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TMI Blog2021 (6) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... Entry Of Goods Act, 1979 - HELD THAT:- If goods specified in the table are bought by the dealer into the local area for consumption or use as raw materials, component parts and inputs in the manufacture of an intermediate or finished product, such goods are exempted from levy of tax. A constitution bench of the Supreme Court examined the correctness of the ratio laid down by three judge bench in SUN EXPORT CORPORATION VERSUS COLLECTOR OF CUSTOMS, BOMBAY [ 1997 (7) TMI 117 - SUPREME COURT] , in which it was held that an ambiguity in a tax exemption provision or Notification must be interpreted so as to favour the assessee claiming the benefit of such exemption - from the said case, it is evident that an exemption Notification should be stri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the benefit of exemption as contained in Explanation I to the Notification dated 30.03.2002 issued by the Government of Karnataka under Section 3(1) of the Act. The said question in turn depends on whether the cutting tools used by the appellant such as twist drills, reamers, cutters and tapes etc can be termed as component parts of inputs in the manufacture of finished product viz., textile machinery and auto parts. 2. Facts leading to filing of this appeal briefly stated are that the appellant was engaged in the business of manufacture and supply of textile machinery and auto parts. The appellant purchases and causes entry of tools viz., twist drills, reamers, cutters and tapes for manufacture of finished products such as textile machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellate Authority dated 17.02.2010 was maintained. In the aforesaid factual backdrop, this appeal has been filed. 4. Learned counsel for the appellant while inviting the attention of this court to the words 'Consumption' or 'Use' in Explanation submitted that specified goods need not necessarily be part of intermediate or finished product and since, the specified goods there consumed / used in the manufacturing activity, as component parts / inputs, the appellant is entitled to benefit of exemption contained in Explanation-I to the Notification dated 30.03.2002. It is further submitted that first Appellate Authority after examining the sample of cutting tools of each category produced before it held that cutting tools a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used by the appellant can neither be treated as input nor component parts and cutting machines are not used as raw materials for manufacture of finished product. It is further submitted that the revisional authority has therefore, rightly held that the appellant is not entitled to benefit of exemption under Explanation I to the Notification dated 30.03.2002. It is also submitted that the order passed by the revisional authority does not call for any interference in this appeal. 6. We have considered the submissions made by learned counsel for the parties and have perused the record. The relevant extract of the Notification dated 30.03.2002 issued by the State Government in exercise of powers under Section 3(1) of the Act, which reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and liquor. 7. Thus, from perusal of the relevant extract of the aforesaid Notification, it is evident that if goods specified in the table are bought by the dealer into the local area for 'consumption' or 'use' as raw materials, component parts and inputs in the manufacture of an intermediate or finished product, such goods are exempted from levy of tax. 8. A constitution bench of the Supreme Court examined the correctness of the ratio laid down by three judge bench in 'SUN EXPORT CORPN. VS. COLLECTOR OF CUSTOMS', (1997) 6 SCC 564, in which it was held that an ambiguity in a tax exemption provision or Notification must be interpreted so as to favour the assessee claiming the benefit of such exemption and answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ples of drill bits, millers and inserts accepted the explanation of the appellant that they were consumed as inputs in the process of manufacture. Accordingly, it was held that the appellant is entitled to benefit of exemption under Explanation I to the Notification dated 30.03.2002. 10. However, the revisional authority without assigning any reasons has concluded that cutting tools are not used as raw materials, component, parts and inputs in the manufacture of intermediate of finished product. The revisional authority is required to record the findings on the factual aspect viz., whether goods viz., drill bits, millers and inserts have been consumed as inputs in the process of manufacture of finished goods viz., textile machinery and aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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