Read:-1. Application dated 06/08/2005 from M/s Vinod Stainless Steel Works, having Registration Certificate No. 400002/S/10578 under MVAT Act, 2002 and 400002/C/9595 under C.S.T.Act, 1956.

2. Letter dated 25/11/2005 from this office calling the applicant for hearing on            29/11/2005.

Heard:-    Shri G. S. Jetly, Sr.Advocate attended alongwith Shri Rajiv Jetly, C.A. for

hearing on 29/11/2005.

PROCEEDINGS

(Under section 56 of the Maharashtra Value Added Tax Act, 2002)

No.DDQ-11-2005/Adm-5/65/B-3                                 Mumbai,dt.10/04/2006

            An application is received from M/s. Vinod Stainless Steel Works ( proprietor of M/s. Vinod Stainless  Wares  Pvt. Ltd ) of 11, Gokul, 3rd Floor, 66/A, Dr. A. Merchant Rd, Bhuleshwar, Mumbai-400 002 for determination of the question as follows :-    

            “Whether on the facts and in the circumstances of the case, the sale made by us under invoice no. 000089 dated 14/07/2005 of deluxe hot tiffins, hot casseroles and hot pot for a sum of Rs. 67139/- which includes Value Added Tax of Rs.2582.28 at the rate of 4% is liable to tax under entry No. 33(a) of the Value Added Tax Act, 2002?”

            The invoice no.000089 covers the following goods:  1] Deluxe Hot Tiffin

              2] Hot Casserole

             3] Hot Pot

            The applicant has been treating the above products as taxable under the schedule entry C-33(a) of the Maharashtra Value Added Tax Act, 2002.  The applicant hereby seeks confirmation of this view.

DETAILS SUBMITTED ALONGWITH THE APPLICATION

02.        The applicant has submitted following details along with the application :-

1)   A copy of the sale invoice No. 000089 dated 14/07/2005 of M/s. Vinod Stainless Steel Works to M/s. Somchand Jethalal Enterprises.

2)   A copy of the sale invoice No. 094 dated 14-08-2002 of M/s. Somchand Jethalal Enterprises selling therein the applicant’s products.

3)   A confirmation from All India Stainless Steel Industries Association certifying that Stainless Steel Hot casserole, Hot Pot and Hot Tiffin Carrier are domestic utensils made of stainless steel covered by the schedule entry C-33(a) of the Maharashtra Value Added Tax Act, 2002.

4)   A confirmation from Stainless Steel Merchant’s Association certifying that Stainless Steel Hot casserole, Hot Pot and Hot Tiffin are used as domestic utensils made of stainless steel covered by the schedule entry C-33(a) of the Maharashtra Value Added Tax Act, 2002.

5)   Inspection/Testing report by Veermata Jijabai Technological Institute (VJTI).

6)   A confirmation from a customer describing the product Deluxe Hot Tiffin, as a domestic utensil used by her to carry lunch to office as it keeps the food warm for few hours.

7)   A brochure showing the various products manufactured by M/s Vinod Stainless Steel Works.

8)   Proof of payment of fees of Rs. 100/-.

9)   Letter of authority in the name of Shri J. S. Jetly, Advocate and Shri Rajiv Jetly, C.A. for attending on behalf of the applicant.

BACKGROUND OF THE CASE

03.       The applicant is duly registered under the Maharashtra Value Added Tax Act, 2002.  The applicant deals in items made of stainless steel. The items currently under consideration are also made of stainless steel.   He has been treating the sales of the items currently under consideration i.e. Hot Casserole, Deluxe Hot Tiffin and Hot Pot as taxable under schedule entry C-33(a) of the Maharashtra Value Added Tax Act, 2002.  The rate of tax for the purposes of the above entry, which reads thus “Ferrous and non-ferrous domestic utensils other than those made from precious metals”, is 4% w.e.f. 01/04/2005.

            The said entry was amended w.e.f 1/5/2005 so as to include the words “whether coated with any material or not”. Also, sub-entries for domestic pressure cookers    and pans and Buckets have been introduced w.e.f 1/5/2005.

