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Saturday, September 10, 2016

The Commissioner of Commercial Taxes, vide order dated 23.1.1999 opined that bitumen emulsion is an unclassified commodity and, therefore, is excisable to tax at the rate of 12.5% as it would fall under the residuary Entry.=when bitumen is available in the liquid form, it is known as bitumen emulsion and is commonly known as bitumen when it is available in the solid form; and both the commodities are understood in the same manner in the commercial world and the end use is the same and, therefore, the rate of tax to be determined has to be the same as prescribed for bitumen.= What is relevant is the classification. In this context, the verdict in Osnar Chemical Private Limited (supra) is significant. The said authority refers to two other variants of bitumen, namely, polymer modified bitumen and crumbled rubber modified bitumen which are created by the process of mixing of polymer and additive to bitumen. It has been held that the aforesaid processes result in improvement of the quality of bitumen and there is no change in the characteristics or identity of bitumen so as to transform bitumen into a new product having an identity, characteristic and use. It has been ruled therein that there is a fallacy in the argument raised by the Revenue that bitumen per se would only include its solid hard form which melts at high temperature and not bitumen emulsion. The two varieties and types carry the same composition, do not differ in character and have the same commercial identity i.e. bitumen. That apart, the use or end use test is also satisfied.

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.2650  OF 2016
                  [Arising out of SLP(C) No. 22191 OF 2013]



Commissioner of Commercial Tax, U.P.          ... Appellant

                                   Versus

M/s. A.R. Thermosets (Pvt.) Ltd.              ... Respondent





                               J U D G M E N T



Dipak Misra, J.

      In this appeal, by special leave, the Revenue has called  in  question
the legal sustainability of the judgment and order passed by the High  Court
of Judicature at Allahabad in Commercial  Tax  Revision  no.  1156  of  2009
preferred by the assessee-respondent under Section 11 of the U.P. Trade  Tax
Act, 1948 (for brevity, ‘the 1948 Act’) read with Sections 81 and 58 of  the
VAT Act, 2008 (for short, ‘the VAT Act’) whereby the  learned  Single  Judge
has allowed the revision negativing the stand put  forth  in  opposition  by
the State to the stance highlighted by the assessee.

2.    The facts on which the controversy rests is in a narrow  compass.  The
respondent manufactures “bitumen emulsion”.  It filed an application  before
the Commissioner, Commercial Taxes, Lucknow, U.P. under Section  59  of  the
VAT Act seeking a clarification about the rate  of  tax  applicable  to  the
sales of bitumen emulsion.   The  Commissioner  of  Commercial  Taxes,  vide
order dated 23.1.1999  opined  that  bitumen  emulsion  is  an  unclassified
commodity and, therefore, is excisable to tax at the rate  of  12.5%  as  it
would fall under the residuary Entry.

3.     Being  aggrieved  by  the  order  dated  23.1.1999,  the   respondent
preferred Appeal No. 6 of  2009  under  the  VAT  Act  before  the  Tribunal
Commercial Taxes, U.P., Lucknow (for short ‘the tribunal’) which  was  heard
by the Full Bench.  It was contended before the tribunal  by  the  assessee-
appellant therein that bitumen as a commodity is taxed at  4%  under  Serial
no. 22 Part A of Schedule II to the VAT Act and bitumen is  found  in  solid
state and to bring it in the liquid form, water is  added  to  it  and  very
little quantity is used in the process.  Elaborating  the  said  submission,
it was urged that when bitumen is available in the liquid form, it is  known
as bitumen emulsion and is commonly known as bitumen when  it  is  available
in the solid form; and both the  commodities  are  understood  in  the  same
manner in the commercial world and the end use is the same  and,  therefore,
the rate of tax to be determined has  to  be  the  same  as  prescribed  for
bitumen.
4.     Be it stated, as per Notification  No.  100  dated  15.1.2000  issued
under the erstwhile U.P. Trade Tax Act, 1948,  bitumen  was  taxed  at  20%.
Under the VAT Act, bitumen has been classified under Part A of  Schedule  II
and the tax leviable is 4%.  Before  the  tribunal,  the  assessee-appellant
produced  reports  from  Harcourt  Butler  Technical  Institute,  Kanpur  to
bolster the stand that there is no difference between  the  two  commodities
and they are to be categorised as one  item,  if  common  parlance  test  is
applied.   To  buttress  the   submissions,   the   assessee   relied   upon
  CST v. Ashok Grah Udyog Kendra Private Ltd.[1], CST v. Bechu  Ram  Kishori
Lal[2], and M/s Indodan Milk Products v.  Commissioner  Sales  Tax[3].   The
tribunal referred to one of its earlier decisions in appeal no. 17  of  2000
decided on 3.4.2009 and on the basis of reasons ascribed  therein  dismissed
the revision.
5.    The dissatisfaction caused by the said adjudication,  constrained  the
assessee to approach the High Court in Commercial Tax Revision no.  1156  of
2009.  The High Court formulated the point in issue which reads as follows:-


