Custom, Excise & Service Tax Tribunal
Ultratech Cement Ltd vs Commissioner Of Gst & Ce -Commissioner ... on 17 January, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL,
SOUTH ZONAL BENCH, CHENNAI
COURT HALL No.III
EXCISE APPEAL No.40092 OF 2022
(Arising out of Order-in-Original No.37-54/2021 dated 30.11.2021 passed by
Commissioner of GST & Central Excise, Chennai - Outer, Newry Towers, No.2054-
I, II Avenue, Anna Nagar, Chennai 600 040)
M/s.Ultra Tech Cement Ltd.
(Unit : Arakkonam Cement Works) .... Appellant
Chitteri (P.O)
Vellore District,
Arakkonam 631 003.
Versus
The Commissioner of GST & Central Excise, ...Respondent
Chennai Outer Commissionerate
Newry Towers, No.2054, I Block, II Avenue,
12th Main Road, Anna Nagar,
Chennai 600 040.
APPEARANCE :
Mr. Raghavan Ramabadran, Advocate
For the Appellant
Mr. M. Ambe, Deputy Commissioner (A.R)
For the Respondent
CORAM :
HON'BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL)
HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)
2
Excise Appeal No. 40092 of 2022
DATE OF HEARING : 09.01.2024
DATE OF DECISION :17.01.2024
FINAL ORDER No.40062/2024
ORDER :Per Ms. SULEKHA BEEVI. C.S. Brief facts are that appellants are manufacturers of Cement- OPC (Ordinary Portland Cement) and PPC (Portland Pozzolana Cement) falling under Chapter Heading 25 of the First schedule to Central Excise Tariff Act, 1985. On scrutiny and verification of records of the appellant for their plant at Arakkonam, it was noticed that they have cleared packed cement in 50 kg. bags without affixing the Retail Sale Price (R.S.P) on the packages to industrial / institutional consumers / self, for which duty had been paid at concessional rate applicable for loose / unpacked cement under Sl.1C of Notification No.4/2006 dt. 1.3.2006 (as amended). The effective rates of excise duty for the cement other than cleared in packaged form, falling under Chapter Heading 2523 29 has been fixed at Rs.400 per MT. The appellant had cleared the cement in 50 kg. bags without printing Retail Sale Price on the bags as required. The rate of duty as per the Tariff is Rs.600 per MT which is applicable for packed cement on which it is affixed with R.S.P exceeding Rs.250/- per Kg bag, which has to be adopted for all such clearances of cement made by the appellant for self-use / industrial 3 Excise Appeal No. 40092 of 2022 / institutional consumers. The department was of the view that appellant ought to have affixed RSP on the 50 kg. bags cement and is not eligible for exemption. The appellant was issued show cause notices for different periods from December 2007 to June 2017 alleging that they have wrongly availed the exemption under Sl.No.1C of Notification No.4/2006-CE dt. 1.3.2006 as amended. According to appellant, they had availed the concessional rate of duty for the reason that the cement supplied to industrial / institutional consumers in 50 kg. bags is eligible for exemption as per provision contained in the third proviso to Explanation (2) appended to Sl.No.1C of Notification No.4/2007-CE dated 1.3.2007, as further amended by Notification No.58/2008-CE dt. 7.12.2008 and No.4/2009-CE dt. 24.2.2009 which were issued as amendments to the Notification No.4/2006-CE dated 1.3.2006. Relevant provisions of the notification are reproduced below for ready reference :
Sl.No. Chapter heading or Description of Rate
sub-heading or tariff excisable goods
item of the First
Schedule
(1) (2) (3) (4)
1. 253329 All goods, manufactured in Rs.220 /PMT
a mini cement plant cleared
in packaged form-
(i) Of retail sale price
not exceeding Rs.190 per 50
kg bag equivalent retail sale
price not exceeding
Rs.3800.
(ii) Of retail sale price
exceeding Rs.190 per 50 kg Rs.370/PMT
bag or of per tonne
equivalent retail sale price
exceeding Rs.3800
1A 2523 29 All goods, whether or not Rs.350 / PMT
manufactured in a mini
cement plant, not covered
4
Excise Appeal No. 40092 of 2022
in S.No.1 and cleared in
packaged form o retail sale
price not exceeding Rs.190
per 50 kg bag or of per
tonne equivalent retail sale
price not exceeding
Rs.3800;
1B 2523 29 All goods, manufactured in Rs.250/PMT
a mini cement plant, other
than those cleared in
packaged form;
1C 2523 29 All goods, whether or Rs.400/PMT
not manufactured in a
mini cement plant, not
covered in S.No.1B,
other than those cleared
in packaged form
Explanation. -
1..........................................................................
(i)..........................................................................
(ii)..........................................................................
2......................................... 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) Rules, 1977 and thus not declared, the duty shall be determined as is in the case of goods cleared in other than packaged form;
3. Where on the package, more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price;"
2. As per the above notification, the cement cleared in packaged form will attract duty with reference to Retail Sale Price declared on those packages. The declaration of Retail Sale Price on the packages of cement is mandatory under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 [SWM (PC) Rules, 5 Excise Appeal No. 40092 of 2022 1997] with some exceptions. In terms of the third proviso to Explanation (2) appended to Sl.No.1C of Notification No.4/2007-CE dt. 1.3.2007 which read as " 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) Rules, 1977, and thus not declared, the duty shall be determined as is in the case of goods cleared in other packed forms".
