(Order of the Court was made by F.M. IBRAHIM KALIFULLA, J.) The Revenue has come forward with this revision, raising the following questions of law:-
" 1. Whether in the facts and circumstances, the Tribunal is legally correct in deleting the turnover subjected to tax based on records of the Excise Department which had levied excise duty treating the manufacture by the assessee as resulting in a distinct commercial commodity?
2. Whether in the facts and circumstances, the Tribunal is right in deleting the consequential penalty levied under Section 12(3)(b) of the TNGST Act?"
The answer to the second question of law depends upon the answer to the first question of law. Therefore, we take up the first question of law in the first instance.
2. The respondent-assessee is the manufacturer of plastic products. The uncontroverted facts are that in the course of manufacture of the products to be supplied to its customers, the assessee was supplied with certain component parts viz. holder supporter, separator, serving guide roller and spools etc. by the supplier themselves. The assessment relating to the year 1990-91, the Assessing authority held that for the purpose of sales tax, the sale value inclusive of components supplied by the assessee's customers has also been taken into account in as much as the said value was the basis for charging basic excise duty and special excise duty.
3. On appeal by the assessee, the Appellate Assistant Commissioner also borne in mind the conclusion of the Assessing Authority and dismissed the appeal and on further appeal before the Tribunal, the Tribunal took the view that the value of the materials supplied by the assessee's customers should be deleted for the purpose of sales-tax liability. As against the same, the present revision has been filed by the State.
4. After hearing Mr. Haja Naziruddin, learned Special Government Pleader appearing for the petitioner and after perusing the order of the Tribunal as well as that of the lower authorities, we are convinced that the order of the Tribunal is to be sustained. It will have to be noted that the Central Excise duty is levied on the value of the product, based on the manufacture by the assessee, while the levy of sales-tax is based on transfer of property or goods from the seller to the purchaser. The failure to apply the above basic difference between the two elements of statutory liabilities has resulted in the Assessing Authority as well as the first Appellate Authority to take the whole of value of product manufactured including the components supplied by the customers, for the purpose of sales-tax assessment.
5. The lower Authorities failed to note that when the customers supplied the components to the assessee, it continue to retain its ownership and even though such components form part of the ultimate product, the value of such components did not form part of the ultimate price at which the product was sold by the assessee to its customers. It is not the case of the petitioner that the price fixed by the assessee on the product included the value of components supplied by the customers. As far as the payment of excise duty is concerned, by virtue of the nature of levy of excise duty, the assessee was bound to disclose the whole of the value of the product and as rightly contended by the assessee, whatever excise duty is levied on the components supplied by the customers, to that extent, the customers get the benefit of modvat credit, which can always be claimed and availed at the appropriate time of removal of the product from the customer's premises.
6. Having regard to the clear cut demarcation as between the instances of levy of excise duty and imposition of sales-tax liability, the conclusion of the Tribunal was perfectly in order and consequently, the first question of law raised in this appeal has to be necessarily answered against the petitioner. As a sequel to it, the second question of law is also held against the petitioner. The tax case revision fails and the same is dismissed.
ssa.
To The Deputy Commissioner (Commercial Taxes), The State of Tamilnadu, Coimbatore Division, Coimbatore 18