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TMI Blog2016 (9) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... id hard form which melts at high temperature and not bitumen emulsion. The two varieties and types carry the same composition, do not differ in character and have the same commercial identity i.e. bitumen. That apart, the use or end use test is also satisfied - bitumen and bitumen emulsion are one and the same commodity - taxable at 4% - appeal dismissed - decided against Revenue. - Civil Appeal No. 2650 of 2016 [ Arising out of SLP(C) No. 22191 of 2013 ] - - - Dated:- 6-9-2016 - Dipak Misra And Prafulla C. Pant, JJ. JUDGMENT Dipak Misra, J. In this appeal, by special leave, the Revenue has called in question the legal sustainability of the judgment and order passed by the High Court of Judicature at Allahabad in Commercial Tax Revision no. 1156 of 2009 preferred by the assessee-respondent under Section 11 of the U.P. Trade Tax Act, 1948 (for brevity, the 1948 Act ) read with Sections 81 and 58 of the VAT Act, 2008 (for short, the VAT Act ) whereby the learned Single Judge has allowed the revision negativing the stand put forth in opposition by the State to the stance highlighted by the assessee. 2. The facts on which the controversy rests is in a narrow compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dication, constrained the assessee to approach the High Court in Commercial Tax Revision no. 1156 of 2009. The High Court formulated the point in issue which reads as follows:- Whether the Bitumen and Bitumen Emulsion are one and the same commodity for the purposes of interpretation of Entry No. 22 Schedule II Part A of the U.P. Value Added Tax Act, 2002 as was originaly enacted i.e. upto enforcement of notification no. 2758 dated 29.9.2008? 6. The learned Single Judge took note of the various technical materials from the Government approved laboratory which had been brought before the tribunal, and opined that the controversy had not been appositely appreciated by the tribunal, for the materials clearly establish that bitumen and bitumen emulsion is the same thing. The High Court analysed the concept of end use, i.e. the end result of bitumen emulsion and came to hold that bitumen emulsion makes the bitumen easily usable in its emulsified form and both the items are used in the construction of road, etc. It further opined that the identity, commercial character and use of both the things are the same, though the tribunal, despite having the material before it, proceeded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee in support of the view expressed by the High Court would contend that four principles relating to interpretation of entries and taxing statute are required to be considered in the present case. According to Mr. Gulati, they are (a) plain meaning to be given to the taxing provision; (b) burden to prove classification in a particular Entry is always on the Revenue; (c) any ambiguity has to be resolved in favour of the assessee; and (d) resort to residuary Entry is to be taken as a last measure. He would put forth that in the instant case, the Revenue, prior to taxing the respondent under the residuary Entry, did not place any evidence before the Commissioner or the tribunal to show that the emulsified bitumen is not covered by the expression bitumen as found in Entry 22 of Part A of Schedule II to the VAT Act. It is urged by him, whether the activity of mixing water with bitumen amounts to manufacture under Section 2(t) of the VAT Act is wholly irrelevant for deciding the issue at hand. It is, according to Mr. Gulati, where goods are purchased on paying tax and process thereafter is undertaken, a question often arises as to whether such process amounts to manufacture or n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lities and the process by which it comes into existence. 13. Bitumen emulsion, as per Indian standards ICS 293.08.0.20 published by the Bureau of Indian Standards is a destruction of very fine particles in an aqueous medium. Harcourt Butler Technological Institute, Kanpur, in its report dated 11.4.2008 states that:- The components derived from fractional distillation of petroleum, at various temperature levies, are (I) Gas (II) Naphtha, (III) Kerosene, (IV) Diesel and lubricating oil, (V) Bitumen and furnace oil, and (VI) residue. This bitumen is known as penetration grade bitumen because the specification, by which it is designated, is obtained from the penetration test. There could be two other forms of Bitumen: Namely (I) Emulsion and (II) Cutback. In the emulsion, bitumen is in the suspension from as small globules in water, whereas in cutback, the bitumen is dissolved in suitable solvent. In bituminous construction, the choice between penetration grade bitumen and the bitumen emulsion is made depending upon the factors like, weather conditions, availability, economy and available construction time. 14. The said report discussing about its composition explicates:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epending upon some parameters like weather conditions, availability of material, economic aspects and availability of construction time. Bitumen needs preheating whereas emulsion is ready to use. It has been observed from previous studies that the physical properties of the emulsion after natural sun drying are almost similar to that of bitumen as the water present. In the binder evaporates and makes the matrix harder as obtained with the bitumen. It may, therefore, be concluded that bitumen and emulsion may be treated at par as far as their significance for application. In their respective area is concerned. 