“Whether the Bitumen and Bitumen Emulsion are one  and  the  same  commodity
for the purposes of interpretation of Entry No. 22 Schedule  II  Part  A  of
the U.P. Value Added Tax Act,  2002  as  was  originaly  enacted  i.e.  upto
enforcement of notification no. 2758 dated 29.9.2008?

6.    The learned Single Judge took note of the various technical  materials
from the Government approved laboratory which had been  brought  before  the
tribunal,  and  opined  that  the  controversy  had  not   been   appositely
appreciated by the  tribunal,  for  the  materials  clearly  establish  that
bitumen and bitumen emulsion is the same thing.   The  High  Court  analysed
the concept of end use, i.e. the end result of bitumen emulsion and came  to
hold  that  bitumen  emulsion  makes  the  bitumen  easily  usable  in   its
emulsified form and both the items are used in  the  construction  of  road,
etc.  It further opined that the identity, commercial character and  use  of
both the things are the  same,  though  the  tribunal,  despite  having  the
material before it, proceeded to record  findings  otherwise.   That  apart,
the High Court took note of the decision of this Court  in  Commissioner  of
Central  Excise,  Bangalore  v.  Osnar  Chemical  Private   Limited[4]   and
ultimately ruled that it could not be said  that  mixing  of  some  material
would amount  to  manufacture  unless  it  results  in  a  change  when  the
commodity concerned cannot  be  recognised  as  an  original  commodity  but
rather new and distinct article emerges having different commercial use  and
identity.  On the basis of the aforesaid analysis, the  High  Court  allowed
the revision and set aside the orders of the forums below.


