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TMI Blog2016 (9) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... he following terms: (i) PVC resin paste is prepared which is coated on a paper which is called 'release paper'. (ii) A cotton fabric is pasted on the release paper. (iii) This is passed through a heated oven and the resin paste due to the process of heating is coated on the textile fabric. (iv) The release paper is removed and the final product so manufactured is called 'PVC Coated Fabric'.” Whether the product being manufactured by the appellant falls in Entry 54 of Schedule 'B' of the Act, can still be exempted from taxation? - Entry 54 of Schedule 'B' of the Act is in two parts. First part mentions leather cloth and inferior or imitation leather cloth ordinarily used in book binding, whereas the second part mentions rubber used tissue or synthetic water tissue or synthetic water-proof fabrics whether single textured or double textured and book binding cotton fabrics. The condition that additional excise duty in lieu of sales tax is leviable is applicable only on the products mentioned in second part. The type of goods mentioned in two parts are altogether different. The same are separated by “colon”. - whether the condition regarding leviability of additional excise duty in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that entry 54 is a one continuous entry and that the condition Additional Duty of excise is applicable even to the first part of entry 54 ? (ii) Whether a ground which was not taken before for want of cause of action can be raised when such cause of action arises and therefore whether the Tribunal is justified in concluding that entry 54 is one continuous entry merely because the said issue was never raised by anyone earlier? (iii) Whether an assessee can claim exemption under another entry (entry 51) when exemption of VAT is denied under one entry of Schedule B to the Haryana VAT Act, 2003, especially when the assessee's product clearly and undisputedly falls within the ambit of this another Entry as well ? (iv) Whether exempting Entry 54 of the Schedule B can be interpreted like taxing provision i.e. what is not covered therein is taxable ? (v) Whether exempting entries of Schedule B of the Haryana VAT Act, 2003 are dependent on each other, when no such qualification, express or implied, has been provided by the legislature ? 5. The appellant in the present case is a private limited company. It is claimed that it is engaged in the business of manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo parts. The condition of leviability of additional excise duty in lieu of sales tax is not applicable on the product being manufactured by the appellant. The observation by the Tribunal that clarification was earlier sought by M/s H.R. Polycoats Pvt. Ltd. and that order was upheld by the Tribunal earlier, hence, the issue could not be raised again is totally wrong for the reason that first of all, there is no estoppel against the appellant to raise a legal issue, which may not have been raised by the party earlier seeking clarification. Secondly, the issue regarding exemption from payment of tax, item being in one of the entries of Schedule 'B', was not raised by that assessee. The only issue on which clarification was sought, was the rate of tax. The minority view of the Tribunal had rightly opined that the item being manufactured by the appellant falls in Entry 51 of Schedule 'B' of the Act and not in its exception clause, hence, entitled to exemption from payment of tax. 8. First raising an argument on the issue whether the goods manufactured by the appellant is a textile, the court was apprised of the process of manufacturing. It was submitted that cotton t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annica Article was referred to, which mentions various finishing processes of textile, but still retaining the same in the category of textile. 10. A scheme prepared by the Government of India, namely, Benefits available under Technology Upgradation Fund Scheme was referred to, where it is provided that manufacturing chain in textile industry starts right from ginning of cotton till the clothing stage. The appellant, being eligible, got benefit under the scheme. The definition of cotton fabric , as provided under Section 14 (ii-a) of the Central Sales Tax Act, 1956 was referred to, which provides that cotton fabric is what is covered under different entries of Central Excise Tariff Act, 1985, as mentioned in the Section. Heading 59.03 has been mentioned. Undisputedly, the product being manufactured by the appellant is covered under that entry. Section 14(vii) of the Central Sales Tax Act, 1956 was also referred to which contains the product as mentioned in heading 59.03 of the Central Excise Tariff Act, 1985 in the category of man-made fabric. 