            We could have a look at the entry as it stood on 1/4/2005 and 1/5/2005 as under:-

The applicant, in support of his claim that his products are covered by the entry C-33(a) of Maharashtra Value Added Tax Act, 2002 has produced certification from the following institutes explaining the nature of his products :

[A]   ALL INDIA STAINLESS STEEL INDUSTRIES ASSOCIATION

            All India Stainless Steel Industries Association has confirmed that their members are manufacturing domestic utensils made out of ferrous and non-ferrous metals like stainless steel and aluminium such as Hot Casserole, Hot Pot and Hot Tiffin Carrier. The sales tax rate for the above products is 4% w.e.f 1/5/2005 being covered by schedule entry C-33(a).

            [B]     STAINLESS STEEL MERCHANT’S ASSOCIATION   

            The Stainless Steel Merchant‘s Association has confirmed that its members are manufacturers of stainless steel Hot Casserole, Hot Pot and Hot Tiffin carrier which are coated with chemicals.  These products are used as domestic utensils.  The sales tax rate for the above products is 4% w.e.f 1/5/2005 being covered by schedule entry C-33(a).

           [C]     VEERMATA JIJABAI TECHNOLOGICAL INSTITUTE [VJTI]

           The institute has submitted its report on the subject matter of “inspection of stainless steel Hot Casserole, Hot Pot and Hot Tiffin”.The inspection/testing report brings out followings facts about the manufacturing process of stainless steel Hot Casserole, Hot Pot and Hot Tiffin :

MANUFACTURING PROCESS

1)      Steel blanks of 26 gauge are cut from stainless steel sheets.

2)      The outer casing and the inner casing are made using appropriate dyes on deep drawing machines.

3)   Isocyanate MDI & EMPEYOL HST 200/11, chemicals are then coated on the inner side of the outer casing.

4)    The inner casing is placed inside the outer casing and the top flange is beaded on to the outer casing, so that this becomes one unit.

5)    Isocyanate MDI & EMPEYOL HST 200/11 is used as coating to impart                                               heat resistant medium. 

CONTENTION AND HEARING

04.          The case was taken up for hearing on 29-11-2005.  Shri J. S. Jetly, Sr.Advocate along with Shri. Rajiv Jetly, C.A. attended. They argued that their products fall under    schedule entry C-33(a) of the Maharashtra Value Added Tax Act, 2002 which is broad enough to cover all domestic utensils.

               The applicant is of the view that his products squarely fall under schedule entry C-33(a) of the Maharashtra Value Added Tax Act, 2002.   The word domestic utensils being a word of wide import, anything connected with the preparation of food, preservation after preparation and service at the stage of consumption of food will be covered as domestic utensils. It is his contention that the word ‘domestic utensils' has not been defined in the Act or the rules made there under. The state government has also not issued any list of articles which could be described as domestic utensils.  The applicant is of the opinion that his products are stainless steel domestic utensils. He submits that all the three products are used in households as domestic utensils .They are used to keep the food hot after it has been cooked.

            He submits that All India Stainless Steel Industries Association and Stainless Steel Merchant’s Association have also confirmed his views regarding the goods being covered by the schedule entry C-33(a) of the Maharashtra Value Added Tax Act, 2002. The goods are certified by them as being used as domestic utensils and thus are covered by schedule entry C-33(a).  Also, he submits that Veermata Jijabai Technological Institute (V.J.T.I.) has also identified his items as serveware.

            Hence, he requests that the said items be treated as covered under schedule entry C-33(a) of the Maharashtra Value Added Tax Act, 2002 attracting tax @ 4%.

            In the alternative, he has also prayed that if the goods are held to be not covered by schedule entry C-33(a) of the Maharashtra Value Added Tax Act, 2002, then prospective effect be given to the determination order, so as to protect his liability.

OBSERVATIONS

05.       I have carefully gone through all the facts placed before me.  The issue involved is the determination of the rate of tax under the Maharashtra Value Added Tax Act, 2002 on the following goods sold vide invoice no. 000089 dated 14/07/2005  :-

          1) Deluxe Hot Tiffin   2) Hot Casserole   3) Hot Pot                                                                                                                                                                                             

            The meanings of the words used to describe the applicant's products could be seen thus -                    

             1]    Tiffin :  The word “tiffin” in common parlance is used to mean a container

                    used by people to carry food (meal) to their work place or a picnic spot or a

                    nursing home for an ailing patient. 

