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TMI Blog2022 (6) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... be taken by way of last resort. Hon'ble Supreme Court in MAURI YEAST INDIA PVT. LTD. VERSUS STATE OF UP. [ 2008 (4) TMI 101 - SUPREME COURT] has held that if there is a conflict between two entries one leading to an opinion that it comes within the purview of the tariff entry and another the residuary entry, the former should be preferred. As regards the contention of the respondents that the Rusk would fall under residuary entry, the burden of proof is on the respondents and the onus also lies on them to first establish conclusively that by no conceivable process of reasoning can the said product be brought under any of the tariff items and hence the product was being brought under any of the tariff items, hence the product was being brought under the residuary item - Hon'ble Supreme Court in PUMA AYURVEDIC HERBAL (P) LTD. VERSUS COMMISSIONER OF C. EX., NAGPUR [ 2006 (3) TMI 141 - SUPREME COURT] has held that It is settled law that the burden of showing correct classification lies on the revenue. If we look at the facts of the instant case there does not appear to have been any strong evidence led by the revenue before the authorities to establish the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Schedules thereof, then the thumb rule of interpretation would be required to apply. The rusk is akin to bread will have to be read under the broad head of 'Bread', therefore, no duties will be chargeable or taxed leviable on the same. 3. It is further contended that nothing prevented the Taxing Authorities to sub classify products which have the origin from bakery and tax them separately on the basis of their commercial use or common parlance by which the products are known as such, but when no such efforts have been made by the State Authority in the notification issued under the VAT Act, 2005, then such items will have to be interpreted under the broad head of Bread and since bread carries zero percent duty, rusk cannot be charged by bringing it under the residuary head. 4. While on the other hand, Shri Ajay Vaidya, learned Senior Additional Advocate General, would argue that Rusk should be read in residuary Entry as it is entirely different product and, therefore, the assessment or demand so made is based on the interpretation by the authorities below should be sustained. We have heard learned counsel for the parties and have gone through the record of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the minority opinion of the Technical Member. It is a settled law that the onus or burden to show that a product fall within a particular Tariff Item is always on the revenue. Mere fact that a product is sold across the counters and not under a Doctors prescription does not by itself lead to the conclusion that it is not a medicament. We are also in agreement with the submission of Mr. Lakshmikumaran that merely because the percentage of medicament in a product is less does not ipso facto mean that the product is not a medicament. Generally the percentage or dosage of the medicament will be such as can be absorbed by the human body. The medicament would necessarily be covered by fillers/vehicles in order to make the product usable. It could not be denied that all the ingredients used in Banphool Oil are those which are set out in the Ayurveda text Books. Of course the formula may not be as per the text books but a medicament can also be under a patented or proprietary formula. The main criteria for determining classification is normally the use it is put to by the customers who use it. The burden of proving that Banphool Oil is understood by the customers as an hair oil was on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any stretch of interpretation. The Legislature is very clear that the bread or similar item which stands to the test of bread only be tax-free. Bread always used by the poor people and rusk used by the medium and rich families as it is costly also. 11. In order to appreciate the submissions of both the sides, it would be relevant to refer to the definition of Rusk and Toast as appeared in the dictionaries. 12. According to Black's Law Dictionary, the definition of Toast so also definition of Rusk is as under:- Toast- Sliced bread that has been browned by heat. Rusk A slice of sweet raised bread dried and cooked again in the oven. 13. So far as Webster dictionary is concerned, Toast has been defined as sliced Bread browned on both side by heat . Likewise, Rusk has also been defined as the sweet or a plain Bread baked until dry and crisp . 14. The Rusk as also Bread is made up of the same ingredients and the method of manufacturing is also the same. As observed above, the difference is the moisture contents which differentiate the Bread with a Toast. The moisture content in Bread is very high whereas the moisture content in Rusk is relatively lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinguishing it from ordinary roti which is synonymous with a loaf of bread. In this country, it is not unusual for a descriptive prefix to cannote the kind of bread such as Jawari-ki-roti, Bajre-kiroti, Makai-ki-roti, Gheon-ki-roti etc. In our view the intention of the Legislature is to include all kinds of bread which are consumed by the citizens of India, whether prepared in different ways or called by 12 different names. There is no justification for limiting the scope of the term bread to a particular kind, such as double roti as contended by the learned Advocate for the Commissioner of Sales Tax. The intention of the Legislature is further made clear in the amended Schedule I which was substituted by Act XXVIII of 1952, where the term bread in item 3 thereof includes double roti, chapathi, kulcha and shirmal . This inclusive definition of the word bread negatives the contention of the learned Advocate that by bread is only meant double roti , and no other kind of roti. If his contention was right, there was nothing to prevent the word double roti for the word bread nor can we justifiably infer that the exemption is only meant for the very limited class of ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read and bun. That statement confirms the correctness of the allegations of the petitioner. 