11. It was further submitted that the aforesaid definition as provided for in the Customs Act, 1962 and Central Excise Tariff Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parallel statements. In 1911 Classic Encyclopedia, colon has been defined to mean a short clause longer than the comma , hence a mark (:) in punctuation, used to show a break in construction greater than that marked by semicolon (;) and less than that marked by a full stop. The judgment of Hon'ble the Supreme Court in Dr. M. K. Salpekar v. Sunil Kumar Shamsunder Chaudhari and others, AIR 1988 SC 1841 was referred to in support of the argument that colon puts a break in sentence. Reliance was also placed upon judgment of Madhya Pradesh High Court in Telecom District Engineer and another v. Pramesh Agrawal and another, 1997(1) MPLJ 173 and a Full Bench judgment of this Court in Rajinder Singh etc. v. Kultar Singh and others, AIR 1980 P H 1 on the same issue. If both the parts of Entry 54 of the Act are read together and the condition regarding leviability of additional duty of excise in lieu of sales tax is held to be applicable on both of them, that means the colon provided in the entry is otiose. It is settled that every word and punctuation mark in a statute has to be given its true meaning. There are no surplusages in an Act. The reason assigned by the Tribunal that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant is leather cloth/PVC cloth. Different products have been mentioned in different Entries from Sr. No. 51 to 54 of the Act in Schedule 'B' of the Act. If a product falls specifically in one entry only that entry, will have to be seen for the purpose of grant of exemption and none else. The product being manufactured by the appellant falls in Entry 54 of Schedule 'B' of the Act. Once the product of the appellant falls in Entry 54 of Schedule 'B' of the Act, it cannot claim that same falls in Entry 51 of Schedule 'B' of the Act as well. Earlier the benefit of exemption under Entry 54 of Schedule 'B' of the Act was available as the condition of levy of additional excise duty in lieu of sales tax was being fulfilled. Now with the abolition of that duty, the tax has become payable. It was so opined by the Financial Commissioner in the opinion earlier given in the case of M/s H. R. Polycoats Pvt. Ltd.'s case (supra). The additional duty was abolished w.e.f. 8.4.2011. The dispute regarding taxation started thereafter. In support of the plea, reliance was placed upon State of Maharashtra v. M/s Bradma of India Ltd., (2005) 2 SCC 669; Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Full Bench of the Tribunal, where by majority opinion, the clarification as rendered by the Financial Commissioner on an application filed by the appellant was upheld. The clarification regarding taxation was sought by the appellant by filing application under Section 56 (3) of the Act on the following issue: Whether the product being manufactured by the applicant which is technically known as Coated Fabric and in common parlance known as Rexin falling under Central Excise Tariff Heading 5903 is covered under entry 51 of Schedule B appended to the Haryana Value Added Tax Act, 2003. 23. In our opinion, the issues, which arise for consideration by this court are: (1) Whether the product being manufactured by the applicant which is technically known as Coated Fabric and in common parlance known as leather cloth/ Rexin falling under Central Excise Tariff Heading 5903 is covered under Entry 51 of Schedule B appended to the Haryana Value added Tax Act, 2003 ? (2) If the goods manufactured by the appellant fall in Entry 54 of Schedule 'B' of the Act, whether condition of leviability of additional excise duty in lieu of sales tax is applicable thereon ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. No. Description of goods 1 2 xx xx xx 51. All varieties of cotton, woollen or silken textiles including rayon, artificial silk or nylon but not including such carpets, druggets, woollen durrees, cotton floor durrees, rugs and all varieties of dryer felts on which additional Excise Duty in lieu of sales tax is not levied. 52. All varieties of textiles covered by item 51 on which knitting and embroidery work has been done provided additional Excise Duty in lieu of sales tax is levied on them. 53. Such varieties of canvas cloth tarpaulines and similar other products manufactured with cloth as base as are manufactured in textile mills, powerloom factories and processing factories (but not including transmission belts) provided additional Excise Duty in lieu of sales tax is levied on them. 54. Leather cloth and inferior or imitation leather cloth ordinarily used in book binding: rubber used tissu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1957 and thus there remains no AED in lieu of Sales Tax on Textile resulting into an understanding that the Textile falling under Entry 54 of Schedule B is taxable under the Act. Thus presently the items falling under Entry 54 are taxable under the Act. On a similar issue while issuing clarification to M/s H. R. Polycot Private Limited, Bahadurgarh, it is clearly opined that PVC coated fabric or commonly also known as rexin cloth falling under Central Excise Tariff Heading 5903 is covered under Entry 54 of the Schedule B of the Act and thus liable to tax. The PVC coated fabric stated to be manufactured and sold by the applicant under central excise tariff heading 5903 is nothing but the same as clarified in the above clarification falling under Entry 54 of Schedule B of the Act. So far as the contention of the applicant that his product falls in Entry 51 relating to all varieties of cotton, woolen or silken textiles including rayon, artificial silk or nylon that carries no weight as and when the product of the applicant specially falls in Entry 54 so the support of a general entry cannot be taken by him. The decision of the Hon'ble Apex Court taken support of by the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bric would be 'textiles'. What is necessary is no more than weaving of yarn and weaving would mean binding or putting together by some process so as to form a fabric. Moreover a textile need not be of any particular size or strength or weight. It may be in small pieces or in big rolls; it may be weak or strong, light or heavy, bleached or dyed, according to the requirement of the purchaser. The use to which