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2011 (6) TMI 657 - BOMBAY HIGH COURT

Other Citation: 2011 (272) E.L.T. 163 (Bom.) , [2011] 42 VST 504 (Bom)

COMMISSIONER OF SALES TAX VERSUS DEV ENTERPRISES LIMITED

Sales Tax Appeal No. 23 of 2010

Dated: - 24-6-2011

Whether Tribunal was justified in construing the Schedule Entry C-74 to mean footwear predominantly
made of plastic and not as footwear exclusively/entirely made of plastic – MVAT Act, 2002 - Held that:-
Counsel for the Appellant has also produced samples of footwear completely made up of plastic and also
of plastic coated textile material. When Entry C-74 adverts to plastic footwear, it must mean what it states.
To accept the contention that footwear made predominantly of plastic would fall for classification under
Entry C-74, would be to re-write the entry. Tribunal was manifestly in error in accepting the contention of
the Respondent and in holding that footwear which is predominantly made of plastic and made by a
moulding process would get covered by the description of plastic moulded footwear. - Decided in favor of
revenue.

Judgment / Order

Dr. D.Y. Chandrachud and Anoop V. Mohta, JJ.

Shri B.B. Sharma, AGP, for the Appellant.

Shri Praful C. Joshi, for the Respondent.

[Judgment per : D.Y. Chandrachud, J.]. –

This appeal by the Commissioner of Sales Tax has been admitted on the following substantial questions of
law :

(i)      Whether in the facts and in the circumstances of the case, the Tribunal was justified in construing the
Schedule Entry C-74 to mean footwear predominantly made of plastic and not as footwear
exclusively/entirely made of plastic; and

(ii)      Whether in the facts and circumstances of the case, the Tribunal was justified in holding that the
goods of the respondent namely “Escort 111 SYN Black” sold through invoice dated 25-8-2005” though
admittedly not wholly made of plastic would be covered by the Schedule Entry C-74.

2. The Respondent engages in the business of the import and sale of footwear at Pune and is registered
under the Maharashtra Value Added Tax Act, 2002. An application was submitted on 25 December 2007 to
the Commissioner for a determination under Section 56 of the Act, accompanied by a Tax Invoice for a
product described as Escort 111 SYN Black. The contention of the Respondent was that the product
manufactured by it is plastic moulded footwear and is covered by Entry C-74 of the Schedule so as to
attract a taxable rate of four per cent. Entry C-74 at the material time was as follows :

“C-74 Plastic Footwear 4% 1-4-2005 to 30-4-

2005

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C-74 Plastic footwear 4% 1-5-2005 onwards

(moulded); hawaii
chappals and straps
thereof”

3. The Commissioner by his determination dated 11 February 2008 held that in order to fall for
classification under Entry C-74, a product must satisfy two criteria: (i) The product should be moulded; and
(ii) The product should be made entirely of plastic. Upon examining the process of manufacture, the
Commissioner came to the conclusion that the product in question is made by applying a Direct Injection
Process and is hence, moulded footwear. The first criterion was held to be satisfied. On the second
criterion, it is an admitted position that the shoe upper is made of plastic coated fabric while the sole is
made of PVC (plastic). The contention of the Respondent was that the footwear is predominantly made of
plastic and hence, should be classified as plastic footwear under Entry C-74. The Respondent relied upon
certificates of the Footwear Design and Development Institute of the Ministry of Commerce and Industries
in the Government of India. The Commissioner considered the certificates which stated that in the sample,
the visible portion is plastic; the upper material is plastic coated fabric, the sole is PVC (plastic) and hence,
the footwear was sought to be classified as plastic footwear with a direct injected sole. The Commissioner
was of the view that according to the certificate, the upper portion is plastic coated and is not itself plastic.
A layer of cloth is coated with plastic, while the sole is the only part which is purely plastic as it is made
from plastic granules. Hence, it was held that the product does not fall within the meaning of the
expression “plastic footwear” as it is not purely a plastic product. The upper part is made out of hand cut
and stitched plastic coated fabric and thus only the lower part is made out of moulded plastic. The
Commissioner relied upon the judgment of the Karnataka High Court in Preston India Private Limited v.
State of Karnataka - (2007) 35 MTJ 139. Consequently, the Commissioner held that the product was not
covered by Entry C-74, but by residual Entry E-1 and was hence liable to tax at 12.5%.