          2]    Casserole :  The word “casserole” as per Webster’s dictionary  means                  

                 “a covered dish of earthenware or toughened glass, etc. in which food needing long, slow cooking is prepared”.

            3]     Hot Pot :    A “Hot Pot” means a container used for holding liquid or solids

                    of a high temperature.  Thus it means a container which is used to keep food

                    or beverages hot.

We could also look at the dictionary meaning of the word “Utensils” which could be reproduced as follows :

AS PER OXFORD’S DICTIONARY

“Utensil -1.Domestic vessels, appliances, and furniture 2. Any article useful or necessary in a household; a domestic implement, vessel, or article of furniture; now esp., an instrument or vessel in common use in a kitchen, dairy, etc. 3. Any vessel (or other article) serving a useful end or purpose esp. A tool or implement used by artisans, farmers, etc. 4. One who is made use of (rare)  5. A sacred vessel, etc., belonging to, and esp. used in the services of a place of worship.”

AS PER WEBSTER’S DICTIONARY

“Utensil - any of various vessels or devices used in a kitchen, e.g. a cooking pot or eggbeater // any of various tools used by artisans, farmers etc. // a vessel, ornament etc. used in church services”

In order to have a better understanding of the issue, it will be useful to see the treatment given to the applicant’s products under the earlier Bombay Sales Tax Act, 1959.

06.   TREATMENT UNDER BOMBAY SALES TAX ACT, 1959

            This issue as regards the rate of tax applicable to the above products has already been determined under the Bombay Sales Tax Act, 1959 in the applicant's own case. The applicant's claim under the Bombay Sales Tax Act, 1959 was that his goods would be covered by the schedule entry C-II-26 (1)/ CII 26. It was, however, held as covered by the schedule entry C-II-53. The entries could be reproduced thus :-

            It was held that the schedule entry C-II-26(1)/ CII 26 covers vessels which are used to cook/serve food in the kitchen of a house or may be a restaurant.  These wares could be having enhanced utility such as they may be heat resistant or nonstick. Thus this entry purely covers vessels which are used to cook and serve food. The schedule entry C-II-53 pertains to vacuum flasks, thermoses, urns, ice boxes or other domestic containers (receptacles) which are used to keep food or beverages hot or cold and the components, parts and accessories of such containers.  The schedule entry C-II-53 is a special entry for these items.  Thus when there is a general entry C-II-26/C-II-26(1) as well as a special entry (C-II-53), the special entry would prevail.                     

            Under the Bombay Sales Tax Act, 1959, there were a number of schedule entries for items of similar nature as utensils, etc.  The same are reproduced herein:-

                  The d of the word “Utensils” is very broad. However the meaning as intended for the purpose of the taxing statute is very restrictive as can be seen from the above treatment to the same under the earlier Act. As per the dictionary meaning any article useful or necessary in a household is a utensil. Hence, all items in the 13 different entries under the Bombay Sales Tax Act such as cookware, serveware, water filters, knives, spoons, etc. would be covered by the word utensils and there would have been a single entry for all the utensils. However, the legislature has different intention which reflects in the separate schedule entries for the above items. Thus the legislature has not adopted the dictionary meaning of the word “Utensils”.  The intention of the legislature should be seen in drafting the schedule entries and would prevail over the dictionary meaning of the word.

                 However, not all dictionaries have adopted such a broad meaning of the word ‘utensil’.

                 The definition of utensils as per the Shorter Oxford Dictionary as cited in the case of Collector of Central Excise, Ahmedabad Vs. Kwality Metal Corporation (1999) (105 E.L.T. 323 (Tribunal) )  could be reproduced herein as “receptacle for a liquid or other substance, often one of circular section and made of some durable material, specially utensils of this nature in domestic use, employed in connection with preparation or serving of food or drink and usually of size suitable for carrying by hand”.

