Whether LAN Cables falls under and / or are covered by entries 41 & 41A of DVAT Act, 2004 (ii) What will be the rate of tax chargeable on the sale of item LAN Cable.
IN THE OFFICE OF THE COMMISSIONER
DEPARTMENT OF TRADE AND TAXES
GOVERNMENT OF NCT OF DELHI
VYAPAR BHAVAN, I.P.ESTATE, NEW DELHI
No.F. 386/CDVAT/2015/428 Dated : 15-03-2016
Name of the firm : M/s Finolex Cables Limited
Present for the applicant: Sh.M.K.Gandhi, Advocate
Present for the Department : Sh.M.K.Aggarwal, DR
The applicant dealer has filed a determination application dated 09.11.2015 under Section 84 of Delhi Value Added Tax Act, 2004 (hereinafter referred to as the “said act”) and the question put up for determination Under the aforesaid provision of law is as under :-
“(i) Whether LAN Cables falls under and/or are covered by entries 41 & 41A of DVAT Act,2004 (ii) What will be the rate of tax chargeable on the sale of item LAN Cable”
2. The application has been filed in the prescribed Format DVAT42 and the requisite fee Rs.1000/- paid through online reference No. 420257776161115 dated 04.11.2015 of State Bank of India.
3. Sh.M.K.Gandhi, Advocate, appeared and reiterated the facts and grounds of the case and requested to determine the rate of tax on the above said product.
4. The brief facts of the case, as explained by the applicant are as under :
i) The dealer is registered in Ward-202 having TIN ‑07090165274.
ii) That, the dealer is engaged in the manufacture of wires and cables for the last five decades.
iii) That, the LAN cables are an integral part of a computer system. The expression “Computer System” includes not just the server/s but also the multiple computing workstations and the cables used to connect the multiple computing workstations to the server/s. The LAN cableS sold by the applicant which helps to connect the server/s and multiple workstations are, therefore, part of the system. The only use of the LAN cable is to connect the server/s and the multiple work stations.
iv) That, the entry No. 41 or 41A carry with it explanatory statements which inter-alia, clearly point out that the said entries relates to information technology products.
v) That, the cables manufactured by the applicant are IT products. Sub entry No. 27-28 of entry 41A mentions the commodity as optical fiber and optical fibre bundles, optical fibre cables. The corresponding entry of Central Excise Tariff mentioned against sub entries 27/28 of the entry 41A of the DVAT Act,2004 are 8544 70 and 9001 10 00 respectively. The description in the Central Excise Tariff is given as Optical Fibre Cables ( 8544 70) and Optical Fibres, Optical Fibre Bundles and Cables ( 9001 10 00) .
vi) That, in the corresponding clause of Central Excise Tariff Headings the word “Cables” has been intentionally kept separate by the legislature from the rest of the words reading as “Optical Fibre and Optical Fibre Bundles” used at the same place and accordingly the word cables covers all kinds of cables including LAN cables. Thus the LAN cables are very well covered by the aforesaid provision and will attract tax at the rate of 5%.
5. With these averments, the applicant requested to determine Whether LAN cables falls under and/or are covered by entries 41 & 41A of DVAT Act,2004 and what is the rate of tax chargeable on the sale of item LAN Cable”
6. The DR appearing on behalf of the department stated that subentry 27 and 28 of entry 41A of the third schedule of the DVAT Act 2004 reads as
27. “Optical fibre cables
28. Optical fiber and optical fiber bundles; Optical fibre cables.
The word mentioned in the third schedule of the DVAT Act 2004 and entry 854470 and entry 9001 10 00 of the central excise and Customs is optical cable and not LAN cable. Both the cables are different. The optical fibre cable is made up of strands of thin optically pure glass that carry digital information with light. But, in the case of LAN cable, the cables are comprised of multiple strands of copper wire twisted together with four pairs per cable. Two of the pairs are used to send data and the other two are used to receive data. In LAN cables data is transmitted via electrical signals sent through copper cabling. So both optical fibre cable and LAN cables are different. Hence the LAN cables being unspecified are taxable @ 12.5%.
7. I have heard both the sides and gone through the documents available on record and of the considered view that the LAN cables are not covered under entry 41A of the third schedule of the DVAT Act and hence are taxable @ 12.5%.
8. Held accordingly.
(S. S. Yadav)