3. It appeared to the Department that the above proviso is not applicable for the cement sold in bags upto 50 kgs. whether or not for industrial or institutional consumers under Rule 2A of the SWM (PC) Rules, 1977 which is reproduced below:
"Chapter - II Provisions applicable to packages intended for retail sale Rule 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 Litres excluding Cement and Fertilizer sold in bags upto 50 Kg; and
(b) packed commodities meant for Industrial consumers and 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." 6
Excise Appeal No. 40092 of 2022
4. The department was of the view that as per Rule 2A, the cement cleared in packaged form upto 50 Kg., even though cleared to institutional or industrial consumers, would get covered under the provisions of Chapter II of SWM (PC) Rules, 1977 and therefore the M.R.P (R.S.P) has to be declared mandatorily on the cement bags.
5. On verification it was noticed that the appellant had cleared large quantity of cement packed in 50 kg. bags to industrial / institutional consumers during the period from December 2007 to June 2017 and availed the concessional rate under Sl.No.1C of the Notification. So also, they had cleared cement in bags of 50 kgs. for their own use within the factory premises for various civil works undertaken by them. The department was of the view that the clearances made to industrial / institutional consumers and for their self-use is not eligible for the concessional rate of duty under Sl.No.1C of the Notification for the reason that the two conditions as stipulated under Rule 2A of Chapter II of SWM (PC) Rules, 1977 have not been satisfied by the appellant.
6. In view of the above, Show Cause Notice No.2/2009 dt. 5.1.2009 was issued to the appellant demanding duty along with interest and penalty for the period from December 2007 to January 2008 by the Additional Commissioner, Chennai III Commissionerate. While so, consequent to an appeal filed by the department before the Hon'ble Supreme Court vide Civil Appeal No.6238-6239/2009 against Final Order No.1430/2008 dated 17.12.2008 in respect of M/s.Cheittinad Cements in an identical issue, the show cause notice issued to appellant was transferred to call book. In order to 7 Excise Appeal No. 40092 of 2022 safeguard the Revenue for the subsequent periods i.e. from February 2008 to June 2017, the department issued 17 protective Show Cause Notices / SODs to the appellant and these SCNs / SODs were kept in the call book during the pendency of the matter before the Hon'ble Supreme Court. Later, the Hon'ble Supreme Court dismissed the appeal filed by the Department vide order dt. 27.11.2019 which has been accepted by the department. Accordingly, 18 SCNs kept in call book were taken up for adjudication. The adjudication of all 18 SCNs culminated in passing the order impugned herein by which the original authority granted relief to the appellant by dropping the demand in respect of clearances for self-use (SCN No.2/2009 dt. 5.1.2009). However, the demand in respect of clearances for industrial and institutional consumers was confirmed along with interest. The proposal in SCN to impose penalties was also dropped. Aggrieved by such order, the appellant is now before the Tribunal.
7. The details of the show cause notice and the period involved are tabulated below :
S.No. SCN / SOD No. File C No. Amount
involved
1 SCN No.02/2009 dt. 05.01.2009 V/15/25/01/2009- Rs.36,67,079/-
December, 2007 to January 2008 C.Ex. Adj. III
2 SCN No.17/2009 dt. 13.02.2009 V/15/25/15/2009- Rs.40,64,113/-
February, 2008 to April 2008 C.Ex. Adj. III
3 SCN No.47/2009 dt. 02.06.2009 V/15/25/48/2009- Rs.39,68,187/-
May, 2008 to July 2008 C.Ex. Adj. III
4 SCN No.65/2009 dt. 03.09.2009 V/15/25/89/2009- Rs.2,06,89,369/-
August 2008 to June, 2009 C.Ex. Adj. III
5 SCN No.50/2010 dt. 28.07.2010 V/15/25/45/2010- Rs.1,52,40,081/-
July, 2009 to December 2009 C.Ex. Adj. III
6 SCN No.03/2011 dt. 02.02.2011 V/15/25/04/2011- Rs.1,61,62,822/-
January 2010 to October 2010 C.Ex. Adj. III
7 SCN No.65/2011 dt. 02.02.2011 V/15/25/65/2011- Rs.59,86,141/-
November 2010 to February 2011 C.Ex. Adj.
8 SCN No.10/2012 dt. 23.03.2012 V/15/25/08/2011- Rs.75,06,961/-
March 2011 to August 2011 C.Ex. Adj.
8
Excise Appeal No. 40092 of 2022
9 SCN No.32/2012 dt. 04.09.2012 V/15/25/53/2012- Rs.1,90,81,908/-
September, 2011 to March, 2012 C.Ex. Adj.
