Custom, Excise & Service Tax Tribunal
M/S. Pg Electroplast Ltd vs C.C.E. & S.T.- Noida on 12 March, 2014
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI COURT NO. I Date of hearing/Decision:12.03.14 Stay Application No. E/Stay/56354/2013 in Appeal No. E/55979/2013 -EX[DB] M/s. PG Electroplast Ltd. Appellant Vs. C.C.E. & S.T.- Noida Respondent
[Arising out of Order-In-Appeal No.40/Commissioner/Noida/2012-13, dt.16.11.2012, passed by Commissioner of Central Excise, Customs & Service Tax, Noida] For approval and signature:
Honble Mr. Justice G.Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Present:
Sh. Amit Jain, Advocate - for the appellant Sh. Pramod Kumar, Jt. CDR - for the Respondent CORAM :
Honble Mr. Justice G.Raghuram, President Hon'ble Mr. Rakesh Kumar, Member (Technical) FINAL ORDER NO. 51670 /2014 Per Rakesh Kumar:-
The facts leading to the filing of this appeal and stay application are, in brief as under:-
1.1 The appellant in their factory at Greater Noida, are engaged in manufacture of Color Television sets/ DVDs/ VCDs, chargeable to Central Excise Duty. During the period from Feb.09 to Oct.11 they supplied color television sets to M/s.ELCOT, Tamil Nadu (a Govt. of Tamil Nadu Undertaking). These color television sets had been supplied to M/s.ELCOT against a contract at a Per Unit Contract Price and the same were meant for free distribution by the Govt. of Tamil Nadu among the poorer sections of the population. M/s.ELCOT was to distribute the CTVs on behalf of the State Government. During the period of dispute, the color television sets were notified under section 4A of the Central Excise Act, 1944 and accordingly if in respect of the color television sets cleared by a manufacturer, Maximum Retail Price(MRP) was required to be declared on the same, in terms of the provisions of Standards of Weights and Measures Act. 1976 (SWM Act) read with Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (SWM Rules), the duty was required to be paid on the assessable value determined on the basis of MRP minus abatement. Accordingly the appellant, in respect of CTVs sold to M/s. ELCOT discharged duty liability on the price at which the CTVs were supplied to M/s.ELCOT minus abatement, by treating their per unit sales price to M/s.ELCOT as MRP. The Department was of the view that in respect of sales of CTVs to M/s.ELCOT, there was no requirement to declare MRP in terms of the provisions of the SWM Rules as in terms of Rule 2A(b) of these Rules, the provisions of Chapter II of these rules would not apply if the packaged commodities are meant for "Industrial Consumers or Institutional Consumer as defined in Explanation to this rule and M/s.ELCOT were an Institutional Consumer. In terms of Explanation to Rule 2A(b) of the SWM Rules, Institutional Consumers mean those consumers who buy packaged commodities directly from manufacturers/packers for service industry like transportation including airways, railways or any other similar service industry and Industrial Consumers mean those consumers who buy the packaged commodities directly from manufacturers/packers for using the product in their industry for production etc. Accordingly the Department was of the view that the duty should have been paid by the Appellant on the value determined under section 4, which was the Per Unit Contract Price at which the appellant supplied the CTVs to M/s.ELCOT. On this basis a Show Cause Notice was issued to the appellant for demand of differential duty amounting to Rs.7,65,73,219/- in respect of clearances of CTVs to M/s.ELCOT, Tamil Nadu, during the period from Feb.09 to Oct.11 along with interest thereon under section 11AB of Central Excise Act. 1944 and also for imposition of penalty on them under section 11AC ibid. Against this order of the Commissioner, this appeal has been filed along with stay application.
2. Heard both the sides.
3. Though the matter was listed only for the hearing of the stay application, after hearing the same for the sometime, the Bench was of the view that since only a short issue is involved, the same can be taken up for final disposal. Accordingly with the consent of both sides, the matter was heard for final disposal.