21. In M/s S. R. Foils and Tissues Limited vs. The State of Haryana and another decided in VATAP No. 73 of 2011 (O M) on 27.10.2016, it was held in para 23 as under:- 23. If the case of the appellant is considered in the light of enunciation of law, as referred to above, Entry 57 in Schedule 'C' only prescribes 'paper', 'paper board' and 'newsprint'. It does not provide for any inclusions or exclusions. It further does not provide for any user test. The word 'paper' used in the Entry is in generic form, which will include all types of paper, which has its essential characteristics. It is not in dispute that even the tissue paper, napkin, toilet paper rolls etc. retain the essential characteristics of paper. It is only that it is in different strength and is used for different purposes. There is no competing entry to find out whether product falls in entry 'A' or 'B'. The residuary entry is to be invoked in case with liberal construction to the specific entry, the product could not be found to be forming part thereof. 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried to any other entry or Schedule V as claimed by counsel for the revenue. 15. In my view it does not make any difference whether it is sold by the present assessee or by a small manufacturer/producer of Rusk and, the intention of Government was just to exempt such items for daily consumption by even lower middle class people. 16. Taking in view the aforesaid, in my view, the view expressed by the Tax Board is just and proper and no interference is required by this Court. The judgments relied upon by the counsel for the Revenue are inapplicable to the facts of the instant case. Accordingly, the petitions being devoid of any merit, are hereby dismissed. 26. In Samsung India Electronics Private Limited vs. Government of NCT and Ors., 2017 (97) VST 417 (Delhi), it was observed in paragraphs No. 41 to 44 as under:- 41. In Commissioner of Sales Tax v. Agarwal Co. 1983 (12) ELT 116 (Bom), the question was whether 'milk' occurring in Entry 36 of Schedule A of the Bombay Sales Tax Act, 1959 includes 'milk powder' as well. It was held that milk would not only include milk in liquid form but all types of milk. It was held that while looking at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as Sodium Chloride. 44. In Sun Export Corporation v. Collector of Customs, Bombay reported in 1997 (93) ELT 641 (SC), the Supreme Court reiterated the well settled principle that if in a matter of classification of goods two views were possible, the one favouring the Assessee has to be preferred. The basic form of Rusk is Bread even as per the standard prescribed by the Indian Standard Institute. 27. All these judgments have been taken into consideration by learned Division Bench of the Chattisgarh High Court in a batch of appeal arising out of the judgment of the learned Single Judge, lead case whereof Appeal No. 760 of 2018, titled as State of Chattisgarh vs. Saj Food Product (P) Ltd., decided on 18.02.2019, wherein while affirming the judgment rendered by the learned Single Judge, it was observed as under:- 8. The State is aggrieved by the decision so taken by the Learned Single Judge and, therefore, these appeals have been preferred on their behalf. Again since these appeals arise out of a common order dated 05.03.2018 and the issue raised before us are identical in nature which was urged before the Learned Single Judge, therefore, after hearing the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial that goes into bread. 39. At first blush, the argument put forth by the petitioner appears to be attractive; after all, it is nobody s case that the petitioner buys bread from the market and manufactures rusk therefrom. According to the petitioner, the activity conducted by the petitioner is as indicated at page 9 of the present petition: The petitioner further begs to state that the item Rusk is nothing but a form of bread and is in the nature of toasted bread and there is no manufacturing process that can be said to have taken place making the item rusk as separate from bread . Rusk is a form of bread which can last longer as its moisture content is reduced by toasting the sliced bread to a given specification. After the preparation of bread is completed, the process of its conversion into rusk begins by slicing the bread into small pieces which are then dried/toasted in an oven to form rusk so that the moisture of the bread comes down to a given specification. For the purpose of preparing rusk , neither any ingredients are added to bread nor, the chemical composition of bread gets changed in any manner. Rusk is prepared by simply drying/toasting the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant before the Supreme Court carried on business of procuring cotton and transforming it into surgical cotton. Apart from the Supreme Court holding that cotton and surgical cotton were completely different products, it is evident that the raw material procured by the assessee in that case was subjected to a manufacturing process to be converted into surgical cotton. As such, merely because the assessee paid sales tax in procuring its raw material, it could not claim exemption of sales tax on its manufactured product. In the present case, there is nothing in the order impugned that brings out that the petitioner herein buys bread and converts such bread into rusk. If such were to be the case, obviously rusk would be subject to VAT, notwithstanding bread being exempted. 42. What is apparent in this case is that the petitioner may be using the same raw material as in the manufacture of bread, whereupon the petitioner manufactures a form of bread and refines the same to rusk. The process has been explicitly described at page 9 of the petition as quoted above. Thus, it is plain to see that the petitioner manufactures bread and subjects such bread to a further process, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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