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2017 (7) TMI 1236 - AAR - VAT and Sales TaxRate of tax - Crysol CU - classification of goods - whether classified under CETH sub-heading 38231900 or not - NOTIFICATION No. VAT-1505/CR-234/Taxation-1, dated-September 1, 2005, Whether the impugned products are covered by the Notification issued by the state government for the purpose of Schedule Entry C-54 or otherwise? Whether the impugned products are covered by chapter 29 or otherwise? - Held that - The impugned products do not satisfy the requirements / qualifications as laid in Note-I specifically (a) and (b). Similarly, the impugned products are not separate chemically defined elements or compounds (usually classified in Chapter 28 or 29) and not covered with the exception provided there in. Therefore, the products cannot be classified under chapter 29 of Central Excise Tariff Act, 1985 (CETA). - The Crysol CU and its variants are not mono-carboxylic acids. A carboxylic acid is an organic compound that contains a carboxyl group (C ( O) OH). The general formula of a carboxylic acid is R-COOH, with R referring to the rest of the (possibly quite large) molecule. The applicant has admitted the interpretation regarding CET H No.38231900 during the course of hearing and stated that he is not pursuing the said CET H No. for the impugned product. Therefore, the impugned products, Crysol CU and its variants are not covered by CET H No. 38231900 as mentioned in sales invoices. The CETH 3814 is covered at serial number 178 in the Notification Dt. 01.09.2005 issued to define Industrial Inputs for the purpose of Schedule Entry C-54. However, the description of goods in column 5 of the said notification against CETH 3814 is restricted to products, Reducers and blanket wash/roller wash used in the printing Industry . The description of goods sold by the dealer i.e. Composite Organic Solvent and description given in notification Dt 01.09.2005 at Serial number 178 does not match. Hence the Note No. 2 appended with notification is applicable. The note no. 2 states that Where any commodities are described against any heading or, sub-heading or as the case may be, tariff item, 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. Hence the impugned product is not covered by the Notification Entry, 178. The Crysol CU, being a blend of various chemicals as shown above in Table-2. The Crysol CU 132 is a versatile organic solvent used in various industries for different purposes, which is rapidly replacing other cleaning processes such as emulsion cleaning, alkaline cleaning and steam cleaning. and hence shall not be covered under the scope of Schedule Entry, C-54 and covered under schedule E-1 of MVAT Act 2002. The prospective effect - use of discretionary power - Held that - he applicant cannot prove existence of circumstances which warrant us to use the discretionary power. In fact use of such discretionary powers in the absence of compelling circumstances would be detrimental to legitimate government revenue and would wipe out the legitimate tax liability In these circumstances, we do not allow the use of prospective effect as a tool to protect or to wipe of legitimate tax liability. Ruling - The commodities, mentioned in Table-1, as above do not find place in the entries of other schedules (A, B, C or D). Hence, they are covered by residuary entry, E-1 of MVAT Act, 2002 and are liable to VAT at the rate provided in said Schedule. The prayer to grant prospective effect to this order is rejected.
Issues Involved:
1. Classification of the product "Crysol CU" and its variants under the appropriate Central Excise Tariff Heading (CETH). 2. Determination of the applicable tax rate under the Maharashtra Value Added Tax (MVAT) Act, 2002. 3. Request for prospective effect of the advance ruling. Detailed Analysis: 1. Classification of the Product: The applicant, M/s Crystal India, sought to classify "Crysol CU" and its variants under CETH sub-heading 38231900 initially and later under 29032900. The product is a blend of various chemicals including Ethylene Dichloride, Carbon Tetrachloride, Tetra Chloro Ethylene, and Chloroform. - Chapter 29 Analysis: The product does not meet the criteria under Chapter 29 of the Central Excise Tariff Act, 1985, which applies to "separate chemically defined organic compounds." The product is a mixture and not a separate chemically defined compound, thus it cannot be classified under heading 2903. - Chapter 38 Analysis: The product fits under Chapter 38, specifically CETH 3814, which includes "Organic Composite Solvents and Thinners, Not Elsewhere Specified or Included; Prepared Paint or Varnish Removers." The product is a composite solvent used in various industries, thus fitting the description under CETH 3814. 2. Determination of Applicable Tax Rate: The applicant argued that the product should be taxed at a concessional rate of 5.5% under Schedule Entry C-54, which covers "Industrial inputs and packing materials as may be notified by the State Government." - Schedule Entry C-54: The notification specifies goods covered under specific headings. CETH 3814 is included in the notification but restricted to "Reducers and blanket wash/roller wash used in the printing industry." Since "Crysol CU" and its variants do not match this description, they do not qualify for the concessional rate under C-54. - Conclusion: The products are not covered by the specific entries in the notification and thus fall under the residuary entry E-1 of the MVAT Act, 2002, making them liable to VAT at the standard rate. 3. Request for Prospective Effect: The applicant requested that any adverse ruling should apply prospectively, citing various judgments and the transition to GST. - Legal Provisions and Precedents: Section 55(9) of the MVAT Act allows for prospective effect if circumstances warrant. The High Court in Lalbaugcha Raja Sarwajanik Ganeshotsav Mandal emphasized that discretionary power should be exercised judiciously and not to defeat the law. - Analysis: The ruling found no ambiguity in the entries of the notification or the Central Excise Tariff Headings. The applicant failed to prove compelling circumstances for prospective effect. The request was seen as an attempt to avoid legitimate tax liability. - Conclusion: The prayer for prospective effect was rejected, and the ruling applies retrospectively. Final Judgment: A. The products "Crysol CU" and its variants are classified under the residuary entry E-1 of the MVAT Act, 2002, and are liable to VAT at the standard rate. B. The request for prospective effect of the ruling is denied.
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