4. The decision of the Commissioner was challenged by the Respondent in appeal before the Tribunal.
The Tribunal by its judgment dated 16 January 2010 held that the footwear was plastic footwear as it was
predominantly made of plastic and was, therefore, covered by Entry C-74. The Tribunal noted that “it is
true that footwear is not made entirely of plastic because other materials like fabric are also used therein”.
The Tribunal noted that “man made fabric with plastic coating is certainly used on the upper portion so as
to make the footwear comfortable”. However, on the basis of the certificate of the FDDI, the Tribunal
accepted the contention of the Respondent that both in terms of weight as well as value, 90% of the
material used in the manufacture of the footwear is plastic and hence, the footwear is made primarily of
plastic.

5. On behalf of the Appellant, it has been submitted that (i) Entries in the Schedule must be construed
according to their plain and literal meaning unless there is an ambiguity or an absurd result would ensue;
(ii) Entry C-74 refers to plastic footwear. If the footwear is not of plastic, but is mixed with any other
material, it cannot be termed as plastic footwear within the meaning of Entry C-74; (iii) It is an admitted
position that the shoe upper is made of fabric coated with plastic, while the sole is made out of plastic. The
Respondent contended that the footwear in question, is plastic footwear because it is predominantly made
out of plastic and relied upon certificates/reports of the manufacture of the footwear from the Footwear
Design and Development Institute to the effect that it is plastic footwear. Those certificates have certified
the product as plastic footwear only and with specific reference to the definition contained in Note-3 of
Section XII of Chapter 64 to the Central Excise Tariff; (iv) The scheme of the Central Excise Tariff and
Customs Tariff is based on the International Harmonized System of Nomenclature (HSN) and the
explanatory notes thereto. The MVAT Act has not adopted HSN as a basis for classification of goods for
the purposes of sales tax. The description contained in the Central Excise and Customs Tariff is confined
to that legislation only and cannot be used for the purposes of the MVAT Act; (v) The description of

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footwear under the Excise Tariff Act is completely different from that under the MVAT Act. HSN Entry 6401
00 00 under Section XII, Chapter 64 reads as follows :

“Waterproof footwear with outer soles and uppers of rubber or of plastics, the uppers of which are neither
fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar process.”

Moreover, Note 3 to the Chapter expressly states thus :

“For the purposes of this chapter : (a) the terms “rubber” and “plastics” include woven fabrics or other
textile products with an external layer of rubber or plastic being visible to the naked eye; for the purpose of
this provision, no account being taken of accessories or reinforcements.”

But for the express definition of the expression “plastic” in Note-3 so as to include woven fabric with an
external layer of plastic in its definition, footwear could not be certified as plastic footwear unless it is made
entirely out of plastic. These distinguishing features are absent in the case of the MVAT Act and its entry;
(iv) For the purposes of Sales Tax Legislation, the State has not followed HSN in respect of the entries to
the Schedule of the MVAT Act. Wherever, the State desired that the HSN classification is to be adopted, it
has by a specific notification adopted the same in respect of a specific scheduled entry. Reliance has been
placed on notifications pertaining to Entry C-6 (Notification dated 1 June 2005), C-54 (Notification dated 1
September 2005), and Entry C-56 (Notification dated 17 October 2005); (vii) The Karnataka High Court in
its decision in Preston India Pvt. Ltd. considered the very entry (plastic footwear) appearing in the VAT
legislation of that State. The Karnataka High Court held that since the material used for the upper portion
of the footwear is man made fabric with plastic coating, the footwear would not fall for classification as
plastic footwear; (viii) In the market, footwear made wholly of plastic is widely available for sale and which
alone would be covered by Entry C-74; (ix) The Tribunal found, as a matter of fact, that the footwear in
question, is not made entirely of plastic because other material like fabric is also used. The Tribunal,
however, incorrectly applied the test of predominance in the present case; (x) The judgment of the
Supreme Court in A. Nagaraju Bros. v. State of Andhra Pradesh - (1994) 95 STC 1 = 1994 (72) E.L.T. 801
(S.C.), is distinguishable. In that case, for the very dealer in issue, suitcases had been held to be plastic
articles in the following Assessment Year 1983-84, but the Tribunal had taken a different view for
Assessment Year 1981-82. The Judgment of the Supreme Court does not lay down that the test of
predominance should be applied for classification in all cases and is authority for the proposition that no
single or universal test can be applied.

