Custom, Excise & Service Tax Tribunal
Cce, C & St, Hyderabad-I vs M/S Orient Cements Ltd on 27 July, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Bench SMB
Court I
Appeal No. E/26805/2013
(Arising out of Order-in-Appeal No. 27/2013 (H-I) CE dt. 27.02.2013 passed by CC, CE & ST (Appeals), Hyderabad)
For approval and signature:
Honble Madhu Mohan Damodhar, 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 Lordship wish to see the fair copy of the Order?
4.
Whether Order is to be circulated to the Departmental authorities?
CCE, C & ST, Hyderabad-I
..Appellant(s)
Vs.
M/s Orient Cements Ltd.,
..Respondent(s)
Appearance
Sh. Arun Kumar, Deputy Commissioner (AR) for the Appellant.
Sh. G. Prahlad, Advocate for the Respondent.
Coram:
Honble Madhu Mohan Damodhar, Member (Technical)
Date of Hearing: 27.07.2016
Date of Decision: 27.07.2016
FINAL ORDER No._______________________
[Order per: Madhu Mohan Damodhar]
Facts of the case put forth by the appellant are as follows:
The appellants are manufacturers of Cement and Clinker falling under Chapter 25 of the CETA, 1985. On verification of the records, it was noticed that the assessee were discharging duty on clearances of cement in terms of SI. No.1A of the Notification No.4/2006-CE dated 1.3.2006 by treating the sales M/s. Andhra Pradesh State Housing Corporation Limited (herein after referred to as APSHCL) as retail sale. The assessee cleared the cement, manufactured and specially packaged for APSHCL, clearly embossing the name of the consignor on the bags and supplied at the contracted/agreed prices as per the terms and conditions of the contract. The contacted sale price has also been embossed on cement packages as Retail Sale Price (RSP), which was different from the prevailing RSP of the said products for the given area and time. The Department took the view that affixing the RSP on the bags was not correct as the sale to APSHCL was not a retail sale as defined under rule 2(q) of the Standards of Weights and Measures [Packaged Commodities] Rules, 1977 and hence the provisions of Standards of Weights and Measures [Packaged Commodities] Rules, 1977 [SWM (PC) Rules], are not applicable to their case, that the purchase order placed by APSHCL for supply of cement in bulk hence the sale can not be termed as Retail Sale therefore, the assessee is required to discharge payment of duty as per SI No. 1C of the said Notification.
2. Hence a SCN dated 27.02.2012 was issued to the assessee demanding differential duty of Rs. 23,73,238/- in respect of supplies made to APSHCL along with interest therein, and imposition of penalties.
3. Adjudicating authority vide order confirmed the proposals in the SCN. Aggrieved, the assessee filed appeal before Commissioner (A) contending that the goods are assessed to duty under SI No.1 A of the notification as the goods are affixed with Retail Price on the cement bags being supplied to APSHCL in terms of the letter issued by the Legal Metrology Department in respect of M/s Sagar Cements Ltd.
4. Commissioner (Appeals) vide Order dated 27.02.2013, set aside the Order-in-Original and allowed the appeal of the assessee interalia holding that the sale of subject goods to APSHCL or the fact that the goods were not sold in retail or otherwise is not relevant for the purpose of the exemption under the subject Notification, since the goods have complied with the requirement of being cleared in packaged form and that they were bearing the RSP indicating less than RS. 190/- per 50 Kg bag.
5. Aggrieved by the order of the Commissioner (Appeals), Revenue has preferred this appeal.
6. During the hearing, Learned AR on behalf of the Department made the following main submissions:
(i) Sales effected by the assessee to APSHCL are not covered under SWM (PC) Rules, 1977 and hence they were not required to print the RSP on the cement bags in as much as their sales are not retail sales and therefore their goods are covered under SI. No. 1C of Notification No. 4/2006-CE, dated 01.03.2006 as amended attracting the duties specified therein. Further, printing of the agreed price as RSP on the cement packages is not the correct RSP as the same was lower than the prevailing RSP for the said product for a given area and time. The same was also not in conformity to retail sale price as defined under rule 2(r) of SWM (PC) Rules, 1977. Therefore, the Order issued by the Commissioner (Appeals-I), Hyderabad is not proper and legal.