                 Let us see whether this definition becomes applicable to the present case.  The products are definitely a receptacle for food.  As regards, the further point of “made of some durable material”, it does not hold true in the case of the impugned products.  This is evidenced by the inspection/testing report of the V.J.T.I which specifically mentions that “when a test was conducted by boiling water in the casserole, the bottom plate of the casserole bulged out and deformed.  Subsequent to this, the coating decomposes and escapes through the heading as gaseous forms.  Hence it is not advised to use the casserole as a cooking device.”  Here it is to be noted that the raw material and the manufacturing process of all the three products being the same, the above advice is applicable to all the products. Hence the products cannot be used for cooking. Now the other use of the products is “serveware”. Only that part of the above definition pertaining to serving of food is applicable to the impugned products as the same are not made of durable material which renders them unsuitable for cooking/preparation of food which involves application of heat.

                 It thus can be seen that the legislation has also treated various articles used in kitchen as different articles.  The products of the applicant which were covered by the Bombay Sales Tax schedule entry C-II-53 are not included in the Maharashtra Value Added Tax schedule entry C-33(a). 

                 In the ambit of the schedule entry C-33(a) of Maharashtra Value Added Tax Act, 2002, only the ferrous and non ferrous domestic utensils, with or without coating, are included.  The very fact that under the Bombay Sales Tax, the applicant's products were not treated as ferrous or non ferrous domestic utensils and were classified in another schedule entry brings out the fact that the legislation never intended to treat these items as domestic utensils.  If that be the case, the products of the applicant cannot be said to be covered by the scope of the schedule entry C-33(a).

07.   TREATMENT UNDER MVAT ACT, 2002

                 Under the Maharashtra Value Added Tax Act, 2002 there are not many entries as in the Bombay Sales Tax Act, 1959 for items of similar nature as utensils. There is only one entry under the Maharashtra Value Added Tax Act, 2002. Hence, it becomes necessary to take a look at the entry and establish its applicability to the present case.  The wording of the schedule entry could be reproduced thus :

The schedule entry speaks of domestic utensils whether coated with any material or not. The coating as intended for this entry is different from the coating as observed in the manufacturing process reproduced hereinabove of stainless steel Hot Casserole, Hot Pot and Hot Tiffin. The coating for the purposes of the schedule entry C-33(a) is visible from the outside as in a non stick pan, copper vessels, etc. The coating as referred in the manufacturing process is between the outer and inner casing and is not visible from the outside.  This coating is for the added quality as regards keeping food hot for hours.                                                                                                                                                                                                                                                                                                                                                                                                

            The schedule entry definitely  does not seek to cover items of the nature as in the present case having special utility as in keeping the food stored in it hot for long hours. It is to be noted that the products come with the prefix 'Hot' which evidently means that the products are not merely used as serveware but the design/make/nature of the product (heat resistant medium imparted by the coating between the outer and inner casing) is such that it enables the user to keep the food stored in it hot. The applicant stresses on this feature of his products and the same is reflected in the names of the products as in Hot Pot, Hot Casserole and Deluxe Hot Tiffin.  The products are marketed with a mention to this special feature in the form of the adjective prefix 'Hot'. It is a special type of serveware.  The entry 33(a) seeks to cover only plain domestic utensils.

                 I have already observed in the earlier paras, on how the word “utensil” takes a meaning different than that as per the dictionary for the purposes of levy of tax under the Sales Tax statute. In this regard, we could also have a look at the Bombay High Court judgment in the following case:-

                 The Commissioner of Sales Tax v/s. Neelam Appliances decided on 21/10/2005 :  The question before the Court was whether the item stainless steel water filter is a utensil covered by schedule entry C-46 of the Bombay Sales Tax Act,1959. The following observations could be seen,

                 “The utensils which are used for household purposes are understood to be not doing any functions on their own but those are to be used for the purposes of cooking and related activities.  The stainless steel water filter can be said to be an appliance and not a utensil. This indicates that stainless steel water filter which is an appliance is different than the stainless utensil for household purpose as contemplated under entry 145 (1) of the notification issued under section 41 of the Bombay Sales Tax Act, 1959.