6. On the other hand, it has been submitted on behalf of the Respondent that (i) The Respondent and
other traders similarly situate had submitted their sales tax returns periodically by making payment of tax
at four per cent right since 1 April 2005. None of the authorities had raised objections till a survey was
conducted in 2007; (ii) entry C-74 does not postulate that the footwear should be made purely of plastic;
(iii) The entry in question is “plastic footwear” as distinct from “plastic footwear fully made of plastic”. In
Karnataka for the purposes of VAT Legislation, the entry was specifically amended after 1 April 2006 to
read “moulded plastic footwear fully made of plastic”. No such amendment has been made in the State of
Maharashtra. In the absence of specific mention, the entry needs to be interpreted so as to include a
product which is predominantly and primarily made from the particular input material; (iv) In the Central
excise Tariff, Note-3 to Chapter 64 mentions that the terms “rubber” and “plastic” include woven fabrics or
other textile products with an external layer of rubber or plastic being visible to the naked eye. “The Excise
Department also allows the inclusion of woven fabric or other textile products in plastic footwear. The
Footwear Design and Development Institute of the Union Ministry of Commerce and the Institute of
Chemical Technology supported the Respondent on the basis of Note-3 of Chapter 64 to the Central
Excise Tariff; (v) The Revenue did not produce any material in rebuttal to the material brought on record by
the Respondent to establish that the item in question is not covered by Entry C-74. A resort to the
residuary entry was not warranted since the residual entry can be applied only as a matter of last resort,
once it is concluded that a specific entry in the Schedule is not attracted; (vi) Entries under the Central

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Excise Tariff Act unless adopted or referred to in the Schedule appended to the Maharashtra Value Added
Tax Act, cannot be blindly applied for considering the scope and meaning of the entries under the
Maharashtra VAT Act; (vii) There is no material on record to indicate that the product in dispute is
commercially known in the trade as anything other than the plastic footwear. The benefit must, in the
circumstances, go to the tax payers. The ingredients, nature and contents of the product have a vital role
in determination of proper classification.

7. These submissions fall for consideration.

8. In analysing the merits of the rival contentions, the admitted position on which there is no dispute, is that
(i) The footwear which forms the subject matter of the determination is not made entirely of plastic; and (ii)
Other material namely, man made fabric with a plastic coating is used on the upper portion of the footwear.
As a matter of fact, the documents which were produced by the Respondent before the Commissioner of
Sales Tax, make it abundantly clear that while the sole of the footwear is made of PVC compound, the
upper portion is made out of plastic coated textile where textile material is used as the base in order to
avoid direct contact with the skin. For instance, one such certificate dated 15 March 2009 in respect of a
sample of the footwear - Escort 111 SYN Black - states that the insole is made up “of top with cotton fabric
and base of plastic” whereby a weight of 10% to 15% is attributable to cotton and 85% to 90% to plastic.
On this basis, it has been estimated that by weight and by value about 90% of the material is plastic, while
10% consists of other materials. The FDDI in its certificate dated 15 June 2009 states that the weight of
elastic, thread, knitted fabric, sponge material etc., other than the PVC, is less than 10%. Several
certificates of the Footwear Design and Development Institute of the Union Ministry of Commerce were
relied upon. Those certificates which have also been produced during the course of these proceedings in a
compilation state that Section XII of Chapter 64, Note-3 (of the Central Excise Tariff) defines the term
“rubber and plastic” to include woven fabric or other textile products with an external layer of rubber or
plastics being visible to the naked eye. It is on this basis that it has been concluded that the footwear can
be identified as plastic footwear which is covered by the Central Excise Tariff 6402.19.