4. Sh. Amit Jain, Advocate, the learned counsel for the appellant, pleaded that during the period of dispute, the color television sets were notified under section 4A of the Central Excise Act.,1944 and accordingly in respect of CTVs cleared to M/s.ELCOT, if MRP was required to be declared in terms of the provisions of the SWM Rules on the CTVs packages, the duty was required to be paid on the assessable value determined under section 4A i.e. Maximum Retail Price (MRP) minus abatement, that in this regard, MRP (per unit price) of CTVs supplied to M/s. ELCOT had been declared on the packages of CTVs, that M/s. ELCOT are neither an Industrial Consumer nor an Institutional Consumer in terms of definitions of these terms as given in Rule 2A(b) of the SWM Rules, that, therefore, the duty has been correctly paid on the CTVs on the basis of the value to determined under section 4A, that the Departments contention is that M/s. ELCOT, Tamil Nadu who had purchased these color televisions sets on behalf of the Govt. of Tamil Nadu for free distribution among the poorer sec*-tion of the population, are Institutional Consumer, is not correct, as they have not purchased CTV sets for use in any service industry, that they cannot treated as Industrial Consumer as the CTV sets were not meant for use in their factory for production etc. but were meant for free distribution, that the Commissioners finding that M/s. ELCOT are an Institutional Consumer, as they have received CTVs for free distribution on behalf of Govt. of Tamil Nadu, is not correct, as the service referred to in the definition of Institutional Consumer is the service industry like transportation including airways, railways or any other similar service industry and distributing TV sets among the poorer section of the population, on behalf of the Govt. of Tamil Nadu cannot be treated the service referred to the definition of Institutional Consumer, that in view of this, the Commissioners finding that M/s.ELCOT is an Institutional Consumer and hence in respect of the sales of the CTVs by the appellant for M/s.ELCOT, there was no requirement to declare MRP is incorrect and that in view of the above, the impugned order is not sustainable.
5. Sh. Pramod Kumar, learned Jt. CDR, defended the impugned order by reiterating the findings of the Commissioner and emphasized that M/s.ELCOT have to be treated as an institutional consumer as defined in the explanation to Rule 2A(b) of the SWM Rules.
6. We have considered the submissions from both the sides and perused the records. There is no dispute that the color television sets are notified under section 4A of the Central Excise Act, 1944 and accordingly in respect of the sales of CTV sets by a manufacturer, which are other than the sale referred in Rule 2A(b)of the SWM Rules, there would be requirement of declaring the MRP on the packages and assessable value of the goods in such cases would have to be determined under section 4A i.e. MRP minus abatement as notified under the Notification issued under section 4A. The appellant have paid duty on the CTVs, in question, sold to M/s.ELCOT on the basis of value determined under section 4A i.e. declared MRP minus abatement. The Departments contention is that in respect of the sales to M/s Elcot, the provisions of section 4A would not be applicable as M/s. ELCOT are an Institutional Consumer, as defined in Explanation of Rule 2A(b) of the SWM Rules and, hence, there is no requirement to declare the MRP on the packages of CTVs sold to M/s. ELCOT.
7. In terms of Rule 2A(b) of the SWM Rules, the provision of Chapter II of these Rules would not apply to the packaged commodities meant for Industrial Consumer or Institutional Consumer. In terms of explanation to this Rule, Institutional Consumers means those consumers who buy packaged commodities directly from manufacturers/packers for service industry like transportation including airways, railways or any other similar service industry and Industrial Consumers means those consumers who buy packaged commodities directly from manufacturers/packers for using the same in their industry for production etc. The Departments contention is that M/s.ELCOT, Tamil Nadu, a Govt. of Tamil Nadu Undertaking, engaged in the manufacture of electronic products, who have been roped in by the Govt. of Tamil Nadu for procurement of CTVs and their free distribution on its behalf, are an Institutional Consumer, as they have provided the services of free distribution of CTV sets to the Govt. of Tamil Nadu. In our view the service referred in the definition of Institutional Consumer is the service industry like airlines, railways and other similar services and as such the activity of free distribution of CTVs among poorer section of the population of Tamil Nadu on behalf of the Govt. of Tamil Nadu, cannot be called service industry as it is not a commercial activity. M/s.ELCOT cannot be treated as Industrial Consumers also, as the CTVs purchased by them were not meant for use in their factories for production. Since M/s.ELCOT are neither institutional consumer nor industrial consumer, in respect of sale of CTVs by the appellant to them, MRP was required to be declared in term of SWM Rules and accordingly, the Provisions of Section 4A would be applicable. The Appellant have paid duty on this basis only i.e. on the value determined under section 4A. In view of this, the impugned order is not sustainable. The same is set aside. The appeal is allowed.
(Justice G.Raghuram) President (Rakesh Kumar) Member (Technical) S.Kaur 1