                 With due respect, it is difficult to go alongwith the view taken by the M.P. High Court in the case of Yadav (supra).  Even if water filter is considered in its popular sense and common parlance test is applied, even then it would not fall in the category of utensil, as sought to be canvassed by the learned Counsel for the assessee.”

                 Thus, the above judgment further confirms my view that the dictionary meaning of utensils is different from that which is intended for the purpose of the legislation.        Herein, we could also take a look at the interpretation of the word in rulings under the Central Excise Act to get an understanding of the nature of domestic utensils and also have a look at the treatment given to similar products under the Central Excise Tariff Act.

                 We could look at one important observation as regards the distinction between utensils and vessels as noted in the case of Collector of Central Excise vs. Sandip Metal Industries  [1989 (42) ELT 142 (Tribunal)].  The same is reproduced thus:-

                 ‘Utensils’ as the dictionary tells us, are vessels in use in a kitchen and a vessel is described by the Shorter Oxford English Dictionary as a ‘receptacle’ for a liquid or other substances often one of circular section and made of some durable material, especially utensils of this nature in domestic use, employed in connection with preparation or serving of food or drink and usually of size suitable for carrying by hand.  From the meaning of the words it is not possible to conceive of utensils as not being associated with kitchen principally as a vessel in which cooking is done”.

[1    Collector of Central Excise, Ahmedabad Vs. Kwality Metal Corporation [final order decided on 1-12-98] [1999 (105) ELT 323 (Tribunal) :  The Tribunal observed that, “Aluminium dabba and dabbi, puri dabba, betha dabba, masala dabba, achaar dabba, papad dabba, cooker dabba, square dabba, idli/dhokla pot, barni with screw, khumcha, musalmani khumcha, tiffin cake pot cannot be considered as utensils of aluminium but they are containers.

                 In arriving at the above conclusion, the Central Excise Tribunal has relied upon the definition of ‘Utensil’ as per the Shorter Oxford English Dictionary.

 [2]    Collector of Central Excise V/s. Sandip Metal Industries (decided on 18-3-1987) [1989 (42) ELT 142 (Tribunal)]:  The Tribunal in this case has held that, – “Welded trays, wire tiffin, tub, pappad dabba, garma dabbas, dhokla dabba, daba ubha and dabba baitha are largely containers or holders to hold items of food etc., and not utensils.”  It is further observed that, “These are largely containers or holders to hold items of food etc., for the purpose of carrying them from house to school or office and so on.  Utensils, according to dictionary meaning are vessels in use in a kitchen and a vessel is described by the Shorter Oxford English Dictionary as a receptacle for a liquid or other substance.  From the meanings of the words, it is not possible to conceive of utensils as not being associated with the kitchen principally as a vessel in which cooking is done.  The appellant, there, would like even a tray to be assessed as a utensil.  However, nobody regards tray as an utensil and it is certainly not a vessel.  It does not contain items and substances of food or drink.  It may serve as a platform, in which utensils containing food and drink are carried such as when the food is to be served to guests in the dining room, but a tray is never a vessel, nor can a pappad dabba, garma dabba and other dabbas be treated as utensils.  They are just boxes or cases of receptacles for holding food items.” 

                        The above judgments confirm my interpretation of the word ‘Utensils’.

