SAFEFLEX INTERNATIONAL LTD Vs. STATE OF MP

JUDGEMENT

(1.) Regard being had to the similitude in the controversy involved in the present cases, the writ petitions were analogously heard and by a common order, they are being disposed of by this Court. Facts of Writ Petition No. 8608/2016 are narrated hereunder.

(2.) The petitioner before this Court, a Company registered under the Companies Act, 1956, has filed this present writ petition challenging the order dated 26/12/2015 passed by the Dy. Commissioner, Commercial Tax, Indore Division III, Indore, imposing tax on Warp Knit Fabrics @ 5% (Value added tax). The contention of the petitioner is that the petitioner is engaged in the business of manufacture of Warp Knit Fabrics which fall under Heading No. 60059000 of the Central Excise Tariff. The said product is listed in the Goods of Special Importance under the additional duty of excise (Goods of Special Importance) Act, 1957. The petitioner has further stated that the Excise Duty payable on Warp Knit Fabrics is leviable @ 12%, however, on account of a Notification dated 9/7/2004 it is exempted from payment of Excise Duty. The petitioner has further stated that a dispute arose in respect of classification of the product and a company registered under the Companies Act M/s. Neo Corp International Ltd., went in appeal before the Excise Commissioner and the Excise Commissioner by order dated 22/3/2012 has held the classification of Warp Knit Fabrics under heading 60053300 instead of heading No. 39269099 of the Central Excise Tariff Act, 1985. The order of the Commissioner Appeals, Central Excise & Service Tax is also on record. The petitioner has also brought on record an order passed by the CESTAT (West Zonal Branch) Ahemdabad in the case of Flora Agrotech wherein again it has been held that Warp Knit Fabrics are classified under Heading 60059000 Chapter 60 of the Central Excise Tariff Act, 1985. The contention of the petitioner is that respondent No.3 has erroneously treated Warp Knit Fabrics under Entry No. 34 of Schedule II and has erroneously levied tax @ 5%, whereas, the entry should have been treated under Entry 48 List 1, Schedule I. A prayer has been made for quashment of the impugned order.

(3.) On the other hand, reply has been filed in the matter by the respondent State and it has been stated that the Commissioner of Commercial Tax in exercise of powers conferred u/S. 70 of the MP VAT Act, 2002, in the case of M/s. SR Polyimpex Pvt. Ltd., and in the case of M/s. Neo Corp International Ltd., has rightly imposed tax @5% by treating it as Entry No.34 of Schedule II. The respondents have stated that the goods in question ie., Warp Knit Fabrics/ agro shed net is not covered by Entry No. 48 of Schedule I of the MP VAT Act, because the said goods, even though it can said to be a textile is not included in the I Schedule of the Act of 1957, hence the same is taxable under Entry 34 of Part 2, Schedule II of the MP VAT Act, which relates to other fabrics other than those specified in Schedule I because Warp Knit Fabrics / agro net does not fall in first schedule to the Additional Duties of Excise (Goods of Special Importance Act, 1957 (No. 58 of 1957) which is a condition precedent for being covered by Entry No. 48 of Schedule I of the MP VAT Act 2002. The respondents have also stated that the petitioner is having an alternative remedy to approach the Additional Commissioner and thereafter again a remedy is available to approach the Tribunal, hence, the petition deserves to be thrown out on the question of alternative remedy also.