9. The question as to whether the footwear in question falls for classification as plastic footwear cannot be
determined on an a priori reading of the notes annexed to Section XII of Chapter 64 to the Central Excise
Tariff. Note 3 to Chapter 64 clarifies that for the purposes of the Chapter, the term “rubber and Plastics”
includes woven fabric or other textile products with an external layer of rubber or plastics being visible to
the naked eye. Similarly, Note 4 clarifies that subject to Note 3, the material of the upper shall be taken to
be the constituent material having the greatest external surface area, no account being taken of
accessories or reinforcements. Note 3 gives an extended meaning to the expression ‘plastic’ by bringing in
woven fabrics or textile material with an external layer of plastic. That is only for the purposes of that
Chapter in the Central Excise Tariff. The interpretation of an entry to the Maharashtra Value Added Tax Act
cannot be based cither on the scheme of the Central Excise Tariff or Harmonized System of Nomenclature
and the explanatory notes thereto. Evidently, an explanation such as Note 3 to Chapter 64 of Section XII of
the Central Excise Tariff Act has not been adopted in the value added tax legislation in the State of
Maharashtra. But Note 3 of Chapter 64, Section XII of the Central Excise Tariff was the basis and
foundation on which the Respondent, relying on the FDDI certificate sought to clarify its product as plastic
footwear. This is plainly contrary to law. It is evident from the material that was produced by the
Respondent, principally the certificates issued by the FDDI that a substantial part of that material is
founded on the notes appended to Section XII of Chapter 64 of the Central Excise Tariff Act. The basis on
which the Respondent sought an inference to be drawn that the footwear fell for classification as plastic
footwear was the explanatory notes to the Central Excise Tariff. These would evidently have no relevance
to a construction to be placed on the provisions of the relevant entry in the MVAT Act.

10. The entry in question, C-74, adverts to plastic footwear. The entry has to be construed as it stands.
The Respondent submitted before the Tribunal that it was the predominant nature of the material used that
must be a determining factor. The Tribunal accepted the submission and held that footwear which is made
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predominantly of plastic and which is made by a moulding process would be covered by the description of
“plastic moulded footwear”. In response to a query of the Court, Counsel appearing on behalf of the
Respondent submitted that so long as the element of plastic in the footwear is in excess of 50%, the
product must fall for classification as plastic footwear. It is impossible to accept the submission. The
Legislature has provided for a specific classification of plastic footwear to which a rate of duty of 4% was
applicable at the material time. In order to fall for classification under Entry C-74, the product must
constitute plastic footwear. Adding the expression “predominant” to the interpretative process is to add
words to the entry. That is to amend the entry - something that is impermissible. In a matter of
classification, no single or universal test can be adopted. In the decision of the Supreme Court in A.
Nagaraju Bros v. State of Andhra Pradesh, (supra), the Tribunal had given more importance to the values
of the plastic and other materials such as steel, including the locks and other fixtures and had opined that
since the value of the other components was more than the value of plastic, the article could not be called
a plastic article. The Supreme Court noted that there was no single or universal test to be applied and it is
for this reason probably that the common parlance test or commercial usage test is treated as a more
appropriate test, though, not the only one. The Court held that there may be cases, particularly in the case
of new products, where this test may not be appropriate, in such cases, other tests like the test of
predominance, either by weight or value or on some other basis may have to be applied. But, ruled the
Supreme Court, it is not possible nor desirable to lay down any hard and fast rules of universal application.

