2016 (12) TMI 25 - AT - Central Excise

Cement - concessional duty in terms of Sl. No. 1C of Notification No. 4/2006-CE dated 01.03.2006 - qualification of buyers in terms of Rule 2A of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (PC Rules) - eligibility of appellant for the concessional rate of duty for cement sold directly to individuals without marking of any MRP on the bags - Held that - a similar situation came up before the Tribunal in the case of Prism Cement where the sale of cement to various categories of buyers, including individuals was considered. The Tribunal in the case of M/s Prism Cement Limited Versus CCE, Bhopal And Vice-Versa 2016 (10) TMI 828 - CESTAT NEW DELHI held that the definition of retail sale as per Rule 2(q) of the PC Rules are to be examined before deciding the nature of sale. Admittedly, the cement without marking of RSP has been sold by the appellant directly to consumers and as such these transactions do 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, the sales without RSP marking is direct to the consumer not through an intermediary as such the criteria for retail sale has not been fulfilled. As such, the Tribunal held that whenever such direct sale is affected application of PC Rules will not be governed by Rule 3. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Interpretation of PC Rules for concessional duty on cement sales directly to consumers without marking MRP on bags.

Detailed Analysis:

1. Applicability of PC Rules: The appeals challenged an order regarding the eligibility of the appellants for concessional duty on cement sales to various consumers. The appellants argued that PC Rules did not apply as sales were made directly to consumers without marking MRP on bags. They contended that since the retail sale price was not required to be declared under PC Rules, duty should be determined differently. The Commissioner's order dropped the demand for institutional buyers but confirmed demands for direct sales to individuals.

2. Legal Arguments: The appellant's counsel emphasized that PC Rules were not applicable as sales were made directly to consumers without marking MRP on bags. They argued that the Commissioner did not address the non-applicability of PC Rules under Rule 3 specifically, only discussing Rule 2A. Various case laws were cited in support of this argument.

3. Counter-arguments: The respondent reiterated the original authority's findings, stating that sales to individuals could not be considered sales to institutions or industrial consumers.

4. Judicial Precedents: The Tribunal referred to previous cases, including Jayanti Food Processing (P) Ltd. vs. CCE, Rajasthan, and Swan Sweets Pvt. Ltd. vs. CCE, Rajkot, to determine the definition of retail sale under PC Rules. It was highlighted that the nature of sale depended on the organization of distribution and sale of the product.

5. Tribunal's Decision: The Tribunal analyzed the applicability of PC Rules in a similar case involving Prism Cement. It was concluded that direct sales to consumers without marking RSP did not qualify as retail sale as per the statutory definition. Since the sales were direct to consumers without an intermediary, they did not meet the criteria for retail sale. Therefore, the Tribunal held that PC Rules did not govern such direct sales.

6. Final Verdict: Considering the above discussion and established legal principles, the Tribunal found the impugned order legally unsustainable. Consequently, the order was set aside, and the appeals were allowed on 28.10.2016.