Custom, Excise & Service Tax Tribunal
C.C.E. & S.T.-Rajkot vs Sanghi Industries Ltd on 15 May, 2017
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad Case No Impugned Order Detail's Date of Impugned Order Passed By Appellant Respondent
E/237/2010-DB OIO-23-29-COMMR-2009 06/01/2009 Commissioner of Central Excise-RAJKOT Sanghi Industries Limited C.C.E. & S.T.-Rajkot E/900/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT Sanghi Industries Ltd C.C.E. & S.T.-Rajkot E/981/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/982/2011-DB OIA-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/983/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/984/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/985/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/986/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/987/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/988/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/989/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/990/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/991/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/992/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/993/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd E/994/2011-DB OIO-37-50/COMMR/2011 31/03/2011 Commissioner of Central Excise, Customs and Service Tax-RAJKOT C.C.E. & S.T.-Rajkot Sanghi Industries Ltd Represented by:
For Assessees: Shri R. Nambirajan, Shri Anand Nainawati - Advocates For Revenue: Shri Sameer Chitkara, A.R. (Addl. Commissioner) For approval and signature:
Honble Dr. D.M. Misra, Member (Judicial) Honble Mr. Ashok K. Arya, Member (Technical)
1. Whether Press Reporters may be allowed to see the No 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 Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
HONBLE DR. D.M. MISRA, MEMBER (JUDICIAL) HONBLE MR. ASHOK K. ARYA, MEMBER (TECHNICAL) Date of Hearing: 08.05.2017 Date of Decision: 15.05.2017 Order No. A/10962-10977/2017, dt.15.05.2017 Per: Ashok K. Arya
1. M/s Sanghi Industries Ltd (SIL) has filed two appeals (E/237/2010 and E/900/2011). Appeal No.E/237/2010 is filed against OIO No.23-29/Commr/2009, dt.06.01.2009 and appeal No.E/900/2011 is filed against OIO No.37-50/Commr/2011, dt.31.03.2011, both passed by Commissioner of C.Ex. & S.Tax, Rajkot.
1.1 Revenue has also filed 14 Cross Appeals (No.E/981-994/2011) against OIO No.37-50/Commr/2011, dt.31.03.2011.
1.2 As the subject matter in all these appeal cases is common, therefore these are being decided by this common order.
2. The brief facts are that:-
i) M/s SIL, an assessee-manufacturer inter alia, is engaged in the manufacture of ordinary Portland Cement falling under Chapter Heading No.2523 of First Schedule to Central Excise Tariff Act, 1985.
ii) M/s SIL cleared cement in packed form (in 50 kg bags), inter alia, to various consumers like builders/developers, industrial manufacturers who used cement for construction or as raw material. The assessee-manufacturer claims that these buyers are covered by the definition of industrial consumer or institutional consumer under explanation to Rule 2A Standards of Weights & Measures (Packaged Commodities) Rules, 1977 and Rule 3(ii) of Packaged Commodities Rules, 2011.
iii) The assessee-manufacturer M/s SIL claims that in terms of Rule 2A(b) of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977 and in terms of Rule 3(ii) of PC Rules in respect of packages of commodities meant for industrial consumers or institutional consumers, the requirement of declaring MRP on the packages is not applicable. On all such bags of cement cleared to the following category of buyers, the assessee did not declare MRP and specifically declared as Project Supply Not for Resale:-
a) Social, religious and charitable organizations,
b) Builders, developers, contractors and construction firms,
c) Infrastructural development projects,
d) Government bodies,
e) Manufacturers of finished goods
f) Captive consumption
iv) During the period March 2007 to January 2010, the Assessee had, inter alia, cleared cement in 50 kg bags to the aforesaid buyers on concessional rate of duty availing the benefit in terms of Sr.No.1C of the Notification No.4/2006-CE, dt.01.03.2006 as amended from time to time.
v) The assessee claims that the aforesaid entry 1C of the Notification provides concessional rate of excise duty for cement cleared in package of 50 kg bags where there is no requirement to declare retail sale price on such bags. In other words, cement bags of 50 kg cleared to Industrial or Institutional consumer are eligible for concessional rate of duty.
vi) The Revenue initiated investigation against the assessee mainly on the following grounds:-
a) that the exemption was availed by the assessee M/s SIL by treating the aforesaid category of buyers as bulk buyers, without categorizing them as to whether they are industrial or institutional consumers or not.
b) that majority buyers had consumed the cement cleared by the appellants for civil construction activities or residential complexes or for industrial building construction for themselves.
c) that M/s SIL have violated the statutory provisions of affixing Retail Sale Price (RSP) on their packaged commodity while clearing cement with intent to pocket undue profit.
d) that M/s SIL wrongly cleared cement on payment of concessional rate of duty in the guise of buyers being institutional consumers or industrial consumers.