11. This principle was reiterated in a judgment of the Supreme Court in O.K. Play (India) Ltd. v.
Commissioner of Central Excise (2005) 2 SCC 460 = 2005 (180) E.L.T. 300 (S.C.). Mr. Justice S.H.
Kapadia (as the Learned Chief Justice of India then was) while adverting to the judgment in A. Nagaraju
Bros, held that there cannot be a static parameter for correct classification. Since the scheme of the
Central Excise Tariff is based on the Harmonized System of Nomenclature (HSN) and the explanatory
notes thereto, HSN together with its explanatory notes would provide a safe guide for interpretation of an
entry in the Central Excise Tariff. Equal importance, the Court held, would be given to the Rules for
Interpretation of the Excise Tariff. Moreover, it would be important to bear in mind that functional utility,
design, shape and predominant usage would have to be taken into account while determining the
classification of an item. These aids and assistance, held the Supreme Court, would be more important
than the names used in the trade or common parlance in the matter of correct classification. These
observations of the Supreme Court emphasize that the nature of the legislation would have an important
bearing on the question in issue. HSN together with its explanatory notes has relevance to interpreting the
Central Excise Tariff because that Tariff is based on the HSN.

12. In Geep Flashlight Industries Ltd. v. Union of India, 1985 (22) E.L.T. 3 (S.C.) the Supreme Court
considered the interpretation to be placed on Tariff Entry 15A(2) of the Central Excise Tariff which dealt
with “articles made of plastics of all sorts including tubes, rods, sheets ...” The issue was whether a plastic
torch manufactured by the Petitioner was covered by residuary item 68 and not by tariff Item 15A(2). The
Supreme Court held that “articles made of plastic would mean articles made wholly of (the) commodity
commercially known as plastics and not articles made from plastics along with other materials. The plastic
torch was held not to fall within the description of an article made of plastic. The Supreme Court held that
the High Court had arrived at the correct conclusion that the expression “articles made of plastics” used in
Tariff Item No. 15A(2) does not cover such articles which are not directly made from the material indicated
in sub-Item (1), but such articles as arc made out of such material. This decision was followed in a
subsequent judgment of the Supreme Court in Wiltech India Ltd. v. Collector of Central Excise - 1996 (84)
E.L.T. 5 (S.C.). In that case, the Tribunal has held, following the decision in Geep Flashlight that a razor
manufactured by the Appellant was not wholly made of plastic, but was made of plastic with an iron rod
and could not, hence, be covered by an exemption notification. The Supreme Court noted in appeal that
while the handle of razor was made of plastic, the hollow portion was filled with an iron rod running through
the length of the handle. Hence, the Tribunal was held to be right in holding that the razor could not be
said to be made wholly from plastic, but it was made of plastic with an iron rod and was not hence,
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covered by the notification in question. In Taxplas (India) Pvt. Ltd. v. Collector Central Excise, 1996 (84)
E.L.T. 18 (S.C.) the Supreme Court followed the judgment in Geep Flashlight which had taken the view
that articles made of plastic must be articles made wholly of the commodity commercially known as
plastics and not articles made from plastic along with other materials. All these judgments of the Supreme
Court are authority for the proposition that an article can be said to be made of plastic when it is made
wholly of the commodity which is commercially known as plastic. An article made from plastic along with
other material cannot be regarded as an article made of plastic.

