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TMI Blog2016 (11) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... d-anodised utensils sold by the appellant under his sales invoice dated 06.02.1996 falls under Schedule Entry C-II-26 and hence would not get covered by the Schedule Entry C-II-24? - Held that: - satilon coating is a hard anodizing coating which is not brushed or sprayed on. It is an integral part of the metal built up molecule to the thickness of more than 50 microns, under very carefully controlled conditions, through electrolysis. Satilon forms an extremely stable surface that is nontoxic, non-staining and non-reactive with foods. It is a naturally dark grey colour. No pigment is added. Satilon does not tarnish, stays looking new for years and makes the utensil non-stick. It will not scratch, is highly abrasion resistant and is 2.4 times harder than stainless steel - the products of the Applicant cannot be classified under Schedule Entry C-II-17 (prior to amendment) and CII- 24 (after amendment). We have no hesitation in holding that the products of the Applicant sold under its invoice dated 12th January, 1995 would fall under Schedule Entry C-II-46B and the Applicant’s products sold under its invoice 6th February, 1996 would fall under Schedule Entry C-II-26. The Sales Tax R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on their products, namely, Anodized Concave Tawa and Anodized Kadai of different sizes ( the DDQ order ). 3. To understand the present controversy, it would be necessary to first set out the necessary Schedule Entries and the amendments thereto. Schedule Entry C-II-17 deals with inter alia utensils made of non-ferrous metals. For the period 1.9.1990 to 30.09.1995, the Schedule Entry C-II-17 read as under:- Sr.No. Description of Goods Rate of Sales Tax Rate of Purchase Tax Period 17. Utensils made of non-ferrous metals (other than those covered by any other entries in this schedule or any other schedule), but excluding utensils made of gold and silver (Sales or purchases of utensils made of aluminium of this Entry: Rate of tax is reduced to 4 % by Entry (235) G by STA-1086/103/RES-8 dt. 30.6.1986 w.e.f. 1.7.1986 to 31.3.1994 and w.e.f. 1.4.1994 the rate of tax is reduced to 1 % by STA-1094/12/T-2 dt. 8.9.1994) 6% 6% 1.9.1990 to 30.9.1995 4. The Schedule Entries relating to heat resist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re amendment) and Schedule Entry C-II-26 on the other hand (after amendment), it is clear that with effect from 1.10.1995 the Schedule Entries C-II-46A and C-II-46B were combined into Schedule Entry C-II-26. Now after amendment, Schedule C-II-26 took within its sweep cookware, serveware and kitchenware coated with any material to make it heat resistant or non-stick. 7. Having set out the relevant Schedule Entries, we shall now turn our attention to the facts. In both these References the facts are almost identical. Hence, for the sake of convenience we shall refer to the facts in Sales Tax Reference No.7 of 2009. (a) The Applicant is a Partnership Firm and manufactures aluminium utensils used for the household purposes. According to the Applicant, the utensils sold by it are not coated with any material so as to make them heat resistant or non-stick. Be that as it may, since the Applicant wanted some clarity in respect of the products sold by it, namely, Anodized Concave Tawa and Anodized Kadai , the Applicant filed two Applications both dated 10th October, 1997 ( the DDQ Applications ) under Section 52 of the BST Act for determination of the rate of tax in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , while the coating on a non-stick cookware would come off with mechanical abrasion and deteriorate rapidly with heat in excess of 260 C. Thus, on the basis of this reasoning, the MSTT classified the products of the Applicant sold under their invoice dated 12th January, 1995 under Schedule Entry C-II-46A instead of C-II-46B (as held by the Commissioner). Since after 1.10.1995, Schedule Entry C-II-26 took within its purview cookware, serveware and kitchenware coated with any material making it heat-resistant or non-stick, the MSTT held that the Applicant s products sold under its invoice dated 6th February, 1996 would fall under Schedule Entry C-II-26. (d) Being aggrieved by the dismissal of the Appeals by the MSTT, the Applicant preferred two Reference Applications under Section 61 of the BST Act inter alia praying to refer the questions mentioned in the said Applications for the opinion of this Court. It is, in these circumstances, that the MSTT partly allowed the Reference Applications and referred the questions of law mentioned in paragraph 1 above for the opinion of this Court. 8. In this factual backdrop, Mr Surte, the learned counsel appearing on behalf of the Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries C-II- 46A and C-II-46B (before amendment) as well as Schedule Entry C-II- 26 (after amendment). Accordingly, he submitted that the questions of law set out in paragraph 1 above be answered in the negative and in favour of the Applicant and against the Revenue. 