The Hindu Business Line : Flooring material vs floor covering

If you thought you knew how to tell a floor from a tile, and vice versa, be ready to be floored by this tile case that went all the way to the apex court: Indcon Structurals (P) Ltd vs Commissioner of Central Excise, Chennai.

Indocon is engaged in the manufacture of flooring cement tiles using cement, sand, blue metal and gravel along with pigment. These are in the form of tiles used for constructing the floor itself or the wall, as the case may be, informs the text of the judgment dated April 17.

The company claimed the benefit of a notification, saying that its cement tiles are not `floor coverings in rolls or in the form of tiles', and therefore eligible for excise duty exemption.

However, the Department officials held a contrary view, and directed Indocon to pay excise duty on the cement tiles. Indocon responded to the Department that cement tiles manufactured by it are used to construct the floor itself and that the product is not `floor coverings'.

The Assistant Collector of Central Excise conducted an on-the-spot study by visiting Indocon's factory premises and studying the manufacturing process of cement tiles.

His decision was that the company was eligible for the benefit of the exemption Notification.

Undeterred, the Revenue pursued the matter at various levels, including tribunal. The ruling that emerged at the tribunal, from the Third Member, after a tie between the Judicial and the Technical Members, went in favour of the Revenue.

Hence the case before the apex court, with V. Lakshmikumaran arguing for Indocon, and B. Dutta, Additional Solicitor General appearing on behalf of the Revenue.

The core question before the court was whether Indocon's cement tiles are used for floor coverings in the form of tiles.

There was difference between `flooring material' and `floor covering,' the court noted. Floor coverings are "quite replaceable in nature since they are mechanically placed on the floor and could be reusable also, whereas the tiles such as mosaic/granite/cement tiles, which are basically embedded to the floor are normally on lifetime basis."

Also, "Such tiles once laid on the floor are almost impossible to remove without breaking or causing damage to the floor itself."

Justices Ashok Bhan and Lokeshwar Singh Panta were of the view that the majority members in the tribunal had failed to consider the expression `floor coverings in rolls or in the form of tiles' as used in the Notification.

They had stated that no restricted meaning could be given to the expression `floor coverings' as to include only those items which could be just separate or placed on the floor, and to put the items that are affixed to the floor to cover the same out of its purview.

"The objection of the Revenue that the cement tiles manufactured by the assessee-Company are covered under the expression `floor coverings in rolls or in the form of tiles' is misconceived," ruled the Supreme Court.

"As per the trade understanding and usages, cement tiles, the subject-matter of the present case, is a form of floor itself and, therefore, entitled to the benefit of Exemption Notification"

LawOfTheLand@rediffmail.com

D. Murali

More Stories on : Courts/Legal Issues | Real Estate & Construction | Ceramics

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page