13. In A. Nagaraju Bros v. State of Andhra Pradesh, (supra). The issue before the Supreme Court in
appeal was whether the “VIP suitcases” in question were plastic articles within the meaning of Entry 113 of
Schedule I to the Andhra Pradesh General Sales Tax Act, 1957. The question arose with reference to
Assessment Year 1981-82. Prior to 1 July 1985, there was no entry specifically dealing with suitcases and
Entry 113 read as “plastic sheets and articles”. With effect from 1 July 1985, the entry was amended to
read “plastic sheets and articles excluding those allied goods falling under any other item” whereas Entry
163 read “All kinds of suitcases, briefcases and vanity bags”. The Supreme Court observed that it was
considering suitcases made of plastic by injection moulding and fitted with steel bands, locks and
ancillaries made of other materials. According to the Appellant, those suitcases were plastic articles within
the meaning of Entry 113, a submission which was not accepted by the Deputy Commissioner, the
Tribunal and the High Court. The Supreme Court noted that the decisions of the Tribunal in the case of
certain other dealers were not uniform. In the case of some similar dealers, the Tribunal had taken the
view that the suitcases were plastic articles. In the case of very same dealer pertaining to Assessment
Year 1983-84, the Tribunal had followed its decision in other cases and had held that the suitcases were
plastic articles. However, a contrary view was expressed in the case of Assessment Year 1981-82. The
Supreme Court adverted to the decision of the Tribunal in Blow Plast wherein several circumstances were
spelt out in holding that the suitcases were plastic articles. The Supreme Court held that the main raw
material was plastic and in common parlance the suitcases were understood to be plastic goods. Though
certain other material was used in the manufacture of suitcases and the value may be substantial, the
Supreme Court was of the view that having regard to the several circumstances set out in the judgment of
the Tribunal, in the case of Blow Plast and applying the common parlance test and the test of usage in
trade circles, the goods must be called plastic goods. The Supreme Court noted that since in the case of
the very assessee for a subsequent Assessment Year, the Tribunal had allowed the appeal of the
assessee following its decision in the case of Blow Plast and the goods were identical, reference had been
made to the material referred to in the judgment in Blow Plast. Hence, the Supreme Court held that while
the Revenue was correct in asserting that the issue relating to each Assessment Year must be decided on
the material adduced in those proceedings, it could not be said that the material in other cases was being
relied upon to determine the question at issue.

14. The decision in Nagaraju Bros, emphasizes that no single or universal test can be applied in such
matters. The common parlance or universal usage test is treated as more appropriate though it is not the
only test. The Supreme Court held that it was not possible or desirable to lay down a hard and fast rule of
universal application. The decision in Nagaraju clearly turns upon the facts which have been adverted to in
a significant amount of detail in the judgment. More specifically, there was the circumstance that in the
case of the very same assessee for a subsequent year, the Tribunal had accepted the contention of the
assessee while allowing an appeal following its judgment in the case of another assessee. For these
reasons, the decision in Nagaraju would not advance the case of the Respondent. Nagaraju does not lay
down a principle or test at variance with Geep Flashlight and Wiltech.

15. The Karnataka High Court considered the provisions of a similar entry in the State Value Added Tax
Act, 2003 in Preston India Pvt. Ltd. v. State of Karnataka - (2007) 35 MTJ 139. Entry 47 of the Third
Schedule to the Act was entitled “Plastic Footwear” for the period between 1 April 2005 and 6 June 2005.
With effect from 7 June 2005, a substituted provision came into force and the relevant entry read as

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“Moulded plastic footwear, hawaii Chappals and their straps”. The Appellant manufactured two types of
footwear. One of them, known as Walkie Chappal, had a sole which was made up of two layers, the upper
layer consisting of a plastic polymer, while the bottom layer was made up of a rubber sheet. The strap of
the footwear, called as the upper, was made up of man made fabric with plastic coated on it. The Appellant
contended that this product was taxable as plastic footwear. The second product of the Appellant was
called EVA footwear in which both the sole and the strap consisted of EVA polymers, moulded together.
The Appellant sought an advance ruling from the Authority. In the case of the Walkie Chappal, the
Authority held that the Appellant was not entitled to the benefit of the entry relating to plastic footwear and
that the Appellant would have to pay a higher rate of tax of 12.5% as opposed to 4%. In the case of EVA
footwear, the Appellant was allowed a classification under the entry relating to plastic footwear for the
period from 1 April 2005 to 6 June 2005, but not thereafter. A Division Bench of the Karnataka High Court
held that for the period 1 April 2005 to 6 June 2005 when the entry read as plastic footwear, the Walkie
Chappal could not be classified under that entry. The High Court observed that the material used for the
upper portion of the footwear is man made fabric with plastic coating. Hence, the High Court upheld the
reasoning of the Authority that the footwear did not fall within the description of plastic footwear, in the
case of EVA Chappal, the High Court noted that the product was made of plastic and the Authority was not
justified in rejecting the claim for classification only on the basis that die footwear was not made from a
single mould.