(01.03.2012 to 16.03.2012)
10 C.No.IV/16/55/2013-Adj. dt. IV/16/55/2013-Adj. Rs.3,22,623/-
08.04.2013 (17.03.2012 to
31.03.2012)
11 SCN No.31/2013 dt. 29.04.2013 V/15/25/30/2013- Rs.1,25,87,142/-
April 2012 to December 2012 C.EX. Adj. III
12 SOD No.5/2014 dt.27/1/2014 V/15/25/01/2014- Rs.1,73,56,256/-
January 2013 to September 2013 C.EX.Adj. III
13 SOD No.60/2014(CE) dt. V/15/25/57/2014- Rs.2,14,24,257/-
30/10/2014 October 2013 to C.EX.Adj. III
March 2014
14 SOD No.13/2015 dt.05.05.2015 V/15/25/11/2015- Rs.1,66,71,120/-
April 2014 to September 2014 C.EX.Adj. III
15 SOD No.45/2015 CE dt. V/15/25/48/2015- Rs.1,38,20,035/-
30.10.2015 October 2014 to C.EX. Adj.III
March 2015
16 SOD No.33/2016 CE dt. V/15/25/30/2016- Rs.2,53,34,946/-
01.11.2016 April 2015 to C.EX. Adj. III
September
17 SOD No.57/2016 CE dt. V/15/25/68/2016- Rs.1,41,44,344/-
01.11.2016 October 2015 to C.EX-ADJ. III
March 2016
18 SOD No.20/2018 dt.27.04.2018 V/15/112/2018-Adj Rs.2,21,65,074/-
April 2016 to June 2017 Ch.Outer
8. Ld. Counsel Raghavan Ramabadran appeared and argued for the appellant. The Ld. counsel made the following submissions :
Proceedings leading to the issuance of impugned Order:
8.1 The Appellant was issued with 17 periodical Show Cause Notices (henceforth 'SCNs') proposing to demand differential central excise duty of INR 24,01,77,638/- by denying concessional rate of tax in respect of the clearances of cement made to industrial/institutional consumers during the period from December 2007 to June 2017 on the ground that Appellant was required to statutorily declare RSP on the cement bags and hence, benefit under Sl. No.1C of the Notification No. 4/2006-CE was not available to the Appellant.9
Excise Appeal No. 40092 of 2022 8.2 The Appellant filed their replies to the SCNs promptly and requested for an opportunity of personal hearing in the matter. The Appellant is given to understand from the Impugned Order that the SCNs were issued as a protective measure and that the notices had been transferred to the call book. The Appellant was never put to notice of the fact that the demands in the SCNs were transferred to the call book.
8.3 A personal hearing was conducted for adjudicating these SCNs on 30.08.2021. The Appellant was directed to submit evidence to prove that the clearances were indeed made to institutional/industrial consumers, a fact which was not raked up in any of the SCNs. The SCNs culminated in the impugned order wherein the demand of INR 24,01,77,638/- was confirmed along with interest under Section 11AB of Central Excise Act 1944. 8.4 In paragraph 16, the impugned Order has set aside the demand raised in respect of clearances made for own use by relying on the Order dated 27.11.2019 issued by the Hon'ble Apex Court in CCE vs. Madras Cements 2020 (371) E.L.T. A42 (S.C.). Further, the SCNs had proposed penalty under Rule 25 of the Central Excise Rules 2002, which was dropped in the Impugned order. As on date, there is no revenue appeal filed against these findings in the impugned order and hence the findings to that extent have attained finality.
A. The contention that clauses (a) and (b) of Rule 2A of PC Rules 1977 and Rule 3 of PC Rules 2011 are to be read in conjunction is not valid. A.1. The SCNs alleged that clauses (a) and (b) of Rule 2A / Rule 3 of PC Rules were required to be read in conjunction as both the 10 Excise Appeal No. 40092 of 2022 clauses are conjoined with the word 'and' and thus, both the clauses are required to be satisfied cumulatively. Therefore appellant was not eligible for benefit of notification. The contention was confirmed in the impugned order in paragraph 15.
A.2. The SCNs analysed all the invoices and has recorded so in the SCNs itself. Though it is admitted that what is cleared is cement in bags of upto 50 kgs and that these are indeed sold to industrial and institutional consumers, the only case made out in the SCNs for proposing the demand is that, both the conditions as provided in clauses (a) and (b) under Rule 2A of the 1977 Rules are to be fulfilled by the Appellant for claiming exemption from declaration of RSP since clauses (a) and (b) of Rule 2A are separated by the word 'and'. A.3. In this regard, it is submitted that even though the Appellant satisfies both the conditions, the clauses of Rule 2A of PC Rules 1977 and Rule 3 of PC Rules 2011 envisage independent and unconnected situations. In other words, even if the packages are not covered under Rule 2A (a) of PC Rules 1977 or Rule 3(a) of PC Rules 2011 the provisions will have no application if Rule 2A (b) of PC Rules 1977 or Rule 3(b) of PC Rules 2011 is satisfied. This submission is supported by the fact that both the clauses of Rule 2A and Rule 3 are joined with a semi-colon (;) and therefore, the word 'and' appearing between such clauses is to be read disjunctively and not conjunctively.
A.4. Reliance is placed on paragraph 5.2 of the decision in the case of Ultratech Cement Limited vs. CCE - 2014 (8) TMI 251 - CESTAT MUMBAI wherein the Tribunal held that the 'semi colon' 11 Excise Appeal No. 40092 of 2022 between the two clauses clearly indicates 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. The decision in Ultra Tech (supra) has been subsequently followed by the CESTAT in the case of ACC Ltd. vs. CCE -- 2018 (359) ELT 572 (Tri.- Chennai) and Viva Dry Mix vs. CCE - 2020 (12) TMI 504 - CESTAT NEW DELHI.
