2014 (3) TMI 307 - AT - Central Excise

Exemption from declaring MRP on Cement Bags - Procurement of Cement from depot - Notification No. 4/2006-C.E., dated 1-3-2006 - Held that - Depot cannot be considered as manufacturer is not correct. According to the Rule 2(a) under SWM Rules, the requirement is that the industrial consumer should have purchased the commodity from the manufacturer. It cannot be said that the depot of the manufacturer is a different entity and therefore the appellant is not eligible for the benefit of Sl. No. 1C of the notification - rate of duty has to be determined under Sl. No. 1C of Notification No. 4/2006-C.E., dated 1-3-2006 - Following decision of MADRAS CEMENTS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, TRICHY 2008 (12) TMI 562 - CESTAT, CHENNAI - Decided in favour of assessee.

Summary

Issues Involved:
1. Eligibility for duty rate benefit under Notification No. 4/2006-C.E.
2. Interpretation of Rule 2(a) of Standards of Weights and Measures Act (SWM) Rules.
3. Consideration of depot as manufacturer for duty rate determination.

Analysis:

Issue 1: Eligibility for duty rate benefit under Notification No. 4/2006-C.E.:
The dispute in this case revolves around whether cement packed in 50 Kgs. bags and cleared through the appellant's depot qualifies for the benefit of duty rate under Sl. No. 1C of Notification No. 4/2006-C.E., dated 1-3-2006. The notification exempts goods from declaring price under SWM Act, with duty assessment under Sl. No. 1C if price is not declared. The Revenue argued that the rule applies only when the customer purchases from the manufacturer directly, not through a depot. However, the Tribunal found that the appellant's depot can be considered part of the manufacturer entity, thereby making the appellant eligible for the duty rate benefit under the notification.

Issue 2: Interpretation of Rule 2(a) of SWM Rules:
The Revenue contended that the depot cannot be seen as the manufacturer as per Rule 2(a) of SWM Rules, which requires the industrial consumer to purchase directly from the manufacturer. The Tribunal disagreed, stating that the depot of the manufacturer should not be considered a separate entity, making the appellant eligible for the benefit under Sl. No. 1C of the notification. The Tribunal's decision was supported by a previous order in the appellant's case where a similar issue was resolved in favor of duty rate determination under the said notification.

Issue 3: Consideration of depot as manufacturer for duty rate determination:
The Tribunal emphasized that the depot of the manufacturer should not be treated as a distinct entity for the purpose of duty rate determination. It was clarified that the industrial consumer purchasing from the manufacturer's depot satisfies the requirements under Rule 2(a) of SWM Rules, enabling the appellant to avail the benefit of duty rate under the relevant notification. Consequently, the impugned order was set aside, and the appeal was allowed, highlighting the incorrectness of the Revenue's stance regarding the depot's status in relation to the manufacturer entity.

In conclusion, the Tribunal's decision in this case clarified the eligibility criteria for duty rate benefit under Notification No. 4/2006-C.E., emphasizing the interpretation of SWM Rules and the consideration of the manufacturer's depot as part of the manufacturing entity for determining duty rates.