(ii) Reliance placed by the Appellate Commissioner in the decision of the Honble Tribunal, Bangalore in the case of Hyderabad-III Commissionerate Vs. Sagar Cements Ltd [2010 (256) ELT 616 (Tn. Bang)] appears to be incorrect, as the said decision has not attained finality in view of the Review Petition filed by the department which has been admitted by the Honble Apex Court. The Honble Supreme court vide Review Petition (Civil) Nos. 2217-2221 of 2012dated 05.03.2013 has allowed the Review Petitions filed by the Department and recalled the order dated 11.02.2011 in CA No. 1901-1905 of 2011.
7. On behalf of the respondent assessee, Learned Advocate Sh. G. Prahlad, submitted that the issue is fully settled in their favour and in the circumstances the order ofCommissioner (Appeals) is correct.
8. Heard both sides and have gone through the facts and records of the case.
9. It is true that the Commissioner (Appeals) has placed reliance on the decision of Tribunal, Banglore Commissioner of C. Ex., Hyderabad-III Vs Sagar Cements Ltd., [2010 (256) E.L.T. 616 (Tri.- Bang.)]. It is also a fact that the review petition filed by Department has been admitted by Honble Supreme Court who have recalled its earlier order in Civil Appeal No. 1901-1905+/2011. It is however seen that in the present case the respondent had approached the Legal Metrology Department of the Government of Andhra Pradesh, who were the competent authority for clarifying whether any goods concerned are required to be sold under MRP. It is seen that in response to their letter dated 02.01.2008, The Controller, Legal Metrology, Hyderabad has replied as follows:
In the reference afore cited, you have expressed considered view that supplies made to the A.P. State Housing Corporation are not governed by any exemption under Rule 2A of Standards of Weights and Measures (Packaged Commodities) Rules, 1977.
In this connection, it is to inform that while declaring retail sale price on cement packages should be in the manner as Maximum Retail Price ..............inclusive of all taxes but not as you stated Not Exceeding RSP Rs. 190 per bag.
The appellant produced similar clarifications issued by the said Controller, Legal Metrology to M/s Keerthi Industries Ltd., Hyderabad and M/s Greygold Cements Ltd., Hyderabad. The relevant portion of the reply dated 05.09.2008 to M/s Keerthi Industries Ltd., is reproduced below:
In the reference cited, it was informed that the Cement bags are supplying at a price below the market rate to the A.P. State Housing Corporation Limited printing on the cement bag of 50 Kg the words Maximum Retail Price............inclusive of all taxes and requested for clarification in this regard.
In this connection, it is to inform that the declaration on Cement packages should be in the manner as Maximum Retail Price......inclusive of all taxes and also is informed that every package shall bear the name, address, telephone number, e-mail address, if available, of the person who can be or the office which can be, contacted, in case of consumer complaints as required under Rule 6(1A) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.
10. It is therefore seen that facts of the case under appeal can be distinguished from the facts of the M/s Sagar Cements case. In the present matter competent authority, namely, the Controller, Legal Metrology, Hyderabad had clarified that declaration on cement packages should be in the manner as Maximum Retail Price........inclusive of all taxes. In the circumstances, the fact of the Honble Apex Supreme Court admitting the review petition filed by department and also recalling its order in earlier civil appeal filed by the department in the M/s Sagar Cements case, will not, in my opinion, affect the present appeal. Once the Legal Metrology authorities have clarified and informed the appellants that supplies made by them even to institutional buyers are not excluded from the declaration of MRP under the Packaged Commodities Rules, the appellant has to necessarily fall in line and declare MRP on the cement packages held by them and in consequence, the goods will necessarily attract the effective rate of duty envisaged in Sl No. 1A of the table in Notification No. 4/2006-CE dated 01.03.2006, as amended, and not Sl No. 1C thereof as held by department.