                 Coming back to the Maharashtra Value Added Tax Act, 2002, the Schedule entry C-33(a) speaks of domestic utensils.  It is not denied that the items may fall within the dictionary meaning of the term “utensils”. As has been discussed in this order earlier, the word “domestic utensils” as meant for the purpose of both the Bombay Sales Tax Act, 1959 as well as the Maharashtra Value Added Tax Act, 2002 is not the same as its dictionary meaning. The intention of the legislation is to levy tax at a lesser rate of 4% on utensils used daily in households to cook/serve food.  The legislation intends to cover all such general purpose utensils of the nature used to cook or serve food under the entry on domestic utensils.  It does not seek to cover special purpose items such as serveware which keeps food hot for long periods of time.  Under the repealed Bombay Sales Tax Act, 1959 the legislation had similar intention.  Hence we had schedule entry C-II-26 / C-II-26(1) which was for cookware, serveware etc. and schedule entry C-II-53 which was for items of enhanced utility of the nature of a casserole, thermoses etc. which kept the food/liquid stored in it hot/cold. Also, the rate of tax on the general purpose items as intended by schedule entry C-II-26/C-II-26(1) was on lower side as compared to the rate for the special purpose items as covered by schedule entry C-II-53.  Now under the Maharashtra Value Added Tax Act, 2002, there is only one entry which as per the detailed deliberations held herein above seeks to cover only general purpose items of the nature used to cook or serve food.  In the absence of a specific entry for items of the nature as meant for the schedule entry C-II-53 of the Bombay Sales Tax Act, 1959, the residuary entry E1 of the Maharashtra Value Added Tax Act, 2002 becomes applicable.

            The legislative history speaks of the existence of two entries, one for ordinary cookware, serveware and other for special purpose receptacles which keep food/liquid hot or cold as the case may be.  Hence in the absence of a corresponding entry to entry C-II-53 of the Bombay Sales Tax Act, 1959, the residuary entry E1 becomes applicable. Hence schedule entry C-33(a) would not apply to the applicant's products. 

In view of the above deliberations and various case laws, the impugned items such as Deluxe Hot Tiffin, Hot Pot and Hot Casserole cannot be said to be utensils as meant for the purposes of the schedule entry C-33(a) which pertains to domestic utensils. In absence of a specific entry covering the impugned products, the schedule entry E-1 becomes applicable.

08.  PROSPECTIVE EFFECT

             The applicant has prayed that, in case the products are determined to be not falling under schedule entry C-33(a), his liability may be protected by giving the determination order a prospective effect i.e., from the date of the determination order.

             This prayer of the applicant is not acceptable as the schedule entry appears to me very clear and self speaking. What is meant by domestic utensils was to be understood strictly in terms of the schedule entry and the history of taxation of the said items, so far under the Bombay Sales Tax Act, 1959. The applicant was content treating his products as domestic utensils because of the definition of utensils. However, what should have been seen is the treatment under the taxing statute. But he has conveniently ignored this fact that, the schedule entry covers utensils which are of general nature, i.e., used for cooking/serving. In the first place, the products of the applicant cannot be termed as utensils as meant for the purposes of the schedule entry C-33(a) which pertains to domestic utensils. They are for a special purpose, as in keeping the food hot/cold. 

                        Hence, the applicant's prayer being not supported by convincing reasons, the same cannot be accepted by me.

CONCLUSION

09.       In view of the deliberations held herein above, I have come to the conclusion that the products of the applicant viz. Hot Casserole, Hot Pot and Deluxe Hot Tiffin are receptacles / containers used to keep food hot. There being no specific entry covering the description of the applicant's products under the Maharashtra Value Added Tax Act, 2002, they obviously get covered by the schedule entry E-1 of the Maharashtra Value Added Tax Act, 2002.

            In view of the above discussion, I proceed to pass an order as follows:-

                ORDER

(Under section 56of the Maharashtra Value Added Tax Act, 2002)

No.DDQ-11-2005/Adm-5/65/B-03                               Mumbai,dt. 10.4.2006

            The applicant’s question as to “Whether on the facts and in the circumstances of the case, the sale made by us under invoice no. 000089 dated 14/07/2005 of deluxe hot tiffins, hot casseroles and hot pot for a sum of Rs. 67139/- which includes Value Added Tax of Rs.2582.28 at the rate of 4%” is liable to tax under entry No. 33(a) of the Value Added Tax Act, 2002?” is hereby answered in the negative. The goods Hot Pot, Hot Casserole and Deluxe Hot Tiffin are covered by schedule entry E-1 of the Maharashtra Value Added Tax Act, 2002 thereby attracting tax @ 12.5% and not by schedule entry C-33(a) of the said Act. 

            The applicant's prayer for prospective effect is herewith rejected.

(B. C. KHATUA)

Commissioner of Sales Tax,

Maharashtra State,Mumbai.