e) that M/s SIL have intentionally and deliberately misstated the facts by considering their bulk buyers as institutional consumers which is not applicable in the present facts and circumstances of the case and wrongly availed the benefit of concessional rate of duty.
vii) In view of the above, the Department issued a total of 21 Show Cause Notices during March 2007 to January 2010 and demanded differential Central Excise duty by denying the benefit of concessional rate of duty as provided in Sr.No.1C of Notification No.4/2006-CE as amended during the relevant period.
viii) Seven Show Cause Notices issued for the period March 2007 to November 2008 were adjudicated by OIO No.23-29/Commr/2009, dt.11.11.2009 and 14 Show Cause Notices issued for the period December 2008 to January 2010 were adjudicated by OIO No.37-50/Commr/2011, dt.31.03.2011.
ix) Both the aforesaid impugned Orders-in-Original have confirmed the demand of differential duty on the goods sold to the following categories of buyers:-
a) Social, religious and charitable organizations,
b) Infrastructural development projects,
c) Government bodies, and dropped the demand of duty on the goods sold to the remaining categories.
x) The status of the demands raised in the Show Cause Notices pursuant to the aforesaid impugned Orders-in-Original dt.11.11.2009 and 31.03.2011 are as follows:-
OIO No. Demand upheld Demand dropped Department appealed OIO No.23-29/ Commr/2009, dt.11.11.2009 Rs.5,06,37,480/-
Rs.8,39,57,101/-
No OIO No.37-50/ Commr/2011, dt.31.03.2011 Rs.11,29,12,698/-
Rs.5,87,99,884/-
Yes
xi) To the extent that the demand of duty of Rs.5,06,37,480/- was confirmed by the OIO dt.11.11.2009, the assessee M/s Sanghi Industries Ltd (M/s SIL) has filed Appeal No.E/237/2010. To the extent that the demand of duty of Rs.11,29,12,698/- was confirmed by the OIO dt.31.03.2011, the assessee M/s SIL has filed Appeal No.E/900/2011.
xii) For the demand of duty of Rs.5,87,99,884/- dropped by the OIO ct.31.03.2011, the Department has filed Appeal Nos.E/981-994/2011.
3. With the background of above facts, both sides i.e. the assessee-manufacturer M/s SIL represented by Shri R. Nambirajan, Shri Anand Nainawati, learned Advocates and the Revenue represented by Shri Sameer Chitkara, the learned A.R. have been heard.
4. After careful observation of the facts on record and the submissions of both the sides, it appears that there is no dispute that the assessee-manufacturer is clearing the goods viz. Cement to various bulk buyers in package form of 50 kg bag with specific declaration on the bag Not for Resale and goods are not meant for further retail sale therefrom; but are to be consumed by buyers for their own use. It has been claimed by the assessee that as per the provisions of Rule 2A(b) of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977, the goods were cleared to the buyers which are covered under the category of industrial/institutional buyers mentioned at (a) and (b) of the explanation to Rule 2A of SWM Rules. The goods were cleared by paying duty @ Rs.400 PMT for every consignment meant for institutional and industrial buyers. 4.1 Revenues stand is that subject supplies/sales, though declared as Not for Resale are not covered under Rule 2A of SWM Rules, therefore, concessional rate of duty as per Notification No.4/2006-CE Sr.No.1(b) or 1(c) will not be applicable to sales made to/for builders, developers, contractors and construction firms, manufacturers of finished goods, captive consumption.
4.2 The Department vide the impugned Orders-in-original has denied the benefit of Notification No.4/2006-CE under its Sr.No.1(C) for the sales made to following 3 categories of bulk buyers:-
i) Social/Educational, religious and charitable organizations
ii) Infrastructural development projects
iii) Government bodies
i) Social/Educational, religious and charitable organizations:- These organizations have bought cement for use in construction of buildings, hospitals, community halls, educational centres etc for providing the services to the public. It has also been submitted that if above activities/projects are not considered as service industry, the construction activity undertaken by these buyers is for production etc and they will be industrial consumers. Considering these facts, we are of the view that this category of buyers appear to be rightly covered under the category of institutional consumer.
ii) Infrastructural development projects:- There cannot be two opinions that the buyers in this category would be covered under the category of institutional consumer; as infrastructure development projects are integrally linked with the construction industry, which is in the category of a service industry.
iii) Government bodies:- The facts on record mention that the bulk buyer here is Gujarat Governments GSCSCL (Gujarat State Civil Supply Corporation Ltd,) who is working as a nodal agency for procuring cement for supply to Government offices/Boards/Corporation for their development and infrastructure works as per the indent received from the concerned department. Such supplies to GSCSCL appear to be covered under the category of supplies to institutional consumers as these are used for construction activity by such entities of Gujarat Government.