7.    We have heard  Mr.  Pawan  Shree  Agarwal,  learned  counsel  for  the
appellant and Mr. Kavin Gulati, learned senior counsel along  with  Mr.  Avi
Tandon, learned counsel for the respondents.
8.    Criticising the view of  the  High  Court,  it  is  submitted  by  Mr.
Agarwal that it has erred in opining that bitumen  in  its  emulsified  form
also remains bitumen.  He has drawn inspiration from the  language  used  in
Section 2(t) of the VAT Act to structure the submission that in the  process
of conversion, manufacturing takes place.  It is his further  argument  that
the decision in Osnar Chemical Private Limited (supra) is not applicable  to
the present controversy as the said decision was rendered in the context  of
the  Central  Excise  Act,  1944  whereas  the  lis  herein  hinges  on  the
definition of manufacturing.  For the said purpose, he has relied  upon  the
authority in Sonebhadra Fuels v. Commissioner, Trade Tax, U.P.,  Lucknow[5].
 Learned counsel for the Revenue contends that when the  view  expressed  by
the lower authorities is neither perverse nor arbitrary, the High  Court  in
exercise of its revisional jurisdiction should not have interfered with  the
findings and for the said purpose he has commended us to  the  authority  in
N. Eswari v. K. Swarajya Lakshmi[6].   Mr. Agarwal has  canvassed  that  the
intention of the legislature, as is manifest,  is  to  charge  a  particular
rate of tax on  bitumen  and  it  remotely  does  not  conceive  of  bitumen
emulsion and the Court should not enlarge the scope of  legislation  or  the
intention of it by adding a word to the term in the statute,  which  is  not
permissible, for a taxing statute has  to  be  understood  what  is  clearly
stated therein and not what is intended to be said.
9.    Mr. Gulati, learned senior  counsel  appearing  for  the  assessee  in
support of the view expressed by the High  Court  would  contend  that  four
principles relating to interpretation of  entries  and  taxing  statute  are
required to be considered in the present case.   According  to  Mr.  Gulati,
they are (a) plain meaning to be given to the taxing provision;  (b)  burden
to prove classification in a particular Entry is always on the Revenue;  (c)
any ambiguity has to be resolved in favour of the assessee; and  (d)  resort
to residuary Entry is to be taken as a last measure.   He  would  put  forth
that in the instant case, the Revenue, prior to taxing the respondent  under
the residuary Entry, did not place any evidence before the  Commissioner  or
the tribunal to show that the emulsified  bitumen  is  not  covered  by  the
expression bitumen as found in Entry 22 of Part A of Schedule II to the  VAT
Act.  It is urged by him, whether the activity of mixing water with  bitumen
amounts to  manufacture  under  Section  2(t)  of  the  VAT  Act  is  wholly
irrelevant for deciding the issue at hand.  It is, according to Mr.  Gulati,
where  goods  are  purchased  on  paying  tax  and  process  thereafter   is
undertaken, a question often arises as to whether such  process  amounts  to
manufacture or not, and if it amounts to manufacture, then it  would  enable
the department to levy tax again as the commodity in different, a  new  one,
for the purposes of this Act and the tax can be imposed as  a  single  point
levy again, but in the case at hand,  that is not  the  situation.   Learned
senior  counsel  further  submits  that  every  process  involved   in   the
manufacture of a commodity does not relate to manufacture of a  new  product
as the end product  continues  to  retain  the  character  of  the  original
product.  According to him, solely because some  process  has  been  carried
out, it cannot  be  held  that  a  new  product  has  come  into  existence.
Expatriating the said submission, it  is  put  forth  that  the  process  of
heating on high degree temperature and then adding water  to  it  to  obtain
emulsified bitumen does not alter the  basic  nature  of  bitumen  but  only
brings a change in physical appearance  of  the  product.   He  has  heavily
relied on Osnar Chemical Private Limited (supra) to highlight  that  bitumen
would include bitumen emulsion.
10.   The principal  controversy,  as  we  perceive,  is  “whether  “bitumen
emulsion” is covered within Entry 22 of Schedule II of  the  VAT  Act  which
only refers to “bitumen””.    According  to  Academic  Press  Dictionary  of
Science and Technology, “bitumen” means:-
“Bitumen Geology and naturally occurring flammable  substance  mainly  of  a
mixture of hydrocarbons such as petroleum or asphalt.

Materials 1. Originally, a type  of  asphalt  occurring  naturally  in  Asia
Minor. 2. Any  similar  black,  sticky  mixture  of  hydrocarbons  occurring
naturally or pyrolytically in  the  atmosphere  and  completely  soluble  in
carbon disulfide: obtained mainly from natural oxidized  petroleum  products
or from a petroleum distillation process.”


11.   The McGraw-Hill Concise Encyclopedia of Science  &  Technology  (Third
Edition) defines “bitumen” as under:-

“Bitumen A term used  to  designate  naturally  occurring  or  pyrolytically
obtained substances of dark to black color  consisting  almost  entirely  of
carbon and hydrogen with very little oxygen, nitrogen, and sulphur.  Bitumen
may be of variable hardness  and  volatility,  ranging  from  crude  oil  to
asphaltites and is largely soluble in carbon disulfifde.”

