Claim
The Tribunal had exempted the sale price of "Tobacco" in the disputed item under Schedule-I, neglecting the interpretation rules of the Excise Tariff. The court held that the Tribunal erred in law by granting this exemption and remanding the matter. It set aside the orders of the Assessing Authority and the Tribunal, directing the Assessing Authority to assess the disputed item under Tariff Heading 2404.49.

Conclusion:
The court allowed the writ application, overturning the Tribunal's decision and directing the proper assessment of the disputed item as "Pan Masala containing tobacco." The judgment emphasized the correct interpretation of Schedule entries and Excise Tariff definitions to determine the classification and taxation of the product in question.