4.3 In case of other three categories of buyers (i) Builders, Developers, Contractors and Construction Firms which includes category of (ii) Captive consumption and (iii) Manufacturers of finished goods, the impugned orders allowed the benefit of Notification No.4/2006-CE (supra), with which we agree with the reasons given therein.
4.4 The present matter is covered by the Tribunals decisions in the casea of Ambuja Cement Ltd Vs CCE Raipur 2017 (1) TMI 1130-CESTAT New Delhi, Shree Cement Ltd Vs CCE Jaipur 2016 (12) TMI 25-CESTAT New Delhi, Prism Cement Ltd Vs CCE Bhopal 2016 (10) TMI 828 CESTAT New Delhi. In the decision of Shree Cement Ltd, reference has also been made to the decisions made in the cases of Jayanti Food Processing (P) Ltd Vs CCE, Rajasthan 2007 (215) ELT 327 (SC), Swan Sweets Pvt. Ltd. Vs CCE Rajkot 2006 (198) ELT 565 (Tri-Mum) as affirmed by Hon'ble Supreme Court in CCE Rajkot Vs Makson Confectionary Pvt. Ltd. 2010 (259) ELT 5 (SC). The CESTAT in the case of Ambuja Cements Ltd Vs CCE Raipur- 2017 (1) TMI 1130 (supra) observes as follows:-
3. The brief facts are that the appellant is engaged in the manufacture of Cement and Clinker falling under Chapter Heading 252329 and was clearing the same, inter alia, to various buyers in 50 kg bags. Such buyers included manufacturer of excisable items, construction service providers, Government Department and Charitable institutions/trusts. Some of the cement was also used for self-consumption and for quality control. During the period of dispute, Appellant had cleared 62673.633 MT cement by discharging duty liability at the concessional rate f Rs.400/- PMT as prescribed under Sl.No.1C of Notification No.4/2006-CE (as amended). Relevant part of the Notification is as follows:-
S.No. Chapter or heading or sub-heading or tariff item of the first schedule Description of excisable goods Rate Condition No. (1) (2) (3) (4) (5) 1C 252329 All goods, whether or not manufactured in a mini cement plant, not covered in S.No.1B, other than those cleared in packaged form:
Explana-tion For the purpose of Sl.Nos.1, 1A, 1B and 1C, -
mini cement plant means -
(i)
(ii)
2.
retail sale price means Provided Provided Provided also that where the retail sale price of the goods are not required to be declared under the Standards of Weights and Measures (Packaged Commodities) Rule, 1977, and thus not declared, the duty shall be determined as is in the case of goods cleared in other than packaged from: Rs.400 per tone
4. After careful consideration of the facts of the case and the submissions of both the sides, it appears that the issue is squarely covered by CESTAT decisions in the case of Grasim Industries Ltd Vs Commissioner of Central Excise, Trichi 2008-TIOL-2328-CESTAT-Mad and Heidelberg Cement (India) Ltd and M/s Ultra Tech Cement Ltd Vs CCE Nagpur, Raigad 2014-TIOL-1433 (CESTAT Mum). CESTAT Bombay in the case of Heidelberg Cement (India) Ltd and M/s Ultra Tech Cement Ltd (supra) in its Paras 5.4 and 5.6 observes as under:- 5.4?There is no dispute that the goods were sold by the appellant directly to the builders/developers/Ready Mix Concrete (RMC) manufacturers. RMC is an excisable product and therefore, the sale of cement for manufacture of RMC would definitely come within the category of sale to industrial consumers. As regards builders/developers etc., construction activity is a service activity as is well understood and there is also a Service Tax levy on construction activity. Therefore, sale to such builders/developers would certainly qualify as sale to institutional consumers. The argument of the Revenue that since the sale is not to consumers like transportation, airways, railways, hotels, hospitals and any other service institution and since the builders/developers have not been specifically included and, therefore, such sale would not qualify as sale to institutional consumer is bereft of logic because only certain service providers have been specifically mentioned therein; others are covered by the expression like and any other service institution similar to those specifically mentioned. The institutional consumers mentioned are transportation, hotels and hospitals which do not form any particular class. Therefore, the principle of ejusdem generies will not apply. Any service institution would qualify as institutional consumers. 5.5?.