11. On the other hand, Mr Nair, learned counsel appearing on behalf of the Revenue, submitted that the products of the Applicant sold under its first invoice dated 12th January, 1995 ought to be classified under Schedule Entry C-II-46B (non-stick cookware) and under the second invoice dated 6th February, 1996 under Schedule Entry C-II-26. According to him, the products of the Applicant would squarely fall in the aforesaid two Entries as they have stick resistant properties. They acquire these stick resistant properties by virtue of a coating being formed on the utensils by virtue of it undergoing the process of anodizing. He submitted that the argument of the Applicant that no coating is found on the utensils when it undergoes the process of anodizing is factually incorrect. He submitted that the process of anodizing the aluminium utensils provides a stick resistant coating to the utensils. By virtue of this process, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding on the process, is the second hardest substance known to man, second only to diamonds. He, therefore, submitted that the products of the Applicant have been correctly classified by the Commissioner in its DDQ order under Schedule Entry C-II-46B (before amendment) and C-II-26 (after amendment). 14. Additionally, Mr Nair submitted that even under the common parlance test, the products of the Applicant could not be understood as ordinary aluminium utensils that would fall under Schedule Entry C-II-17 (before amendment) and C-II-24 (after amendment). The prices of the products of the Applicant are far higher than ordinary aluminium utensils sold in the market. For all the aforesaid reasons, Mr Nair submitted that the products of the Applicant sold under their invoice dated 12th January, 1995 are correctly classified by the Commissioner under Schedule Entry C-II- 46B. Similarly, according to Mr. Nair, the Commissioner has correctly classified the products of the Applicant sold under their invoice dated 6th February, 1996 under Schedule Entry C-II-26. 15. We have heard the learned counsel for respective parties at length. We have perused the papers and proceedings in both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant under its invoices dated 12th January, 1995 and 6th February, 1996 for it to fall either under Schedule Entries C-II-46A or C-II-46B (before amendment) or C-II-26 (after amendment). The corollary to this argument was that the Applicant s products would therefore fall within Schedule Entries CII- 17 (before amendment) and C-II-24 (after amendment), respectively. 19. We are afraid we are unable to accept this submission. For the Applicant's product to fall within either Schedule Entry C-II- 17 (before amendment) or C-II-24 (after amendment), the following basic conditions are to be fulfilled:- (1) the utensil is made of non-ferrous metal; and (2) this utensil made of non-ferrous metal should not be covered in any other Entry either in Schedule 'C' or any other Schedule to the Bombay Sales Tax Act. 20. In Schedule Entry C-II-17 one more condition has to be fulfilled, viz. the utensil should not be made of gold or silver. It is common ground before us that the Applicant s products are made of aluminium and therefore, the first condition is fulfilled. However, the dispute arises with reference to the second condition viz. whether they are covered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely fall within Schedule Entry C-II-46B (prior to amendment) and C-II-26 (after amendment). 23. Even from the advertisement of the Applicant s products (pg 67 of the paperbook), it is clear that this is how even the Applicant understood it. The relevant portion of the said advertisement reads thus:- This 'Armour' finish cookware is made of heavy gauge, commercially pure aluminium metal, which is one of the best and most even conductors of heat. The metal surface is specially toughened to the 'Armour' finish surface by an electrolysis process. The Armour Finish forms an integral part of the metal and is natural dark gray in colour. IT IS TOUGH, STABLE, NON-TOXIC, NON-STAINING AND NONREACTIVE WITH FOODS. Armour Finish thus combines the superior heat conductivity of aluminium with the corrosion resistance of stainless steel. Armour Finish does not develop hot-spots like in stainless steel. Armour Finish: Stays Looking Good:- It does not tarnish and with a little proper cleaning, stays looking good for years. Stays tough:- It will not scratch. It is highly abrasion resistant in fact harder than stainless steel. Provides Convenien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Hawkins cookware with satilon coating is not understood as aluminium ware. We further agree with the view taken by the High Court that the amendment to Entry 104 of the First Schedule is clarificatory in nature. (emphasis supplied) 26. We must mention here that satilon coating is a hard anodizing coating which is not brushed or sprayed on. It is an integral part of the metal built up molecule to the thickness of more than 50 microns, under very carefully controlled conditions, through electrolysis. Satilon forms an extremely stable surface that is nontoxic, non-staining and non-reactive with foods. It is a naturally dark grey colour. No pigment is added. Satilon does not tarnish, stays looking new for years and makes the utensil non-stick. It will not scratch, is highly abrasion resistant and is 2.4 times harder than stainless steel. Once we understand what is a satilon coating, then the decision of the Supreme Court in the case of Hawkins Cookers Ltd.(2008) 12 SCC 447 would squarely apply to the facts of the present case. 27. In view of our foregoing discussion, we have no hesitation in holding that the products of the Applicant sold under its invoice dated 12t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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