A.5. In any case, it is submitted that the clearances made by the Appellant satisfies both the conditions as the cement is packed in bags of 50kg and sold to institutional and industrial consumers. Since both the conditions are cumulatively satisfied the question of invoking the 1977 Rules does not arise.
B. The SCNs are vague and are liable to be set aside on this sole ground alone. B.1. It is submitted that where the sale was undertaken by the Appellant in loose or through retail sale by affixing RSP there is no dispute. Further the demand with respect to cement cleared in 50 kg bags for self-use has also been dropped in the impugned order. The SCNs only alleged that cement in 50kg bags were cleared without affixing RSP to institutional/ industrial consumers and that the exemption was applicable only to cement cleared in bags of 50 Kgs.
B.2. It is submitted that the entire demand is based on a mere misapprehension that one of the conditions is not satisfied - namely, that the cement was cleared in bags of 50Kgs, whereas the exemption in the 1977 Rules and the 2011 Rules was for cement 12 Excise Appeal No. 40092 of 2022 cleared in bags above 50 Kgs. However, this is incorrect. The SCNs does not dispute the fact that cements were indeed meant for clearances to institutional and industrial consumers. In fact, the SCNs categorically state that though the clearances were made to institutional/industrial consumers, since clauses (a) and (b) of Rule 2A were separated by 'and', both conditions had to be satisfied. The SCNs do not bring out any evidence or any instances after perusal of invoices where the department has shown that the claim of sale to institutional and industrial consumer is incorrect. B.3. Further, it is submitted that only a passing reference has been made in SCNs that "on perusal of invoice it is not known exactly whether they are institutional or industrial consumers or not". However, this stray sentence is at odds with the narration of facts throughout the SCNs and the impugned order has latched onto this averment and has ignored the other admitted facts on record. Such selective adjudication reflects bias and prejudice. B.4. The SCNs have been issued on an apprehension of illegality, which is incorrect. No evidence whatsoever has been brought forth at any point to prove that the clearance, even in one instance, has not been made to institutional and industrial consumers. So long as the SCNs have not brought out any evidence against the Appellant the question of denying the benefit as claimed by the Appellant is incorrect.
B.5. The Appellant relies on the decision in CCE vs. Brindavan Beverages 2007 (213) E.L.T. 487 (S.C.) for the proposition that a vague demand cannot be sustained.
13
Excise Appeal No. 40092 of 2022 B.6. It is well settled that the onus is on the department to prove that the clearances were not made to institutional consumers, when there is no specific allegation made out in the first instance. C. All documents were already given and have been subjected to verification by the Department.
C.1. The Appellant cleared cement in 50 kgs bags to various industrial / institutional consumers. This is evident from the SCNs, which narrates the facts in paragraphs 4 and 9. The sole basis for denying the Appellant the concessional rate of duty was that the conditions in Rule 2A (a) and (b) of PC rules 1977 must be cumulatively satisfied.
C.2. In such scenario, the benefit of concessional rate of duty provided under SI. No.1C of Notification No. 4/2006-CE would be available as the Appellant has cleared cement in 50 kgs bags to government companies, construction companies and industrial / institutional consumers. Reliance is placed on the following decisions wherein it was held that the benefit of SI. No.1C of Notification No. 4/2006-CE would be available for clearance of cement made to institutional consumers in 50 kgs bags:
i. Prism Cement Ltd. Vs. CCE 2017 (357) ELT 1003 (T.) ii. Diamond Cement Vs. CCE 2017 (352) ELT 177 (T.) iii. Dalmia Cements (Bharat) Ltd. Vs. CCE 2018 (361) ELT 917 (T.) The above decisions were affirmed by Hon'ble Apex court in Commissioner v. Madras Cements Ltd 2020 (371) ELT A42 (S.C.) 14 Excise Appeal No. 40092 of 2022 C.3. The Appellant submits that where the transaction does not qualify to be a 'retail sale' as defined under PC Rules, there was no requirement to affix MRP. In this regard, reliance is placed on the following decisions of CESTAT.
i. Diamond Cement vs. CCE - 2017 (352) ELT 177 (T.) Affirmed by Supreme Court in CCE vs. Madras Cements Ltd. - 2020 (371) ELT A42 (S.C.) ii. UltraTech Cement Ltd. vs. CCE - 2018 (8) TMI 458 -
CESTAT AHMEDABAD C.4. In view of the above, it is submitted that there was no statutory requirement for the appellants to declare MRP on cement bags of 50 kg. Therefore, the ground alleged in SCNs and confirmed in para 15 of the impugned order that appellants were statutorily mandated to affix MRP on such cement bags no longer survives. The finding in the impugned order that the appellants have not produced invoices for verification is contrary to the observation made in the SCNs. C.5. It is submitted that the findings in paragraph 14 of the impugned order that the Appellant have failed to produce necessary documents to prove supply to institutional customers is contrary to the observation made in SCNs.
C.6. It is submitted that from paragraph 11 of the SCNs, it is clear the invoices with respect to clearance of cement bags to industrial/ institutional consumers were produced by the Appellant and the same were verified. Whereas the impugned Order has confirmed the demand in the impugned order for non-production of necessary documents.15
Excise Appeal No. 40092 of 2022 C.7. The Respondent cannot blow hot and cold as the invoices pertaining to clearance of cement bags to institutional/ industrial consumers were already provided by the Appellant and the same was verified. The impugned order passed confirming the demand is perverse and untenable to this extent.