5.6?In the Grasim Industries case (supra), this issue was specifically examined by this Tribunal & it was held as follows :-
As rightly pointed out by the learned Counsel, as the benefit offered under the Notification pertains to goods cleared to industrial/institutional consumers and as this aspect was overlooked by the Legal Metrology expert as also by the learned Commissioner, the impugned order is liable to be set aside. The Boards clarification on the relevant question was wrongly by-passed by the adjudicating authority. We have found favour with the assessees case in view of the clarification issued by the C.B.E. & C., which is to the effect that no RSP requires to be printed on the goods sold to industrial/institutional consumers as defined under the rules framed under the Standards of Weights and Measures Act and that such goods would be covered under SI. No. 1B or 1C of Notification No. 4/2006-C.E., by virtue of the Second Proviso to the Explanation to SI. No. 1C of the Notification as amended. The Boards clarification squarely covers the case in favour of the assessee. Further, in the case of Mysore Cement Ltd. - 2010 (249) E.L.T. 398, this Tribunal held that construction industry is a service industry and benefit claimed by the appellants under the aforesaid Notifications shall be admissible. The said decision was upheld by the Honble High Court of Karnataka (supra). Again in the case of India Cement Ltd. - 2009-TIOL-1464-CESTAT-MAD = 2009 (235) E.L.T. 145 (T), it was held that cement cleared to industrial/institutional consumers in 50 kg bags are eligible for the benefit of Notification No. 4/2006 under Sr. No. 1C. Thus it can be seen that this Tribunal as also the High Court have been consistently holding that institutional/industrial consumers are eligible for the benefit of Notification No. 4/2006 and Notification No. 12/2012.
4.1 As facts are similar to the facts of the decisions quoted above; therefore, following the decisions in the case of Grasim Industries Ltd (supra) and Heidelberg Cement (India) Ltd and M/s Ultra Tech Cement Ltd (supra), the appellant would be eligible for the benefit of Notification No.4/2006 under Sr.No.1C of the table annexed to it. 4.5 Further, the Tribunal in the case of M/s Prism Cement Ltd Vs CCE Bhopal (supra) observes as under:-
3. The applicability of concessional rate for the cement cleared to builders in construction industry and educational institution have been subject matter of decision by this Tribunal. In Heidelberg Cements (India) Ltd M/s Ultra Tech Cement Ltd Vs CCE, Nagpur, Raigad 2014 TIOL-1433-CESTAT-MUM, the Tribunal held that any service institution would qualify as institutional consumer, builders, developers were held to be eligible for coverage in the said category. The Tribunal in the case of Grasim Industries Ltd Vs CCE, Trichy 2009 (238) ELT 655 (Tri-Che) relied on the Board clarification dt.12.06.2008 to hold that Government companies, construction companies and other industrial/institutional consumers were eligible for such concessional rate of duty. The Tribunal in appellants own case vide Final Order No.54122/2014, dt.13.10.2014 held that when there is no requirement to declaration the RSP on the package in terms of Packaged Commodities Rules, 1977 the goods should be treated as if cleared in other than packaged form and the concessional rate of duty in terms of Entry 1C should be eligible. The Tribunal was deciding the issue of RSP and the concession under the said Notification for exported cement.
4. We find that the original authority found that hospitals, co-operative societies, temples cannot be considered under the category of institutional or industrial consumers. We find the reasoning given by the original authority those schools, educational institutions and hospitals are not service industry in terms of Rule 2A of the Packaged Commodities Rules, 1977 is not tenable. The institutional consumer means those consumers who buy cement directly from the manufacturers for service industry like transportation including airway, railway, hotel or any other similar service industry. We find that educational institutions and hospitals are directly buying cement from the assessee-appellant and rightly eligible for concessional rate of duty as service institution. Even if it is considered that these institutions do not come under the category of other similar service industry, as per Rules, the fact remains that the sale to these institutions are not covered by the definition of retail sale as per Rule 2(q) of the said Rules. Admittedly, the cement without marking of RSP has been sold by the assessee-appellant directly to these consumers and as such these transactions does not qualify as retail sale in view of the statutory definition which requires sale, distribution or delivery of such commodity through retail sale agency or other instrumentality for consumption by an individual. In the present case, admittedly, the sale being direct without any intermediary involved, the criteria for retail sale has not been fulfilled. As such we find wherever such direct sale is effected the application of Packaged Commodities Rules, 1977 will not be governed by Rule 3 for enforcement.
5. In view of the above position, We find that the denial of the concession in terms of the above said notification for the assessee-appellant on these grounds is not justifiable. 4.6 From above discussions, and the decisions cited, we are of the considered view that the sales made to various categories of buyers are covered under Rule 2A of SWM Rules, 1977 and such goods are eligible for the benefit of Notification No.4/2006-CE (supra).
5. In the result, the impugned Orders No.23-29/Commr/2009, dt.06.01.2009 and No.37-50/Commr/2011, dt.31.03.2011 are modified to above effect and the appeals filed by assessee M/s Sanghi Industries Ltd are allowed and the appeals filed by the Revenue are rejected.
(Pronounced in the Court on 15.05.2017) (Dr. D.M. Misra) (Ashok K. Arya) Member (Judicial) Member (Technical) Cbb 13