12.    The  above  definitions  when  appreciated  clearly  show  that  they
expressively define the word  “bitumen”  as  a  commodity  and  explain  its
chemical composition, colour or appearance and qualities and the process  by
which it comes into existence.
13.   Bitumen emulsion, as per Indian standards  ICS  293.08.0.20  published
by the Bureau of Indian Standards is a destruction of  very  fine  particles
in an aqueous medium.  Harcourt Butler Technological Institute,  Kanpur,  in
its report dated 11.4.2008 states that:-
“The components  derived  from  fractional  distillation  of  petroleum,  at
various temperature levies, are (I) Gas (II) Naphtha, (III)  Kerosene,  (IV)
Diesel and lubricating oil, (V) Bitumen and furnace oil, and  (VI)  residue.
This  bitumen  is  known  as   penetration   grade   bitumen   because   the
specification, by which it is designated, is obtained from  the  penetration
test.  There could be two other forms of Bitumen: Namely  (I)  Emulsion  and
(II) Cutback.  In the emulsion, bitumen is in the suspension from  as  small
globules in water, whereas in cutback, the bitumen is dissolved in  suitable
solvent.  In bituminous construction, the choice between  penetration  grade
bitumen and the bitumen emulsion is made depending upon  the  factors  like,
weather conditions, availability, economy and available construction time.”

14.   The said report discussing about its composition explicates:-
“Bitumen is basically a hydrocarbon with 10% by weight of atoms of  sulphur,
nitrogen and oxygen, attached to hydrocarbon molecules.  The carbon  content
in  bitumen  is  80-87%.   Three  basic  components  of  bitumen   are   (I)
asphaltene, (II) maltene and (III) carbine.  The chemical bonds  in  bitumen
are weak and break when heat is applied.  When it is cooled, it  comes  back
to its original structure, but not necessarily the same as before.”

15.   The said report has further proceeded to state that emulsion is a  two
phase system consisting of two immiscible liquids, one  being  dispersed  as
finite globules in the other.  In bitumen  emulsion,  bitumen  globules  are
suspended as emulsion in water with the help of emulsifiers, which are  used
to stabilize the emulsion.  Emulsifiers  break  into  ions  and  charge  the
bitumen particles.  Charged particles repel each other  and  the  suspension
remains stable and  this  stability  remains  as  long  as  water  does  not
evaporate, freeze or emulsifier does not break.
16.   About the characterization of the bitumen, report states:-
“Bitumen materials have certain characteristics such  as  (I)  waterproofing
(II) durability,  (III)  resistance  to  strong  acids  and  (IV)  cementing
properties.  At normal temperature, bitumen is semi-solid and takes time  to
flow.  At higher temperatures, it behaves like a viscous liquid, whereas  at
very low temperature, is brittle as glass. Bitumen  is  believed  to  behave
‘viscoelastically’ at the standard operating temperature at highways.”

17.    According to the report when a state of liquefaction is achieved  and
the same is constant for a longer period,  it  can  be  used  under  diverse
moisturic conditions and has a very  wide  range  of  applications  such  as
surface dressing of low volume roads, curing purposes base for  high  volume
roads, surface dressing, tack  coat,  premix  carpets,  soil  stabilization,
etc.  The report has clearly stated that the use of bitumen  is  because  of
its characteristics which includes cementing properties.  Be it  noted,  the
use of both bitumen and  bitumen  emulsion  is  similar,  that  is,  surface
dressing,  tack  coat,  premix  carpets,  soil   stabilization,   etc.   The
concluding remarks of the report is extracted below:-
“Bitumen and Emulsion are two forms of bituminous binders which  serve  some
common purposes in road construction and maintenance.  Bitumen and  emulsion
are selected for various applications depending upon  some  parameters  like
weather  conditions,  availability  of  material,   economic   aspects   and
availability  of  construction  time.   Bitumen  needs  preheating   whereas
emulsion is ready to use.  It has been observed from previous  studies  that
the physical properties of the emulsion after natural sun drying are  almost
similar to that of bitumen as the water present.  In the  binder  evaporates
and makes  the  matrix  harder  as  obtained  with  the  bitumen.   It  may,
therefore, be concluded that bitumen and emulsion may be treated at  par  as
far as their significance for application.   In  their  respective  area  is
concerned.”