C.8. The SCNs are vague and suffer from inconsistencies and self- contradictions. The impugned order ought to have acknowledged this, instead of relying on the inconsistency to confirm the demand. D.1. It is submitted that the delay in adjudication of the SCNs is unreasonable, inasmuch as almost 15 years have lapsed since the issuance of the first SCN on 05.01.2009. The Impugned Order has confirmed the entire demand based on 'lack of evidence' which was sought for the first time during the personal hearing conducted on 30.08.2021, held almost 12 years since the issuance of the first SCN.
D.2. The prolonged delay in adjudication on part of the Revenue has scuttled the opportunity of an effective defense due to lapse of time, systemic overhaul of records, change in personnel in the Appellant and has reduced the adjudication proceedings contemplated under the Act to a mere farce.
D.3. Reliance is placed on paragraph 21 of the Order dated 22.11.2023 in Steel Authority of India Limited vs Office of the Commissioner of GST & CE in W.P. No. 12074 of 2023 wherein the Hon'ble Madras High Court held that proceedings could not be allowed to continue after a period of 12 years. It was held that adjudication of proceedings after a long period would cause serious prejudice to the parties and such proceedings are barred by 16 Excise Appeal No. 40092 of 2022 limitation and is unjustifiable. As on date, no revenue appeal has been filed against the Order dated 22.11.2023.
D.4. Further Reliance is placed on paragraphs 18, 22, 23 of the decision in Steel Authority of India Limited vs Office of Assistant Commissioner - 2022 (11) TMI 1393- Madras High Court wherein the Hon'ble High Court held that the adjudication of a notice cannot be protracted endlessly for a period of 21 years by relying on the phrase 'where it is possible to do so' in Section 11A (11) of the Excise Act. The Revenue has filed Writ Appeals Nos. 1369,1371,1373,1377,1379 and 1380 which are pending before the Division Bench of the Hon'ble High Court of Madras as on date. However, no stay operates against the Order of the Ld. Single Judge cited above and hence the findings have attained finality. The Appellant was not put to notice of the SCNs being placed in the Callbook. D.5. The Appellant had duly filed their replies to the SCNs in a prompt manner, adducing all relevant evidence. When no personal hearing was conducted and when no orders were issued, the Appellant believed that the demands had been dropped. The Impugned Order states for the first time that the SCNs had been placed in the call book for 14 years. The Appellant was not put to notice at any stage prior, that the SCNs were being placed in the call book.
D.6. In Siddhi Vinayaka Syntex Pvt Ltd vs UOI- 2017 (352) ELT 455 (Guj), where a challenge to the very concept of transferring cases to the call book was upheld by the Hon'ble High Court of Gujarat. The Hon'ble Gujarat High Court analysed the power 17 Excise Appeal No. 40092 of 2022 of the CBEC (as it then was) to issue instructions under Section 37B of the Excise Act and the powers of adjudication under Section 11A of the Excise Act to conclude that the concept of call book, contrary to the Excise Act and such instructions are beyond the scope of the authority of the C.B.E. & C. A Revenue Appeal against this judgment was disposed of on account of monetary limits in UOI v. Siddhi Vinayak Syntex Pvt. Ltd. [2022 (379) E.L.T. 553 (S.C.)]. D.7. Further reliance is placed on Yangir Properties & Trading Ltd vs UOI- 2021 (2) TMI 910 Gujarat High Court, where the Hon'ble High Court of Gujarat held that the authorities were bound to formally put the Assessees on notice as to the fact that the matter was transferred to the call book. Revenue Appeal against this decision is pending before the Hon'ble Apex Court in UOI vs Yangir Properties and Trading Ltd 2021 (378) ELT A20 (SC) and no stay has been granted.
D.8. Hence the delay in adjudication is unreasonable and the demand must be set aside on this very ground.
E. Quantification of demand is incorrect.
E.1. Without prejudice to the above submissions, it is submitted that the quantity of clearances adopted in the SCNs included quantity of 1,30,408 MT of cement cleared in bulk (i.e., loose form) to various industrial and institutional consumers. The differential duty on such cement cleared in bulk was also included in the total demand of differential duty proposed in the SCNs. 18
Excise Appeal No. 40092 of 2022 E.2. The Appellant submits that when there was no requirement to affix RSP on clearances of cement in bulk, the SCNs ought not to have included such clearances in the demand.
E.3. Further, the Impugned Order has confirmed the demand on tariff rate, whereas, even if the concessional rate is denied to the Appellant the cement clearances would be amenable to the rate of duty based on Sl. 1A of the NN 04/2006 of Sl. 51 of NN 12/2012- C.E. It is prayed that the appeal may be allowed.
9. Ld. A.R Shri M. Ambe appeared and argued for the Department. The show cause notice dated 5.1.2009 was adverted to by the Ld. A.R to submit that as per Rule 2A of the SWM (PC) Rules, 1977 both the conditions have to be satisfied to be eligible for the concession at Sl.No.1C of Notification No.4/2006. In para-9 of SCN, it is specifically alleged that the appellant failed to affix retail price on the cement bags weighing 50 kgs.