11. While arriving at this conclusion I also draw sustenance from ratio of the judgment in the case of H & R Johnson (India) Ltd. Vs CCE, Raigad [2014 (306) E.L.T. 645 (Tri.-Mumbai)] whether the facts are pari materia with that of the present case. The relevant portion of the order is reproduced below:
5.?We have carefully considered the submissions made by both the sides. We have also perused the sample purchase orders placed by some of the institutional buyers. From these documents, it is seen that the goods are required to be supplied in standard packages consisting fixed number of specified tiles. These packages are the same in respect of retail sale also and on these packages the appellant has declared the MRP. In other words, there is no difference in respect of packages of tiles sold to retail consumers or to the so-called institutional buyers and all of them are in standard packages, having MRP declared on them. It is also not in dispute that, on the packages, the appellant has not made any declaration that the packages are not meant for retail sale or the packages are meant for use by any specified industry. In the absence of such markings on the packages, it cannot be said that the goods supplied were not in retail packages. In their letter dated 23-2-2012 the Dy. Controller of Legal Metrology, Maharashtra has clarified that according to Rule 3 of Packaged Commodities Rules, 2011 the provision regarding mandatory declaration on retail packages are not applicable to the packages meant and marked as industrial/institutional consumers. Similarly, the Assistant Controller of Legal Metrology, Government of Karnataka, vide letter dated 24-2-2012 has clarified that institutional/industrial package does not bear the MRP marking but will have marking as meant for industrial/institutional consumer and not meant for retail sale. Similarly, Controller of Legal Metrology, Government of Gujarat has clarified that the only packages which bear clear markings meant for industrial consumer or meant for institutional consumer are excluded from the provisions of Packaged Commodities Rules and such packages should have a further marking that they are not meant for retail sale. From these clarifications, which have been issued by the authorities implementing the Legal Metrology (Packaged Commodities) Rules, 2011, it is absolutely clear that the supplies made by the appellant to the various institutional buyers are not excluded from the declaration of MRP under the Packaged Commodities Rules. We cannot disregard these clarifications given by the competent authorities in the matter.
5.1.?We further observe that the Honble Apex Court in the case of Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan (supra), had clearly held that to come under the purview of Section 4A, the following conditions should be satisfied :
(i) The goods should be excisable goods;
(ii) They should be such as are sold in the package;
(iii) There should be requirement in the SWM Act or the Rules made thereunder or any other law to declare the price of such goods relating to their retail price on the package;
(iv) The Central Government must have specified such goods by notification in the Official Gazette; and
(v) The valuation of such goods would be as per the declared retail sale price on the packages less the amount of abatement.
In the said decision, the Honble Apex Court further held that the material consideration for assessment under Section 4A is not the nature of sale but such sale should be in a package and there should be a requirement in the SWM Act or the Rules made thereunder for displaying MRP on such packages.
5.2?In the present case, the above stipulations are completely satisfied. This decision of the Honble Supreme Court was also followed by the Tribunal in the case of Sagar Cements Ltd. (supra) where there was a bulk supply of cements in retail packages on which MRP was declared. This Tribunal held that such bulk supply would also come under the purview of Section 4A and the duty liability has to be discharged under the said provision. The said decision was also affirmed by the Honble Apex Court. In ITEL Industries Pvt. Ltd. v. Commissioner of Central Excise - 2004 (163) E.L.T. 219 case, telephones were supplied in bulk for exclusive use of the Department of Telecom; this Tribunal held that duty liability discharged under Section 4A is correct as there was no exemption from packaging indicating special use by any industry 5.3?In view of the above, we are of the considered view that, in the present case also, the same ratio would apply. Accordingly, we hold that the discharge of duty liability tiles supplied in retail packages to real estate developers/developers, etc., has to be made under Section 4A of the Central Excise Act, 1944. Therefore the impugned demands are not sustainable in law and accordingly, we set aside the same.
12. It is further seen that the afore said Tribunal judgment in H & R Johnson (India) Ltd. Vs CCE, Raigad [2014 (306) E.L.T. 645 (Tri.-Mumbai)] was maintained by the Hon Supreme Court on 05-12-2014, in 2015 (319) ELT A227 (Supreme Court):
The Supreme Court Bench comprising Honble Mr. Chief Justice H.L. Dattu and Honble Mr. Justice A.K. Sikri on 5-12-2014 after condoning the delay dismissed the Civil Appeal Nos. 10918-10920 of 2014 (C.A. Diary No. 34732 of 2014) filed by Commissioner of Central Excise, Raigad, against the CESTAT Final Order Nos. A/330-332/2014-WZB/C-II(EB), dated 2-5-2014 as reported in 2014 (306) E.L.T. 645 (Tri.-Mumbai) (H & R Johnson (India) Ltd. v. Commissioner). While dismissing the appeals, the Supreme Court passed the following order :
1.?We have heard Shri P.S. Narasimha, learned Additional Solicitor General for the appellant.
2.?Delay condoned.
3.?We find no merit in the Civil Appeal. Accordingly, the Civil Appeals are dismissed.
13. In view of the afore said discussions, I am of the considered opinion that the order of Commissioner (Appeals) dated 27.02.2013 interalia that the duty liability shall be determined under Sl. No. 1A of the Notification No. 4/2006 dated 01.03.2006, does not require any interference. In consequence the appeal filed by the department is dismissed.
(Operative part of this order was pronounced in court on conclusion of the hearing) (MADHU MOHAN DAMODHAR) MEMBER (TECHNICAL) Jaya.
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