18.   A reading  of  the  aforesaid  definitions  and  the  scientific  text
clearly reveal that bitumen in its original form is  solid  but  melts  when
heated, for it  is  used  in  molten  stage.   There  is  no  difficulty  to
appreciate that bitumen  emulsion  comes  into  existence  when  bitumen  is
treated with emulsifiers and other chemicals to attain a  liquid  form.   It
has a huge advantage and add benefit because it is  not  to  be  heated  and
detained in its liquid form and has better stability and  thus,  saves  time
and cost components.  That apart,  it  ensures  its  use  at  the  stage  of
application.  Needless to say it is comparatively less  hazardous.   Bitumen
consists of four forms of variants, namely, solid bitumen, polymer  bitumen,
crumbler rubber modified bitumen and bitumen  emulsion.  The  stand  of  the
Revenue is that the word “bitumen” must be conferred a  narrow  meaning  for
the reason that the legislature has not thought it appropriate  to  use  the
prefix or suffix like “all”, in all forms  or  of  all  kinds.   It  may  be
immediately clarified that bitumen  is  a  generic  expression  which  would
include different types of bitumen.  Revenue, however,  as  stated  earlier,
intends to apply it restrictively.  The said submission  has  a  fundamental
fallacy.  Entry 22 does not exclude or specify that  it  would  not  include
bitumen of all types and varieties.  This is not the  principle  or  precept
applied to interpret the entries under the Schedule of the Act.  We will  be
deliberating in detail on the said aspect at a later stage.  Prior to  that,
we would like to advert to certain other aspects.
19.   At the very inception, we think it absolutely  seemly  to  state  that
the nature and composition of the product or the  good  and  the  particular
entity in the classification table is important.  Matching of the good  with
the Entry or Entries in the Schedules is tested on the basis of identity  of
the goods in question with the  Entry  or  the  contesting  entries  and  by
applying the common parlance test, i.e., whether the goods as understood  in
commercial or business parlance are identical or similar to the  description
of the Entry.  Where such similarity in popular  sense  of  meaning  exists,
the generic entity would be construed as including the  goods  in  question.
Sometimes on certain circumstances the end use test, i.e., use of  the  good
and its comparison with the Entry is applied.
20.   The Entry in question uses the  word  “bitumen”  without  any  further
stipulation or qualification.  Therefore, it would, in our opinion,  include
any product which  shares  the  composition  identity,  and  in  common  and
commercial parlance is treated as bitumen and can be used as bitumen.   When
we apply the three tests, namely, identity, common parlance and end  use  to
the goods and the Entry in question, bitumen emulsion would  be  covered  by
the Entry bitumen. It is worthy to note that bitumen  emulsion  matches  the
Entry as it is only one of the varieties of bitumen.   Bitumen  emulsion  is
processed  bitumen,  but  the  process  has  not  changed  its  composition,
commercial identity or its use.  Bitumen emulsion is regarded  and  performs
the same function as bitumen.   As  a  result  of  processing,  neither  the
primary character nor the composition is lost.   Emulsification  only  eases
and provides proficiency to the use of application of  bitumen.   Hence,  in
popular and commercial sense,  bitumen  emulsion  is  nothing  but  bitumen,
which is in liquid form and is user friendly.
21.   It is perceivable that the legislature has  used  the  word  “bitumen”
and treated it as a separate entity.  As we notice,  it  has  not  indicated
that this was done with the intention and purpose to exclude  some  type  or
variety of bitumen.  All bitumen  products,  which  share  and  have  common
composition and commercial entity, and meet the popular parlance  test,  is,
therefore, meant to be covered by the said Entry. In the instant case,  even
the end use test is satisfied. There is nothing in the Entry to suggest  and
show that the Entry is required to be  given  a  restrictive  and  a  narrow
meaning.
22.   In this regard, another aspect needs to be noted.   The  Revenue  does
not rely upon another Entry under which bitumen emulsion can be taxed.   The
