Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Trichy vs M/S. Tamilnadu Cement Corporation Ltd on 4 October, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/66/2010
(Arising out of Order-in-Appeal No. 157/2009 dated 14.10.2009 passed by the Commissioner of Central Excise (Appeals), Trichy)
Commissioner of Central Excise, Trichy Appellant
Vs.
M/s. Tamilnadu Cement Corporation Ltd. Respondent
Appearance Shri S. Govindarajan, AC (AR) for the Appellant Ms.J. Ragini, Advocate for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of Hearing / Decision: 04.10.2017 Final Order No. 42270 / 2017 Per Bench Brief facts of the case are that the respondents are manufacturers of cement. They filed six refund claims for the period from May 2007 to October 2007. According to the respondent, Rule 2A of Standards of Weights and Measures (Packaged Commodities) Rules 1977 is to be applied when the cement is cleared to industrial or institutional consumers. Hence as per Sl. No. 1C of Notification No. 4/2007-CE dated 1.3.2007, they would be eligible for concessional rate of duty. Department was of the view that the respondents are not eligible for the concessional duty and therefore are not entitled for refund of any amount. Against the order of rejection of refund claims, the respondent filed appeal before Commissioner (Appeals) and vide order impugned, the Commissioner (Appeals) held that the respondents are eligible for exemption under notification and directed the lower authority to verify the claim with regard to unjust enrichment. Hence the department is now before the Tribunal.
2. On behalf of Revenue, ld.AR Shri S. Govindarajan reiterated the grounds of appeal. He submitted that the Commissioner (Appeals) has relied upon the decision of the Tribunal in the case of M/s. Grasim Industries Ltd. Vs. Commissioner of Central Excise 2009 (238) ELT 655. That an appeal has been preferred by Revenue against this order before the Honble Supreme Court and the appeal has been admitted but there is no stay of operation of the Tribunals order.
3. Ld. Counsel Ms. J.Ragini submitted that the Commissioner (Appeal) has rightly relied upon the decision rendered in Grasim Industries Ltd. (supra) and the issue stands squarely covered by the said decision. She also submitted that the Mumbai Bench of the Tribunal in the case of Heldelberg Cement (India) Ltd. Vs.CCE, Nagpur 2015 (315) ELT 53 has also taken a similar view.
4. Heard both sides and perused the records.
5. There is no dispute that the cement was cleared by the respondents to M/s. Tamilnadu Electricity Board for their own use and not for resale. So also the quantity was not more than 50 kilograms. The issue whether such clearance to institutions/ industrial consumers, the benefit of exemption under Sl. No. 1C of Notification No.4/2006-CE would be eligible has been analysed and discussed in the case of Grasim Industries Ltd. (supra). The Mumbai Bench of the Tribunal in the case of Heldelberg Cement (India) Ltd. (supra) has also analyzed such issue and held the issue in favour of the assessee. The relevant paragraph of the decision is reproduced as under:-
2.?The appellants are manufacturers of cement. There is a statutory requirement to affix MRP on packages sold to dealers for further sale to consumers in retail under the Legal Metrology (Packaged Commodities) Rules, 2011 (PC Rules in short). The appellants have complied the provisions of these Rules. The appellants have also cleared cement in 50 kg bags to various bulk consumers like, builders/developers/industrial users, who use the cement for construction purpose or as raw material. Such buyers are covered by the definition of industrial consumer or institutional consumer under explanation to Rule 2A of PC Rules, 1977 and Rule 3(ii) of PC Rules, 2011. As per these provisions, commodity meant for industrial consumer or institutional consumers are not required to be affixed with MRP. Accordingly, the appellants have not declared the MRP on the cement bags and specifically have declared on the packages as Not for Retail Sale - meant for industrial consumer/institutional consumer/RMC consumption. They have discharged excise duty liability on such cement bags availing the benefit of Sr. No. 1C of Notification No. 4/2006-C.E., dated 1-3-2006 as amended from time to time during the period May, 2007 to 16-3-2012 and under Sr. No. 52 of Notification No. 12/2012-C.E., dated 17-9-2012 for the period from 17-3-2012 onwards. As per these entries in the notifications, cement bags of 50 kg cleared to industrial or institutional consumers, which is not subject to fixation of MRP, is eligible for concessional rate of duty as provided therein. However, the department was of the view that the appellants are not eligible for the aforesaid exemption benefit inasmuch as the sale to buyers like, builders/developers etc. cannot be considered as sale to industrial/institutional consumer and, therefore, the appellants are liable to discharge excise duty at the tariff rate. Consequently, differential duty liability has arisen and the duty demands were confirmed along with interest and also by imposing penalties.
xxxxx xxxxxx xxxxxxx xxxxxx
5.?We have carefully considered the submissions made by both the sides.
5.1?Rule 2A of the PC Rules, 1977 reads as follows :-
2A.?Applicability of the Chapter. - The provisions of this chapter shall not apply to,-
(a) packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags up to 50 kg; and
(b) packaged commodities meant for industrial consumers or institutional consumers.
Explanation :- For the purpose of this rule,-
(a) Institutional consumer.- Means those consumers who buy packaged commodities directly from the manufacturers/ packers for service industry like transportation (including airways, railways), hotel or any other similar service industry.
(b) Industrial Consumer - Means those consumers who buy packaged commodities directly from the manufacturers/packers for using the product in their industry for production, etc. Rule 3 of the PC Rules, 2011 reads as follows :-
3. Applicability of the Chapter. - The provisions of this Chapter shall not apply to,-
(a) packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags up to 50 kg; and
(b) packaged commodities meant for industrial consumers or institutional consumers.
Explanation :- For the purpose of this rule,-
(i) Institutional consumer means the institutional consumer like transportation, Airways, Railways, Hotels, Hospitals or any other service institutions who buy packaged commodities directly from the manufacturer for use by that institution.
(ii) Industrial Consumer means the industrial consumer who buys packaged commodities directly from the manufacturer for use by that industry. 5.2?From the above, it can be seen that packages of commodities containing a quantity of more than 25 kg or 25 litre excluding cement and fertilizers sold in bags upto 50 kg and packaged commodity meant the industrial or institutional consumer are excluded from the provisions of the said Rules. In other words, the Rules exclude two categories - the first category is packaged commodity containing a quantity of more than 25 kg or 25 litre and cement and fertilizer bags containing more than 50 kg. The second category is packaged commodity meant for industrial or institutional consumer. As regards the second category there is no restriction with respect to the quantity of the goods contained in the package. There is a semi colon between the two clauses. This would clearly indicate that the word and between the two clauses have to be read disjunctively and not conjunctively. In other words, in respect of both the above categories, the provisions of PC Rules would not apply.
5.3?Further, institutional consumer is defined to mean consumers like transportation, Airways, Railways, Hotels, Hospitals or any other service institutions who buy packaged commodity directly from the manufacturer and industrial consumer means those who purchase the packaged commodity for use by that industry.
xxxxx xxxxxx xxxxxxx xxxxxx 5.6?In the Grasim Industries case (supra), this issue was specifically examined by this Tribunal and 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.
6. Following the said decision, we are of the considered opinion that the impugned order calls for no interference. The appeal filed by the department is devoid of merit and the same is dismissed.
(Operative portion of the order was
pronounced in open court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S.)
Member (Technical) Member (Judicial)
Rex
6