Custom, Excise & Service Tax Tribunal
Kenda Farben India Private Limited vs Noida on 21 August, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Excise Appeal No.70766 of 2017
(Arising out of Order-in-Appeal No.NOI-EXCUS-000-APP-828-17-18 dated
12/09/2017 passed by Commissioner (Appeals), Central Goods & Service
Tax, Noida)
M/s Kenda Farben India Private Limited .....Appellant
(A-27, Sector 80, Phase-II, Noida)
VERSUS
Commissioner of Customs, Central Goods & Service Tax,
Noida .....Respondent
APPEARANCE:
Shri R. Krishnan, Advocate for Appellant Shri P.K. Singh, Authorized Representative for Respondent CORAM :
Hon'ble Mrs. ARCHANA WADHWA, MEMBER (JUDICIAL) Hon'ble Mr. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL) DATE OF HEARING : 21 June, 2019 DATE OF PRONOUNCEMENT : 21 August, 2019 FINAL ORDER NO. 71578 / 2019 ARCHANA WADHWA As per facts on record the appellant is engaged in the manufacture of chemical for footwear, varnishes, adhesive, polish etc. for footwear falling under Chapter 29 & 32 of the Central Excise Tariff Act. The appellants are selling the said products through distributive channels as also by displaying in the retail outlet for sale. The duty was being paid by the appellant under the provisions of Section 4A of the Central Excise Act, 1944, which relates to payment of duty on the basis of the MRP endorsed on the said goods. The finished goods are packed in 5 Ltr/25 Ltr packets and sold through retail 2 Excise Appeal No.70766 of 2017 outlets/stockists and attracted duty under provisions of Section 4A of the Central Excise Act.
2. As an audit objection raised by the audit in the year 2013, Revenue entertained a view that the goods in question are ought to have been cleared on the basis of assessable value arrived at in terms of Section 4 of the Central Excise Act, inasmuch as no MRP is required to be affixed on the packages of commodities containing quantity of more than 25kg/25ltr which was meant for industrial consumers and institutional consumers. As the goods in question were for industrial consumers, the Revenue was of the view that in terms of provisions of Rule 2A (b) of Chapter 2 of the Standard of Weight & Measure (PC) Rules, 1977 and subsequently in terms of Section 3 of the Legal Metrology (Packaged Commodities) Rules 2011, the goods meant for an Industrial/Institutional consumers are excluded from the provisions of Standard of Weight & Measures (PC) Rules, 1977 and require no fixation of MRP, in which case provisions of Section 4A, would not get attracted.
3. In view of the above, enquires were made from the appellant and thereafter a show cause notice was issued on 25 June, 2015 raising demand of duty of Rs.16,41,197/- for the period 2010-11 to 2013-14 on the ground that the appellant should have discharged their duty liability in terms of Section 4 of the Central Excise Act and not under Section 4A of the Act. The appellant contested the said proposal on merits as also on limitation. It was submitted that the goods are not required to be affixed MRP under Legal Metrology (Packaged Commodities) Rules 2011 only when sold directly to industrial/institutional consumers. Inasmuch as in their case the goods were sold through distributive channels, the exclusion from affixing MRP is not available. Inasmuch as the goods were sold through retail outlet, MRP fixation was mandatory. The duty stands accordingly discharged by them under Section 4A. They also 3 Excise Appeal No.70766 of 2017 submitted that Weight & Measure Authorities have clarified the issue and even their competitors are discharging duty on MRP basis. They also assailed the proposed confirmation of duty on the point of limitation by submitting that prior to audit in 2013 there have been numerous audits in their factory and no objection was ever raised at any point of time. Even in 2013 itself the appellant had filed reply clarifying their stand and in spite of that the show cause notice was issued in 2015 invoking the extended period. They submitted that invocation of proviso to Section 11A is not warranted.
4. However, the said pleas of the appellant were not appreciated by the Original Adjudicating Authority, who confirmed demand along with imposition of penalty. On appeal the order of the Original Adjudicating Authority was upheld by Commissioner (Appeals) and hence the present appeal.
5. After appreciating the submissions made by both the sides and after going through the impugned order, we find that the dispute revolves around the applicability or non- applicability of provisions of Section 4A of the Central Excise Act which provides for discharge of duty on the basis of the MRP. Admittedly the appellant's final products were carrying the MRP on the same. The goods were being sold through distributive channels and by displaying the same in retail outlets. The explanation to Section 3 of the Legal Metrology (Packaged Commodities) Rule 2011 define the expression industrial consumers and institutional consumers. For appreciation of the same, the said definitions are being reproduced below:-
"(i) "Institutiona consumer" means - the Institutional consumer like transportation, airways, railways, hotels, hospitals or any other service institutions who buys package of commodities from the manufacturers for use by that industry.
4 Excise Appeal No.70766 of 2017(ii) "Industrial consumer" means the industrial consumer who buys packaged commodity directly from the manufacturer for use by that industry."
As is seen from the above definitions, a sale would be considered as a sale to institutional consumer or industrial consumer if the packaged commodities are directly purchased from the manufacturer. In the present case admittedly the goods were not being directly purchased by the industrial consumers from the present manufacturer appellant.
6. The Hon'ble Bombay High Court in the case of Larsen & Toubro Limited V/s Union of India reported 2012 (275) E.L.T. 153 (Bom.) has held that once the product are displayed for sale by stock/retail outlets, MRP provisions are applicable. The said decision was followed by the Tribunal in the case of Schneider Electrical India (P) Ltd. V/s Commissioner of Central Excise, Nashik reported at 2014 (311) E.L.T. 113 (Tri.- Mumbai). As such we are of the view that the ratio of the above two decisions are fully applicable to the facts of the present case.
7. Otherwise also we find that the demand stands raised on 25 June, 2015 for the period 2010-11 and 2013-14 i.e. by invoking the longer period of limitation. Admittedly, the fact that the appellant was discharging its duty liability under Section 4A was in the notice of the Revenue inasmuch as the appellant was filing due returns. Not only that, the audits have earlier taken place in the assessee's factory in the year 2008 as also in 2010 and no objection was raised by the audit team thus letting support to the appellant's belief that their product attract Section 4A of the Central Excise Act. The appellants were maintaining all the records required to be maintained in the ordinary course of their business and in fact it is audit of those records only which led the Revenue to find out that the duty was being paid under Section 4A. In such a scenario no 5 Excise Appeal No.70766 of 2017 mala fide can be attributed to the appellant so as to invoke the extended period.
8. Further, we note the Show Cause Notice was issued in 2015 i.e. after normal period from the date of the audit. The Hon'ble Allahabad High Court in the case of Commissioner of C. EX. & Service Tax V/s Triveni Engineering & Industries Ltd. reported as 2015 (317) E.L.T. 408 (All.) has held that show cause notice after a period of 22 months from the date of the audit is clearly barred by limitation, inasmuch as the Revenue comes to know about the factual position at the time of conducting of audit.
9. The ratio of the said decision is squarely applicable to the facts of the present case. As such, we hold that the demand is also barred by limitation.
10. In view of the forgoing, we set aside the impugned order and allow the appeal with consequential relief to the appellant.
(Order Pronounced in the open Court on 21 August, 2019) Sd/-
(Archana Wadhwa) Member (Judicial) Sd/-
(Anil G. Shakkarwar) Member (Technical) nihal