Revenue relies upon the residuary Entry  which  would  only  include  goods,
which  cannot  be  covered  under  any  other  Entry  in  the  schedule   on
application of the three-fold criteria.  In  the  State  of  Maharashtra  v.
Bradma of  India  Limited[7],  the  Court  had  observed  that  the  general
principle is that specific Entry would override a general  Entry.  Referring
to the decisions in the case of Collector of  Central  Excise,  Shillong  v.
Wood Craft Products Ltd.[8], it has been ruled that resort can be made to  a
residuary heading only when  by  liberal  construction  the  specific  Entry
cannot cover the goods in question.  Referring to Entry No. 90 in  the  said
case, which covered tabulating, calculating, cash registering, indexing  and
data processing, etc, other than computer machines, it  was  held  that  the
words did not contain words of limitation and would cover every  species  of
cash registering machines, irrespective of their mode of operation.  In  the
absence of any limitation or qualification as to the different kind of  cash
registering machines, there was no reason for such qualification  and  limit
the Entry to  a  particular  kind  of  cash  registering  machine.  However,
computers had been specifically excluded and were separately dealt  with  in
Entry 97(a). The assessee, who was manufacturing electronic  cash  registers
would, therefore, be covered by Entry 90 and not by the  Entry  relating  to
computers.  A similar opinion has been expressed in Hindustan  Poles  Corpn.
v. Commissioner of Central Excise, Calcutta[9] stating that residuary  Entry
is made to cover only those category of goods  which  clearly  fall  outside
the ambit of the main Entry.  The opinion proceeds  further  to  state  that
unless the Revenue can establish that  the  goods  in  question  can  by  no
conceivable process of reasoning be brought under any of the  tariff  items,
resort cannot be made to the residuary Entry.
23.    In this context, reference  to  the  authority  in  Commercial  Taxes
Officer v. Jalani Enterprises[10] would be profitable.  While  dealing  with
the question of sales tax/VAT under the Rajasthan  Sales  Tax  Act,  it  was
held that if from records it was established that the  product  in  question
could be brought under a specific Entry, then there was no  reason  to  take
resort to the residuary Entry.  Revenue cannot be  permitted  to  travel  to
the residuary Entry when a product can be covered under a specific Entry.
24.   In the present context, when the word “bitumen” has  been  used  as  a
generic expression, it would be erroneous not to cover  a  product  that  is
only  a  type  or  form  of  bitumen   and   retains   all   its   essential
characteristics, and treat it as covered by  the  residuary  Entry  by  some
kind of ingenuous reasoning. Taking it outside the purview of  the  specific
Entry is incorrect.
25.   At this juncture, we may refer to certain pronouncements commended  to
us by the learned counsel for the appellant. In  Collector  of  Customs  and
others v. Kumudam Publications (P) Limited and others[11],  while  adverting
to the issue of classification it  has  been  held  that  it  would  not  be
correct to say that in no case can the end use or function of the  goods  be
relevant in the question of classification,  as  was  held  in  Indian  Tool
Manufacturers v. Asstt. Collector of Central Excise, Nasik  and  others[12].
The decision in Commissioner of Central  Excise,  Cochin  v.  Mannampalakkal
Rubber  Latex  Works[13]  emphasizes  and  holds  that  in  the  matters  of
classification, “composition test” is  important  test  and  the  “end  user
test” would only apply if the Entry  says  so.   We  have  referred  to  the
aforesaid authorities for sake of completeness only because we have  applied
the “composition test” as well as the “commercial or common  parlance”  test
in addition to the “end use test”.
26.   Reliance placed by  the  Revenue  on  the  decision  in  the  case  of
Hindustan  Aluminium  Corporation  Ltd.  v.  State  of  Uttar  Pradesh   and
another[14], is of no assistance, for  in  the  context  of  the  particular
notification it was held  that  aluminium  ingots,  billet,  roll  products,
extrusion, etc. would not be covered by the exemption, which was granted  to