16. This judgment of the Karnataka High Court clearly supports the case of the Appellant before us that in
order to be classified as plastic footwear, the footwear must be made out of plastic. As in the case of the
Walkie Chappal before the Karnataka High Court, in the present case as well, the upper part of the
footwear consists of man made fabric upon which a plastic coating is applied. In similar circumstances, the
Karnataka High Court which was interpreting a similar entry - plastic footwear - held that for this reason,
the footwear would not fall for classification under that entry. Similarly, in the case of the EVA Chappal,
what was found significant was that the footwear was made of plastic.

17. Counsel for the Respondent sought to distinguish the judgment of the Karnataka High Court on the
ground that the Walkie Chappal there, had a sole which also consisted of a rubber sheet. This, in our view,
cannot be a ground for distinction. The judgment of the Karnataka High Court rests on the principle that
where the material which is used in the manufacture of the footwear is not plastic, but man made fabric,
upon which a plastic coating is applied, such footwear would not fall for classification under entry “plastic
footwear”. We are in agreement with the view of the Karnataka High Court. The view of the Karnataka
High Court is also consistent with the law laid down by the Supreme Court in Geep Flashlight which was
followed in the subsequent decision in Wiltech.

18. The Respondent sought a determination under Section 56 of the MVAT Act, based on a tax invoice
relating to a product which the Respondent claimed was plastic footwear. The material upon which
reliance was placed by the Respondent primarily consisted of certificates from the FDDI and the Institute
of Chemical Technology. All the certificates arc consistent when they state that the upper part of the
product incorporates textile material upon which a plastic coating is applied. Many of the certificates
opined that the product is plastic footwear on the basis of the explanatory notes contained in Section XII of
Chapter 64 of the Central Excise Tariff. The explanatory notes to the Central Excise Tariff cannot
determine the interpretation of the entry in question, in the MVAT Act, 2002. The IISN has not been
adopted in the Maharashtra Value Added Tax Legislation by legislative incorporation. Hence, it would not
be permissible to rely upon the explanatory note contained in legislation pertaining to the Central Excise
Tariff. The basis and foundation upon which the Respondent claimed classification of its footwear as
plastic material, was hence, flawed and erroneous.

19. We may note that during the course of the hearing. Counsel for the Revenue has submitted that in the
market footwear made completely of plastic is available for sale. This has not been disputed by Counsel
appearing on behalf of the Respondent. Counsel for the Appellant has also produced samples of footwear
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completely made up of plastic and also of plastic coated textile material. When Entry C-74 adverts to
plastic footwear, it must mean what it states. To accept the contention that footwear made predominantly
of plastic would fall for classification under Entry C-74, would be to re-write the entry. The Tribunal, in our
view, was manifestly in error in accepting the contention of the Respondent and in holding that footwear
which is predominantly made of plastic and made by a moulding process would get covered by the
description of plastic moulded footwear.

20. For the reasons which we have indicated, the appeal would have to be allowed and is accordingly
allowed. We answer both the questions of law in the negative. There shall no order as to costs.

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Citations: in 2011 (6) TMI 657 - BOMBAY HIGH COURT

1. OK. PLAY (INDIA) LTD. Versus COMMISSIONER OF C. EX., DELHI-III, GURGAON - 2005 (2) TMI
114 - Supreme Court

2. WILTECH INDIA LTD. Versus COLLECTOR OF CENTRAL EXCISE - 1995 (3) TMI 112 - Supreme
Court

3. A NAGARAJU BROS. Versus STATE OF ANDHRA PRADESH - 1994 (7) TMI 88 - Supreme Court

4. GEEP FLASHLIGHT INDUSTRIES LTD. Versus UNION OF INDIA - 1984 (8) TMI 85 - Supreme
Court

5. TEXPLAS (INDIA) PVT. LTD. Versus COLLECTOR OF CENTRAL EXCISE - 1995 (7) TMI 94 - SC
Order

6. PRESTON INDIA PRIVATE LIMITED Versus STATE OF KARNATAKA - 2006 (7) TMI 672 -
KARNATAKA HIGH COURT

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