it may be put is also immaterial and does not bear in its character as a textile. .... A textile may have diverse uses and it is not the use which determines its character as textile. ...... It is true that our minds are conditioned by old and antiquated notions of what are textiles and, therefore, it may sound a little strange to regard 'dryer felts' as 'textiles'. But it must be remembered that the concept of 'textiles' is not a static concept. It has, having regard to newly developing materials, methods, techniques and processes, a continually expanding content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be regarded as 'textiles'.... The character of a fabric or material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be cotton fabric, opined that leather cloth is a cotton coated fabric. It is one of the varieties of cotton fabric, hence, falls under 'textile'. 33. The judgment of this court in Orient Electrical Insulation Private Ltd.'s case (supra) is distinguishable for the reason that the issue under consideration in that judgment was whether sleevings, which were in circular form, manufactured by the assessee therein, which is a kind of insulation material to be used in electric motors was textile or not. While noticing the process of manufacture and other judgments of Madras and Gujarat High Courts dealing with the same product, this court opined that sleevings manufactured by the assessee therein cannot be termed to be textile. 34. The process for manufacture of coated fabric by the appellant is noticed in the order of the Tribunal in the following terms: (i) PVC resin paste is prepared which is coated on a paper which is called 'release paper'. (ii) A cotton fabric is pasted on the release paper. (iii) This is passed through a heated oven and the resin paste due to the process of heating is coated on the textile fabric. (iv) The release paper i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f goods. The exceptions and conditions, which were separately mentioned in the notification dated 17.4.2003 were part of the description of goods itself. Entry 18 of the Act in the notification dated 17.4.2003 is identical to Entry 51 of Schedule 'B' of the Act in notification dated 30.6.2005. No special exceptions and conditions were mentioned in that entry, whatever was required was mentioned in the column of description of goods itself. If we see Entry 21 of Schedule 'B' of the Act in the notification dated 17.4.2003, while mentioning all the goods in the column of description of goods, in the column of exceptions and conditions, it was mentioned that on which additional excise duty in lieu of sales tax is levied . This would necessarily mean that condition of levy of additional excise duty in lieu of sales tax was applicable on all the goods mentioned in the column of description of goods under Entry 21 in notification dated 17.4.2003. 39. Schedule 'B' was substituted vide notification dated 30.6.2005. The Entries, which were at Sr. Nos. 18 to 21 of Schedule 'B' of the Act, were given new Sr. Nos. 51 to 54 of Schedule 'B' of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear not only to be an absurd reading but also would make the language both faulty and ungrammatical. Hence, I find no escape from the conclusion that 'Administration of Justice' occurring in entry 3 is a distinct topic. 41. The aforesaid judgment was referred with approval by a Constitution Bench of Hon'ble the Supreme Court in Jamshed N. Guzdar v. State of Maharashtra and others, (2005) 2 SCC 591. An earlier judgment of Hon'ble the Supreme Court in Aswini Kumar Ghose v. Arbinda Bose, AIR 1952 SC 369 was also referred to, wherein it was opined that when a statute is carefully punctuated and there is doubt about its meaning, a weight should undoubtedly be given to the punctuation. 42. In Telecom District Engineer and another's case (supra), the effect of semi-colon, a punctuation mark, was under consideration. The provision reads as under: (e) to restrain any auction intended to be made or, to restrain the effect of any auction made by the Government; or to stay the proceedings for the recovery of any dues recoverable as land revenue unless adequate security is furnished. 43. It was opined that use of punctuation mark semi-colon in the later part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entry were required to comply with exceptions and conditions as provided. The observation made by the Tribunal in the order that the matter was never argued in that line is merely to be discarded for the reason that there is no estoppel against the statute. The manufacturers of these products were satisfied as they were being granted exemption from payment of tax. The issue arose only after the additional excise duty in lieu of sales tax was abolished. 45. As leather cloth, which is manufactured by the appellant, is specifically mentioned in Entry 54 of the Act and that no condition of levy of additional excise duty in lieu of sales tax is applicable thereon, in our opinion, the appellant will be entitled to benefits arising therefrom. 46. In view of answer to first two questions, as referred to in paragraph No. 24, we do not deem it appropriate to consider the issue regarding choice of an assessee to opt for any of the entry in which the goods may fall, which may be more beneficial to the assessee, as in that event, even the principle that special will exclude general may have also to be considered. 47. In view of our aforesaid discussion, questions No. (1) and (2) are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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