10. In para-10, it has been specifically alleged that even though it is contended by the appellant that they have cleared goods for industrial / institutional consumers it is not known to the department as to whether the buyers are institutional or industrial consumers. At the time of adjudication, the appellant did not produce evidences as to whether buyers are industrial or institutional consumers. The original authority has therefore correctly confirmed the demand observing that the appellant has failed to produce necessary documents to prove that the cement was supplied to industrial / institutional consumers.
19
Excise Appeal No. 40092 of 2022
11. The matter was kept in the call book only because the appeal was pending before the Hon'ble Supreme Court. The appellant cannot fall upon delay in adjudication as they are bound to maintain the records. It is submitted that after verification, the original authority has given relief in respect of clearances meant for their own consumption in view of the Supreme Court order. The Supreme Court in the appellant's own case on the very same issue vide judgment in C.A. 6227/2009 dt. 14.9.2019 had held that the wherever the clearances are not made to industrial or institutional consumers, the concession at Sl.No.1C of notification will not be available. It is therefore the burden of the appellant to establish that the clearances were made to institutional / industrial consumers. The appellant having failed to establish with documentary evidence, the demand and interest confirmed is legal and proper. The adjudicating authority has given relief of not imposing any penalty as the issue is of interpretational in nature. It is submitted that impugned order does not require any interference and the appeal may be dismissed.
12. Heard both sides.
13. The foremost issue as per the allegations raised in the SCN is whether Chapter II of SWM (PC) Rules, 1977 / PC Rules of 2011 require affixation of MRP / RSP on cement bags of 50 kgs. when cleared to industrial / institutional consumes. The second issue whether the exemption from duty at Sl.No.1C of Notification 4/2006 as amended is available for the goods cleared by the appellant. 20
Excise Appeal No. 40092 of 2022 13.1 The adjudication authority accepts in para 12 of the impugned order that the first issue is settled by the decision of the Hon'ble Supreme Court. As per the decision of the Hon'ble Supreme Court in the case of Commissioner Vs Madras Cements Ltd. - 2020 (371) ELT A42 (SC) a batch of cases on the same issue was decided by upholding the decisions of the Tribunal. The Tribunal held that R.S.P is not required to be printed on cement cleared in 50 kgs. bags to industrial / institutional consumers and is covered under Sl.No.1C of Notification No.4/2006-CE dated 1.3.2006 as amended. The Tribunal in the case of Grasim Industries Ltd. Vs CCE Trichy - 2009 (238) ELT 655 (Tri.-Chennai) has discussed in detail the issue as to whether R.S.P has to be affixed on cement bags of 50 kgs. And the eligibility of the notification no.4/2006. The said order of Tribunal along with other cases was disposed in the batch cases referred above The relevant part of discussions of the Tribunal in Grasim Industries is as under :
"2. The learned Commissioner has demanded duty of over Rs. 2.8 crores from the appellants in respect of cement cleared in 50 Kg. packs to Govt. companies, construction companies and other industrial/institutional consumers during the period May 2007 to February 2008 by denying them the benefit of Notification No. 4/2006-C.E., dated 1-3-2006 (Sl. No. 1C). The learned Commissioner has also imposed equal amount of penalty on them. The Notification, at SI. No. IC thereof, prescribed Rs. 400 per tonne as the rate of duty of excise for goods falling under SH 2523 29 of the CETA Schedule, not covered under Sl. No. 1B, other than those cleared in packaged form. Admittedly, the appellant's cement plant is not a 'mini cement plant' defined under the Explanation to Sl. No. 1C of the Notification and consequently the subject goods were not covered under Sl. No. 1B of the Notification. The Second Proviso to the Explanation reads thus :-
"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) Rules, 1977, and thus not declared, the duty shall be determined as is in the case of goods cleared in other than packaged form".21
Excise Appeal No. 40092 of 2022
3. Before the adjudicating authority, the assessee relied on a clarificatory letter issued by the CBEC, in F. No. 124/02/2008-CX-3, dated 12-6-2008, wherein it was clarified that, in certain factual situations mentioned therein, sale of goods even in packaged form would not attract the provisions of the Standards of Weights and Measures Act, 1976 or of the Rules made thereunder. The letter particularly clarified as under :-
"No RSP required to be printed on the goods in respect of above mentioned categories of sale. Hence they will be covered under Sl. No. 1B or 1C of the Notification 4/2006-C.E., by virtue of second proviso to Explanation II in the Notification 4/2006 dated 1-3-2006 as amended."
On the above basis, the assessee argued that the cement in 50 Kg. packs cleared by them to industrial/institutional consumers during the period of dispute attracted the concessional rate of duty prescribed under Sl. No. 1C of the aforesaid Notification. It is submitted by the learned counsel that this argument was ignored by the adjudicating authority. The learned SDR points out that a similar case of the India Cements Ltd. was remanded by this Bench to the adjudicating authority for fresh adjudication in the light of the above circular of the Board. It is pointed out that, in that case, the circular was not before the Commissioner when he passed the impugned order.