18. A reading of the aforesaid definitions and the scientific text clearly reveal that bitumen in its original form is solid but melts when heated, for it is used in molten stage. There is no difficulty to appreciate that bitumen emulsion comes into existence when bitumen is treated with emulsifiers and other chemicals to attain a liquid form. It has a huge advantage and add benefit because it is not to be heated and detained in its liquid form and has better stability and thus, saves time and cost components. That apart, it ensures its use at the stage of application. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not changed its composition, commercial identity or its use. Bitumen emulsion is regarded and performs the same function as bitumen. As a result of processing, neither the primary character nor the composition is lost. Emulsification only eases and provides proficiency to the use of application of bitumen. Hence, in popular and commercial sense, bitumen emulsion is nothing but bitumen, which is in liquid form and is user friendly. 21. It is perceivable that the legislature has used the word bitumen and treated it as a separate entity. As we notice, it has not indicated that this was done with the intention and purpose to exclude some type or variety of bitumen. All bitumen products, which share and have common composition and commercial entity, and meet the popular parlance test, is, therefore, meant to be covered by the said Entry. In the instant case, even the end use test is satisfied. There is nothing in the Entry to suggest and show that the Entry is required to be given a restrictive and a narrow meaning. 22. In this regard, another aspect needs to be noted. The Revenue does not rely upon another Entry under which bitumen emulsion can be taxed. The Revenue relies upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a specific Entry. 24. In the present context, when the word bitumen has been used as a generic expression, it would be erroneous not to cover a product that is only a type or form of bitumen and retains all its essential characteristics, and treat it as covered by the residuary Entry by some kind of ingenuous reasoning. Taking it outside the purview of the specific Entry is incorrect. 25. At this juncture, we may refer to certain pronouncements commended to us by the learned counsel for the appellant. In Collector of Customs and others v. Kumudam Publications (P) Limited and others (1998) 9 SCC 339, while adverting to the issue of classification it has been held that it would not be correct to say that in no case can the end use or function of the goods be relevant in the question of classification, as was held in Indian Tool Manufacturers v. Asstt. Collector of Central Excise, Nasik and others (1994) Supp (3) SCC 632. The decision in Commissioner of Central Excise, Cochin v. Mannampalakkal Rubber Latex Works (2007) 217 ELT 161 (SC) emphasizes and holds that in the matters of classification, composition test is important test and the end user test would only apply if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself would not be per se relevant under the Sales Tax or Value Added Tax Act. Thus, there is a distinction between what is exigible to tax under the excise law and the incidence of tax when the legislation relates to sales or value added tax. What is relevant is the classification. In this context, the verdict in Osnar Chemical Private Limited (supra) is significant. The said authority refers to two other variants of bitumen, namely, polymer modified bitumen and crumbled rubber modified bitumen which are created by the process of mixing of polymer and additive to bitumen. It has been held that the aforesaid processes result in improvement of the quality of bitumen and there is no change in the characteristics or identity of bitumen so as to transform bitumen into a new product having an identity, characteristic and use. It has been ruled therein that there is a fallacy in the argument raised by the Revenue that bitumen per se would only include its solid hard form which melts at high temperature and not bitumen emulsion. The two varieties and types carry the same composition, do not differ in character and have the same commercial identity i.e. bitumen. That apart, the use or en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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