all kinds of minerals, ore, metals or alloys, including sheets  and  circles
used in  the  manufacture  of  brasswares  and  scraps.   In  this  context,
referring to Section 3A of the U.P. Sales Tax Act and  the  notification  as
applicable, it was held that the earlier notifications issued from  time  to
time  would  show  that  the  expression  “metal”  had  been  employed  with
reference to metal in its primary sense.  The principle  laid  down  in  the
said authority is in the context in issue and is based  upon  the  schematic
arrangement indicated and specified in the notification under  consideration
therein.  That  apart,  the  said  decision  also  emphasizes  that  a  word
describing a  commodity  in  a  sales  tax  statute  should  be  interpreted
according to its popular sense and words of everyday use must  be  construed
not in their scientific or technical sense,  but  as  understood  in  common
parlance.
27.   We have also been commended to a judgment of the Customs,  Excise  and
Service Tax Appellate Tribunal in Allied  Bitumen  Complex  (India)  Private
Limited v. Collector of Central Excise, Calcutta – 1[15], which  holds  that
conversion of bitumen into bitumen aqueous emulsion amounts to  manufacture.
  Per  contra,  the  respondent-assessee  has  relied  on  judgment  of  the
Karnataka High Court in SR Projects Limited v.  Commissioner  of  Commercial
Taxes[16].  However, it is not necessary to dilate on the  said  aspect  for
there is a distinction between what can be  regarded  as  manufacture  under
the Excise Act and what is the sale or transfer of property in  goods  under
the Sales Tax Act and the Value Added Tax Act.  In M.P.  Agencies  v.  State
of Kerala[17], it has been held that the decisions under the Excise Act  may
have some play and relevance, but the  question  of  manufacture  by  itself
would not be per se relevant under the Sales Tax or  Value  Added  Tax  Act.
Thus, there is a distinction between what  is  exigible  to  tax  under  the
excise law and the incidence of tax when the legislation  relates  to  sales
or value added tax.  What  is  relevant  is  the  classification.   In  this
context,  the  verdict  in  Osnar  Chemical  Private  Limited   (supra)   is
significant.  The said authority refers to two other  variants  of  bitumen,
namely, polymer modified bitumen and crumbled rubber modified bitumen  which
are created by the process of mixing of polymer  and  additive  to  bitumen.
It has been held that the aforesaid processes result in improvement  of  the
quality of bitumen  and  there  is  no  change  in  the  characteristics  or
identity of bitumen so as to transform bitumen into a new product having  an
identity, characteristic and use.  It has been ruled therein that  there  is
a fallacy in the argument raised by the Revenue that bitumen  per  se  would
only include its solid hard form which melts at  high  temperature  and  not
bitumen emulsion.  The two varieties and types carry the  same  composition,
do not differ in character  and  have  the  same  commercial  identity  i.e.
bitumen.  That apart, the use or end use test is also satisfied.
28.   In view of the aforesaid analysis, we find the view expressed  by  the
High Court to be absolutely flawless and, accordingly, we  concur  with  it.
Our concurrence with the view of the High Court  entails  dismissal  of  the
appeal and, accordingly, it is so directed. There shall be no  order  as  to
costs.
                                             .............................J.
                                                               [Dipak Misra]



                                              ............................J.
                                                          [Prafulla C. Pant]
New Delhi
September 6, 2016
-----------------------
[1]     (2004) UPTC 1827
[2]     (1976) 36 STC 236
[3]     (1974) 33 STC 381
[4]    (2012) 2 SCC 282
[5]     (2006) 7 SCC 322
[6]     (2009) 9 SCC 678
[7]    (2005) 2 SCC 669
[8]    (1995) 3 SCC 454
[9]    (2006) 4 SCC 85
[10]   (2011) 4 SCC 386
[11]   (1998) 9 SCC 339
[12]   (1994) Supp (3) SCC 632
[13]   (2007) 217 ELT 161 (SC)
[14]   (1981) 3 SCC 578
[15]   (1997) 90 ELT 374 (Tribunal)
[16]   (2013) 63 VST 49 (Kar)
[17]   (2015) 7 SCC 102

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