4. Here is a case where the circular was cited but not considered. It is also noticed that the learned Commissioner was carried away by an opinion of the Controller of Legal Metrology which was to the effect that 50 Kg. cement packages were covered under the provisions of the aforesaid Act and Rules. The expert's opinion was apparently given without reference to the material fact that the cement in question had been cleared to industrial/institutional consumers. The adjudicating authority chose to go by the opinion of the Legal Metrology Department, saying that they were the competent experts to certify such cases. 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 Board's clarification on the relevant question was wrongly by-passed by the adjudicating authority. We have found favour with the assessee's case in view of the clarification issued by the CBEC, 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 Sl. No. 1B or 1C of Notification No. 4/2006-C.E. by virtue of the Second Proviso to the Explanation to Sl. No. 1C of the Notification as amended. The Board's clarification squarely covers the case in favour of the assessee.
5. In the result, the benefit of the Notification would be admissible to the assessee and the impugned demand is liable to be vacated. The appeal is allowed. The stay application also gets disposed of accordingly." 22
Excise Appeal No. 40092 of 2022
14. After the aforesaid judgment of the Hon'ble Apex Court the 17 show cause notices were taken up for adjudication. As mentioned above, the adjudicating authority though took note of the decision of the Hon'ble Supreme Court has thereafter confirmed the demand on the ground that appellant has not established that the cement was supplied to industrial / institutional consumers. It requires to be stated that in the SCN there is clear admission by the department that demand of duty is made on sale and clearances made to industrial / institutional consumers. The relevant paras of show cause in this regard is noteworthy of reproduction as under :
"4. The assesses have also cleared packed cement in bags, each containing 50 kgs. of cement, without affixing Retail Sale Price (RSP) on the packages to industrial / institutional consumers, for which the assesses have paid excise duty at concessional rate of applicable for loose/unpacked cement under Sl.o.1C of Notification No.4/2006-CE dated 1.3.2006 as amended i.e. at the rate of Rs.400/M.Ton upto 28.2.2008.
5. Consequent to changes made in the Union Budget, 2007, the effective rates of excise duty for cement have been revised vide Notification No.4/2007-CE dated 01.3.207 by amending Notification No.4/2006-CE dated 01.3.2006. Under S.No.1C of Notification No.4/2006-CE dated 1.3.2006the rate of duty of Rs.400/- M.Ton has been prescribed for the cement other than those cleared in packaged form. The definition for "retail sale price (RSP) has been provided in the said notification wherein "retail sale price' means the maximum price at which the excisable goods in packed form may be soled to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to the dealers, and all charges towards advertisement, delivery, packing, forwarding and the like as the case may be and the price so printed is the sole consideration for "sale'. As per third proviso to Explanation (2) applicable to S.No.1, 1A, 1B and 1C of Notification No.4/206-CE dated 1.3.2006 as amended where the retail sale price of the goods are not required o be declared under the Standards of Weights and Measures (Packaged Commodifies) Rules, 1977, and thus not declared, the duty shall be determined as is in the case of goods cleared in other than packaged form".
...
8. However, the provisions applicable to packages intended for retail sale shall not apply to the following a per Rule 2A of the Standard of Weights and Measures (Packaged Commodities) Rues, 1977. For the sake of convenience, the Rule 2A is reproduced as below :
......
9. In the instant case, the assesses have cleared cement bags/packages containing 50 kgs. of cement without affixing / printing the Retail Sale Price on 23 Excise Appeal No. 40092 of 2022 packages i.e. in the packages containing 50 kgs. of cement, it is mentioned as "NOT FOR RETAIL SALE, MEANT FOR INDUSTRIAL COSUMER / INSTUTIONTAL CONSUMER /SELF RMC CONSUMPTION". As per Rule 2A ibid, cement and fertilizers sold in bags upto 50 kgs. are excluded from the applicability of the Chapter and hence, the cement bags cleared in 50 kgs without affixing Retail Sale Price by the assessee is not eligible for concessional rate of duty because the provisions of Rule 2A(a) and (b) are to be read together and not in isolation in view of the word "and" I between (a) and (b) of Rule 2A though the packages cleared by the assessee are meant for industrial and institutional consumer, in other words, both the conditions of (a) and (b) under Rule 2A are to be fulfilled by the assessee for claiming exemption from declaration / affixing of Retail Sale price on the packages.
10. Further, it appears that the assesses have cleared packed cement in bags of 50 kgs. each for own use within the factory premises for various civil work undertaken by them. The said clearance does not fall under the scope of the term 'industrial consumer' since the said goods have not been used / utilised for manufacture of any excisable product. Neither are they covered under the term 'institutional buyer' since no service activity is undertaken at the factory premises. Hence these clearances do not satisfy both the above said conditions. It also appears that on perusal of the invoices concerned for which the assesses claimed exemption in respect of other industrial consumers and institutional consumers it is not known exactly whether they are institutional or industrial consumers and hence, the said clearances do not fall under the erm "industrial consumers and institutional consumers" and hence, the two conditions are not satisfied. Hence, the assessees are liable for penal actin under Rule 25 of Central Excise Rules, 2002 inasmuch as they have contravened the provisions of Rules 4, 6, 8, 10 & 12 of the Central Excise Rules, 2002. The applicable rate of interest is also demandable in view of the short payment of duty by the assessees.
