Appeal No. 1834 of 1999, decided on 8th November, 2001. Versus Appeal No. 1834 of 1999, decided on 8th November, 2001.
ORDER
ZAFAR IQBAL, MEMBER (TECHNICAL). ‑‑‑ This appeal has been filed by the Sales Tax Department against the orders of the Collector of Customs, Appeals, Karachi, dated 28‑7‑1999; whereby the appellate authority allowed the first appeal of the respondent by treating his supply of goods as exempt.
2. The facts leading to the present appeal are that the respondent namely, Messrs Unik Fabrics (Pvt.) Ltd., who is a sales tax registered person did supply (mats) as accessories to a vehicle manufacturer for use of the same in the assembly of motor cars. The goods so supplied were exempt in terms of Notification No.109(1)/94, dated 8‑2‑1994 at the relevant time.
3. The Sales Tax Department objected to the taxpayer's practice of claiming exemption on floor mats. It was their point of view that floor mats are not assessable within the framework of Chapter 87 of the 1st Schedule to the Customs Act, 1969, as such these goods cannot acquire the status of spare parts or accessories, hence the supply made by the taxpayer was liable to sales tax.
4. The respondent on the other hand contended before the first Appellate Authority that the supply made by them‑ is that of an accessory and the same is exempt in terms of S.R.O. 109(1)/94.
5. We have heard the appellant at length. In order to appreciate his point of view, it would be appropriate to reproduce the provisions of S. R. O. 109(1)/94. The same are as under:
" .... S.R.O. 109(1)/94 .‑‑‑In exercise of powers conferred by subsection (1) of section 13 of Sales Tax Act, 1990 the Federal Government is pleased to direct that in its Notification No. S.R.O. 598(1)/90, dated the 7th June 1990, the following further amendment shall be made, namely:
In the aforesaid notification, in the table, after Serial No. 13‑A in column (1) and the entry relating thereto in columns (2), (3) and (4) the following new serial number and entries relating thereto shall be added, namely:‑‑
13‑B. Parts and accessories of motor cars.
Respective Headings.
If supplied as original equipment before 30 th June, 1995 for using them in assembly of motor cars of engine capacity of 1600 CC or less to such assemblers of motor cars as are approved by the Federal Government for the purpose of this Notifica tion.
(Sd.)
(Alvi Abdul Rahim),
Additional Secretary.
6. The perusal of the S.R.O. indicates that if a part or an accessory is supplied as an original equipment to an approved car manufacturer the same is exempt. The fact that goods were supplied as original equipment to a car manufacturers is not disputed.
7. The department simply states that a part of accessory not conforming to Chapter 87 of the Customs Tariff does not fall within the ambit of exemption: Whereas the fact is that the said notification has not restricted a part or an accessory to Chapter 87 only, the language used in Column 2 of the notification reads, "Respective Heading", which means that in case the goods do correspond to the phrase "parts and accessory of motor cars", irrespective of their classification, the goods will be exempt. So in other words we have been left to determine whether or not "floor coverings" supplied by the respondent do fall within the phrase "accessory".
8. For that the appropriate way would be to know what is the exact nature of an "accessory". The term as defined in Webster's Third New International Dictionary is, an object or device that is not essential in itself but that adds to the beauty, convenience or effectiveness of something else. In order to constitute an accessory to a machinery, the article or device must be one that adds to the convenience or comfort or effectiveness of the main product, but it is not essential. It is an equipment usually removable, replaceable for care, safety or completeness.
9. According to the facts available on record, it is an admitted fact that floor coverings are used in all motor cars for comfort and beauty. Accordingly, we believe that the disputed goods are covered within phrase "accessory". An accessory falling within the framework of respective heading, that is in the corresponding classification stands exempt for payment of sales tax within the framework of S.R.O. 109(1)/94. This point of view was also advised by the C.B.R. to the department vide its Letter C. No. 3(6)GST‑1/93, dated 4‑4‑1994 having said that, it is evident that an accessory corresponding to relevant heading i.e., Chapter 58 or 87; as the case may be, become exempt within the framework of S.R.O. 109(1)/94. Be that as it may, we reject this appeal as no case has been made out to interfere with the impugned order.
C.M.A./M.A.K./223/Tax (Trib.)
Appeal rejected.