Rajes Kumar, J. - (1.) Present revision under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 12.12.1995 relating to assessment year 1988-89.
(2.) Opposite Party/Dealer (hereinafter referred to as "Dealer") was carrying on the business of Nylon Yarn. It had imported Nylon Yarn and after some chemical process sold the same to the Shoe maker. It had claimed that by processing the quality of Yam had only been increased, but Nylon Yam remains the same and was used for sewing and knitting. It had also been explained that Shoe makers normally use such Yarns for sewing of Shoes, though, these Yarn can be used for any other purposes also. Claim of dealer was that it was Yam and liable to tax @ 2% under the entry of "All Kinds of Yam" under the Notification No. ST-I1-5785/X-10 (l)/80-U.P. Act No. 15/48 dated 07.9.1981. Assessing Authority had accepted the claim of dealer and taxed the turnover of the said Nylon Yam @ 2%. Deputy Commissioner (Executive), however, passed order under Section 10-B of the Act on 13.6.1995 and levied tax on the turnover of the said Nylon Yarn @ 10% treating it as an unclassified item. Deputy Commissioner (Executive) held that the Nylon Yarn after processing became a special kind of Yam which was to be used in Shoe making and therefore, it was Shoe material and since there was no entry of Shoe material, therefore, it was liable to tax as an unclassified item. Against the order of Deputy Commissioner (Executive), dealer filed appeal before the Tribunal. Tribunal vide its impugned order, allowed the appeal. Tribunal held that by chemical process of imported Nylon Yarn, a special kind of thread have been manufactured which remains thread/Yarn. Tribunal held that by chemical processing, only strengthen have been provided to the Yarn, but it remains Yarn.
(3.) Having heard learned Counsel for the parties and 1 have perused the order of Tribunal and the authorities below. The entry 55 of Notification No. ST-II-5785/X-10 (l)/80-U.P. Act No. 15/48 dated 07.9.1981 reads as follows "55. Yarn of all kinds except those covered by any other Notification.";