11. In as much as the assessee have cleared the cement in 50 kg bags without printing the Retail Sale price on the bags as required under the above mentioned rules, the rate of duty as mentioned in the Tariff i.e. Rs.600/M.Ton, which is applicable for packed cement affied with Retail Sales price exceeding Rs.250 per 50 kg. bag has to be adopted for all such clearances of cement made to self / institutional / industrial consumers. In view of the above, it appears that the assesees have wrongly availed concession under Sl.No.1C of Notification No.4/2006-CE dated 1.3.2006, as amended, for the cement cleared to self / institutional / industrial consumers and thus have short paid duty of excise."
15. As per above extractions from the show cause notice it can be seen that the case of the department is that as per SWM (PC) Rules the RSP has to be affixed on cement bags of 50 kgs. and that the appellant has cleared cement without affixing R.S.P to industrial / institutional consumers. That they cannot claim benefit at Sl.No.1C of Notification No.4/2006 as it is required to affix R.S.P on the cement bags as per Rule 2A. In para-10 of SCN, there is minor and 24 Excise Appeal No. 40092 of 2022 vague averment that "it is not exactly known whether the appellant has cleared cement to industrial / institutional consumers and therefore the clearances do not fall under the term "industrial or institutional consumer". However, the show cause notice which has been issued after verification of returns / records and accounts of the assessee does not allege anywhere that any such bags which are cleared with the remark affixed "not for retail sale, meant for industrial consumer/institutional consumer/self R.S.P consumption"
has been cleared in retail sale. The SCN does not mention about even a single instance of clearances made to retail sale, or any averment as to what is the basis of such averment. The department has to furnish the details of the allegation and basis of the demand of duty in the show cause. Without such details, the appellant will not be able to put forward their defence in a proper manner. If the department had mentioned any particular transaction(s) or invoice(s) for doubting that such bags have been cleared for retail sale, it would have enabled the appellant to clarify in their reply as to whether such sales are made or invoices issued. The SCN should contain sufficient information to facilitate in giving a reply / defence and also for understanding the dispute at the time of adjudication. The adjudication cannot be founded on an incomplete or insignificant averment in the SCN.
16. Further, it has to be noted that 18 SCNs for the period from December 2007 to June 2017 have been taken up for adjudication together and the order is passed on 30.11.2021. There is considerable delay in passing the adjudication order after the 25 Excise Appeal No. 40092 of 2022 issuance of the show cause notices. Indeed, if the appellant had been intimated to preserve the records in regard to these show cause notices, the same would have been available to the appellant for the belated adjudication. When the main issue alleged in the SCN that appellant has to satisfy both the conditions in Rule 2A for not affixing RSP and claim eligibility of the benefit under Sl.1C of Notification No.4/2006 is settled in favour of the assessee the demand cannot be later confirmed on a vague allegation in the SCN. When the department was aware that the main issue was pending before the Hon'ble Supreme Court, they ought to have done verification of the invoices for subsequent periods as to whether the clearances are made to industrial / institutional consumers for issuing subsequent periodical SCNs. It also requires to be noted that the main defence taken by the assessee in all their replies issued from 09.02.2009 has been that the clearances of bags are made to industrial or institutional consumers.
17. In view of the Hon'ble Supreme Court decision, the demand in respect of clearances for their own consumption has been dropped by the adjudicating authority. In para-17 of the OIO, the adjudicating authority has observed that the issue is interpretational in nature and there is no intention to evade payment of duty. For this reason, the proposal to impose penalties has thereupon been dropped. This observation implies that the issue in the show cause notice was with regard to whether RSP is required to be affixed on 50 kg. cement bags or not.
26
Excise Appeal No. 40092 of 2022
18. The very same issue in respect of appellant's Trichy unit had come up for consideration before the Tribunal and vide Final Order No.42165/2017 dt. 20.09.2017, the Tribunal set aside the demand taking note of the various decisions passed by the Tribunal as well as the clarification issued by the Board vide Circular No.124/02/2008-CX-3. dt. 12.6.2008.
19. In the case of M/s.Heidelberg Cement (India) Ltd. and Ultra Tech Cement Ltd. Vs CCE - 2021 (8) TMI 251 CESTAT MUMBAI [2015 (315) ELT 53 (Tri.-Mumbai) the issue as to whether both the conditions in Rule 2A has to be read conjunctly or disjunctively was discussed. Relevant para of the order reads as under :
"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 Board's clarification on the relevant question was wrongly by- passed by the adjudicating authority. We have found favour with the assessee's 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 Board's 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 Hon'ble 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.
27
Excise Appeal No. 40092 of 2022
6. In this view of the matter, we are of the considered view that the impugned demands are not sustainable in law. Accordingly, we set aside the same and allow the appeals with consequential relief, if any, in accordance with law."
20. After considering the facts, we are of the view that the allegation in the SCN as to whether the appellant has cleared cement to industrial / institutional consumers is too vague to be the basis for confirmation of demand. Further, adjudication after such lapse of time alleging that the appellant has not furnished evidences to show that the clearances of such 50 kg. bags have been made only to industrial / institutional consumers, is not justified.
21. After appreciating the facts, evidence and also following the decisions cited supra, we are of the considered opinion that the demand cannot sustain and requires to be set aside which we hereby do. Appeal is allowed with consequential relief, if any.
(Pronounced in court on 17.01.2024)
sd/- sd/-
(VASA SESHAGIRI RAO) (SULEKHA BEEVI. C.S.)
Member (Technical) Member (Judicial)
gs