Jurisprudentiol–Tomorrow's cases

By Vijay Kumar

Legal Corner Icon — the image was hosted by the publisher and was not captured.Central Excise

Classification of Dant Manjan Lal – Merely because there is some difference in the tariff entries, the product will not change its character - The primary object of the Excise Act is to raise revenue for which various products are differently classified - Common parlance test continues to be one of the determinative tests for classification of a product – Supreme Court

MERELY because there is some difference in the tariff entries, the product will not change its character. Something more is required for changing the classification especially when the product remains the same. The primary object of the Excise Act is to raise revenue for which various products are differently classified There is no doubt that a specific entry must prevail over a general entry DML is a tooth powder which has not been held to be Ayurvedic Medicine in common parlance. Common parlance test continues to be one of the determinative tests for classification of a product whether medicament or cosmetic. There being no change in the nature, character and uses of DML, it has to be held to be a tooth powder - as held in Baidyanath II. DML is used routinely for dental hygiene. Since tooth powder is specifically covered by Chapter Sub-heading 3306, it has to be classified thereunder.

VAT

Works Contract Composition Scheme - Section 6 of TN VAT Act – Interim stay granted: Madras High Court

WORKS Contract Composition Schemes vary from State to State. The Composition scheme under Section 6 of the Tamilnadu Value Added Tax Act, 2006, provides for payment of 2%/4% rate for Works Contracts under Section 6 of the TNVAT Act, 2006. Like many other states, Composition Scheme in Tamilnadu contains certain restrictions of Input Tax Credit from the inception of the scheme from January 1, 2007. However, on June 8, 2007, Section 6 was amended to provide for an additional condition that a dealer opting for Composition Scheme should not buy goods from outside Tamil Nadu and also should not import goods from abroad, for use in the Works Contract. This amendment was given effect to with effect from January 1, 2007.

Income Tax

Exports - sale proceeds deposited in EEFC Account - exchange gains due to fluctuation in US Dollar rates on date of realisation in Indian currency - since such gains are related to exports proceeds billed in US Dollar, assessee is eligible for deduction under Sec 10B : ITAT by majority

MAKING gains or losses through fluctuation in foreign exchange rates is a part of export business. However, the question before the Third Member of the Tribunal was that whether such gains attributable to fluctuation in the US Dollar rate can be allowed as benefits under Sec 10B? And the final verdict has gone in favour of the assessee as the Tribunal by majority has held that such exchange rate gain is nothing but sales realisation of the billed amount in the US Dollar and is to be treated as an income from the export of goods and articles.

See our columns tomorrow for the judgements