Ccex Business Taxation
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Ccex Business Taxation

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BT 2 Presentation
Author- Manohar Prasad.
Suryadatta Institute Of Management, Pune

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  • 1. CCEx. Champdany Industries Limited.
    Presented By-
    Manohar Prasad,
    Saurabh Mishra,
    Sonal Udawat,
    Raashi Singh,
    Guddi Mahto.
  • 2. Situation:
    The assessee was engaged in the manufacture of the carpets in which jute predominated by weight over every other single textile material. However, Revenue contended that it should be classified as polypropylene carpet as the surface of the carpet is made of polypropylene.
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  • 3. Facts:
    (1) U/s 57(1), Revenue argued that the surface of the carpet being entirely of polypropylene, the same should be classified as polypropylene carpet. The Supreme Court viewed that role of Chapter Note 57(1) is limited to decide whether the goods in question are “carpets and other textile floor coverings”.
    (2) U/s 2(A) and 14(A), the Supreme Court held since the goods admittedly fell under Chapter 57 and consisted of more than two textile materials, it had to be classified on the basis of that textile material which predominated by U/s- 46.
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  • 4. Facts:
    As, in the goods in question, jute admittedly predominated by weight over each other single textile material, the said carpet could only be classified as jute carpets and nothing else.
    (3) Relying on the concept of essentiality test, Revenue argued that as the exposed surface of the carpet was polypropylene fiber and not jute, these goods could not be classified as jute carpets. The Court held the said argument of the Revenue to be erroneous because it was against the principle of predominance test.
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  • 5. Facts:
    (4) Learned counsel for the Revenue argued that the common parlance test should be applied for classifying the carpets , to the common man, would not appear to be jute carpet but polypropylene carpet.
    The Supreme Court observed that it is already established principle that while interpreting status like the Sales Tax Acts, the common parlance test can be accepted only if any term or expression is not properly defined in the Act. Therefore, going by the aforesaid principle, the Court held that common parlance test did not have any application here.
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  • 6. Decision:
    The Court held that the carpet shall be classified as Jute Carpet based on the predominance test. Common Parlance Test shall not be applied in this case. Further, the Court held that the department cannot raise a point in the appeal which is not mentioned in the Show Cause Notice.
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  • 7. Notes:
    1. U/s 57(1) of the Central Excise Tariff Act, 1985: “carpets and other textile floor coverings’ means floor coverings in which textile materials serve as the exposed surface of the article when in use and includes article having the characteristics of textile floor coverings but intended for use & other purposes.”
    2. U/s 2(A) and 14(A) of the Central Excise Tariff Act, 1985 is set out as follows:-
    “2(A) Goods classifiable in Chapters 50 to 55 and of a mixture of two or more textile materials are to be classified as if consisting wholly of that one textile material which predominates by weight over any other single textile material.”
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  • 8. Notes Cont….
    “14(A)” Products containing two or more textile materials are to be regarded as consisting wholly of that textile material which would be selected for the classification of a product of Chapters 50 to 55 consisting of the same textile materials.
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  • 9. Thanks !
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