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TMI Blog2010 (7) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... gram gold rectangular bars marketed by that bank and classifiable under HSN Code 7108.13.00 falls under entry 4(4) of the Third Schedule to the Act and is taxable at four per cent. State Bank of India which applied for clarification has accepted the order of clarification issued by the Commissioner and Government Pleader has produced copy of the return filed by them offering tax at four per cent on the turnover of 10 gm. rectangular gold bars sold in the market. However, the appellant which is a bank in the private sector, has challenged the order of clarification issued by the Commissioner in the case of SBI contending that the clarification is incorrect because according to the appellant, item is classifiable under HSN 7108.12.00 falling under entry 1(2) of the Second Schedule to the Act attracting tax at one per cent under the head bullion . We have heard counsel appearing for the petitioner, Government Pleader for the respondent and have seen samples of the product marketed both by the SBI on whose application the impugned clarification was issued and by the appellant which is contesting the clarification issued by the Commissioner on SBI's application, which is produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard form containing all the details of the manufacturer and the bank. What is clear from the Rules of interpretation of the entries in the Schedule is that a product with 8 digit HSN Code covers only the item described under the entry. Since the classification of various items under the Act are based on entries in the Customs Tariff Act which is based on the HSN classification, we have to necessarily refer to the entries in the Customs Tariff Act with HSN Code numbers. On going through the Customs Tariff Act, we find the description of the items with HSN Code numbers are the following: Tariff item Description of goods Unit Rate of duty Standard Preferential areas 7108 GOLD (including gold plated with platinum) unwrought or in semimanufactured forms, or in powder form Non-monetary: 7108 11 00 Powder kg. 10% . . . 7108 12 00 Other unwrought forms kg. 10% . . . 7108 13 00 Other semi-manufactured forms kg. 10% . . . 7108 20 00 Monetary Since the Rules of interpretation of the Schedules have to be in consonance with the meanings assigned to the items as described in the HSN codes, we have to only consider whether the rectangular gold bars of 10 gm. size sold by the appellant is g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssifies low purity cast gold bars, (i.e., newly-mined dore bars and bars made from melted down scrap), and refined cast gold bars used for fabrication or investment purposes, as unwrought bars. It also classifies minted gold bars as unwrought bars for fabrication or investment purposes, when they are manufactured by a recognized bar manufacturer, include official markings, and are known to have been issued at a low premium above the prevailing value of their fine gold content. However, it can be noted that, while some countries classify minted gold bars as 'unwrought', others classify them under some other category, notably as 'other semi-manufactured forms' or as 'other articles of precious metal'. Counsel for the appellant contended that the appellant is marketing rectangular gold bars in small pieces of 5 gm., 8 gm., 10 gm. and even large dimensions of 50 gm., 500 gm. and 1 kg. are also sold. However, in the impugned order the Commissioner has clarified only the rate of tax of 10 gm. rectangular piece of gold which is produced by the very same manufacturer in Switzerland and marked by them in the State. After seeing the samples, we have already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edule to the Act. In our view, minted rectangular forms of gold made with fine finish and markings with size of 5 gm., 8 gm., 10 gm., etc., are purchased only to be worn or to be gifted or purchased and retained for the finish and beauty and not for use as a raw material in the manufacture of gold ornaments which alone is covered by Second Schedule entry 1 until the amendment made effective from April 1, 2009. Counsel for the appellant has relied on several decisions, particularly of the Supreme Court in Orient Traders v. Commercial Tax Officer, Tirupati [2008] 13 VST 530. We find that the said decision is not based on the description of the entries with reference to the HSN code contained in the Customs Tariff Act, but with reference to the entries in the Sales Tax Act. Moreover, the entries interpreted are not similar to the provisions under the KVAT Act involved herein. A single Bench decision of one of us (Ramachandran Nair, J.) in Bhima Jewels v. Assistant Commissioner (Assessment), reported in [2008] 12 VST 280 (Ker) is also relied on by the counsel and contended that bullion is a raw material used in the manufacture of gold ornaments. We do not think there can be any controv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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