JUDGMENT
The judgment of the Tribunal was delivered by
J. Kanakara.J, J. (Chairman)
1. The Revenue is the petitioner in this tax revision case. The assessee is a dealer in card auto levellers and spares. The goods manufactured by the assessee are used for controlling the quality of yarn produced in the textile industry. They claimed the goods as machinery parts and paid tax at 8 per cent under entry 81 of the First Schedule. They purchased component parts from Switzerland such as “guide for printed circuit board, transistor, diodes and integrated circuits”. From these component parts the assessing authority came to the conclusion that the end-product manufactured by the assessee must be an “electronic system” falling under entry 41-C of the First Schedule taxable at 12 per cent. The assessing authority also refers to the bill describing the component part as “consisting of electronic unit”. In the leaflet issued by the assessee the product is described as “the fully electronic premier card control and system”.
2. Before the first appellate authority (Appellate Assistant Commissioner), the assessee contended as follows : that in regard to the turnover of Rs. 26,96,576 they would like to bring to the notice of the appellate authority, that the items sold by the appellants is an accessory or part of the textile machineries, and these card control machineries is fitted to the carding machines and yarn cleaner is fitted with yarn winders, that these are machinery parts, manufactured by the appellants exclusively for the textile industries in the carding machines and winders, as the case may be, that they cannot be used for any other purposes, that these are therefore machinery parts only, that they cannot be treated as falling under any one of the categories mentioned in item 41-C of the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, that the items sold by the appellants are not electronic systems by themselves, that they are also not an electronic instrument, that they are also not an electronic apparatus or appliance and that therefore these cannot be classified as electronic goods and as they are also not a part and a accessory of such electronic goods that in the absence of any of the above items specifically or particularly mentioned in the Schedule under item 41-C it cannot be simply assessed to tax at 12 per cent, that because the products manufactured by the appellants consist of certain electrical and electronic goods such as “guide for printed circuit board”, “transistor”, “diodes” and “integrated circuits”, the product itself cannot be treated as a whole as an electronic system as observed by the learned assessing officer, that the card control was fitted to carding machine used in the textile industry, that this part may contain certain electronic item, that for that reason this will not lose the character of machinery part fitted to a carding machine or winder, which does the job of removing the faults to the yarn at the time of winding and gives a good quality of yarn and that therefore the assessment at 12 per cent on the turnover of Rs. 26,96,576 may be set aside and that this turnover ordered to be assessed at 8 per cent.
After referring to the two entries in the First Schedule, the Appellate Assistant Commissioner gives the following reasons for reversing the order of the assessing authority :
(1) Entry 81 says “all machinery other than those specifically mentioned in this Schedule). The goods in question, namely, “Premier card Control-L system” and “yarn cleaner” are not mentioned in any other items of the First Schedule including 41-C.
(2) Decisions in F. Rose Mary Carpentry Works v. State of Madras [1964] 15 STC 924 (Mad.), Commissioner of Sales Tax, U.P. v. Abdul Khaliq Mistri [1979] 43 STC 428 (All.) and Pioneer Electronics v. State of Andhra Pradesh [1983] 54 STC 83 (AP) support the contention that the goods are accessories of textile machinery.
(3) 41-C is a general provision whereas entry 81 is a specific provision.
(4) Reliance placed on the Andhra Pradesh Sales Tax Appellate Tribunal in relation to certain electrical goods.
4. We may straightly point out that the last two reasons given by the Appellate Assistant Commissioner are totally unwarranted and only shows his over-enthusiasm. But the first two reasons are sound and could be countenanced. The assessee filed an appeal to the Appellate Tribunal (STAT). The State filed an enhancement petition so far as the turnover of Rs. 26,96,576. The Sales Tax Appellate Tribunal took into consideration that the goods manufactured by the assessee cannot function independently and they can be used only in the textile industry. They upheld the order of the Appellate Assistant Commissioner. Hence this revision by the State. The relevant entries may be first noticed. Entry 41-C of the First Schedule is a follows :
“Electronic systems, instruments, apparatus, appliances (other than those specified elsewhere in this Schedule), but including electronic cash registering, indexing, card punching, franking and addressing machines, computers of analog and digital varieties, one-record units and other electronic goods and parts and accessories of all such goods.”
Entry 81 of the First Schedule is as follows :
“All machinery (other than those specifically mentioned in this Schedule) worked by (i) electricity, (ii) diesel or petrol, (iii) furnace oil, (iv) kerosene, (v) coal including charcoal or (vi) any other form of fuel or power, and parts and accessories of such machinery and tools used with such machinery.”
Entry 41-C relates to electronic system or other apparatus including parts and accessories of such goods. Therefore, if the goods in question are capable of being classified as electronic system and could be used as such or could be used in any other machinery in general, then it is possible to construe such goods as falling under entry 41-C. But in this case the records show that the goods manufactured are not capable of being used by themselves. Nor is it possible to say that the goods can be utilised generally in any type of machinery or sold as general goods. On the other hand, the goods can be used only in textile machineries. The purpose and use of the goods in the textile industries has also been clearly explained by the assessee. Therefore, the goods sold by the assesses are parts or accessories of machineries in textile industry. In this connection the decisions cited by the Appellate Assistant Commissioner are relevant and apposite. We may also add one more decision of the Supreme Court in [1991] 80 STC 233 (Mehra Bros. v. Joint Commercial Tax Officer, Madras). The apex Court held that car seat covers and upholstery manufactured by an assessee are accessories to motor vehicles, even though they are made of leather, plastic cloth or such other materials. Similarly, in T.C. (R) No. 95 of 1997* this Special Tribunal has taken a similar view in respect of leather belting and rubber belting used in textile industry. It was held that they will fall under entry 81. Looked from this view, we are satisfied that the goods in question are used only as accessories of machineries in the textile industry. Therefore, it clearly falls under entry 81 of the First Schedule. The tax revision case filed by the Revenue fails and is dismissed.
And this Tribunal doth further order that this order on being produced be punctually observed and carried into execution by all concerned.
Issued under my hand and the seal of this Tribunal on the 26th day of March, 1999.