2017 (5) TMI 1191 - AT - Central Excise

Valuation - MRP Valuation - cement in packed form (in 50 kg bags) - supply to industrial consumer or institutional consumer - benefit of N/N. 4/2006-CE Sr.No.1(b) or 1(c) - case of Revenue is that subject supplies/sales, though declared as Not for Resale are not covered under Rule 2A of SWM Rules, therefore, concessional rate of duty as per N/N. 4/2006-CE Sr.No.1(b) or 1(c) will not be applicable to sales made to/for builders, developers, contractors and construction firms, manufacturers of finished goods, captive consumption - Held that - The present matter is covered by the Tribunal s decisions in the casea of Ambuja Cement Ltd Vs CCE Raipur 2017 (1) TMI 1130 - CESTAT NEW DELHI , where it was held 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 - appellant elgible for benefit. The sales made to various categories of buyers are covered u/R 2A of SWM Rules, 1977 and such goods are eligible for the benefit of N/N. 4/2006-CE - appeal allowed - decided in favor of assessee.

Summary

Issues Involved:
1. Eligibility for concessional rate of excise duty under Notification No. 4/2006-CE.
2. Classification of buyers as industrial or institutional consumers.
3. Requirement of declaring MRP on cement bags.
4. Validity of demands raised by the Revenue.

Detailed Analysis:

1. Eligibility for Concessional Rate of Excise Duty:
The core issue revolves around whether M/s Sanghi Industries Ltd (SIL) is eligible for a concessional rate of excise duty under Sr.No.1C of Notification No. 4/2006-CE for cement cleared in 50 kg bags without declaring the MRP, claiming these were meant for industrial and institutional consumers. The Tribunal referenced multiple precedents, including Ambuja Cement Ltd Vs CCE Raipur and Shree Cement Ltd Vs CCE Jaipur, which supported the eligibility for concessional rates when goods are sold to institutional or industrial consumers without the requirement of declaring MRP.

2. Classification of Buyers:
The Tribunal examined whether the buyers categorized by M/s SIL as industrial or institutional consumers fit within the definitions provided under Rule 2A of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977. The Tribunal concluded that:
- Social, Educational, Religious, and Charitable Organizations: These were deemed institutional consumers as their activities, such as constructing buildings, hospitals, and community halls, serve public services.
- Infrastructural Development Projects: These were also classified as institutional consumers since infrastructure development is integrally linked to the construction industry, considered a service industry.
- Government Bodies: Specifically, Gujarat State Civil Supply Corporation Ltd (GSCSCL) was categorized as an institutional consumer due to its role in procuring cement for government infrastructure projects.

3. Requirement of Declaring MRP:
The Tribunal noted that M/s SIL cleared cement bags with the declaration "Not for Resale," arguing that these were not subject to MRP declaration as per Rule 2A(b) of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977. The Tribunal agreed, referencing earlier decisions which held that sales to institutional or industrial consumers do not require MRP declaration and are eligible for concessional duty rates.

4. Validity of Demands Raised by the Revenue:
The Revenue had issued 21 Show Cause Notices demanding differential duty, alleging that M/s SIL wrongly availed the concessional rate by misclassifying buyers and not declaring MRP. The Tribunal, however, found that the buyers in question were correctly classified under the relevant rules and that the goods were eligible for the concessional rate. Consequently, the Tribunal modified the impugned orders and allowed the appeals filed by M/s SIL while rejecting the appeals filed by the Revenue.

Conclusion:
The Tribunal's decision affirmed that M/s SIL's classification of buyers as industrial or institutional consumers was correct, and the goods sold to these buyers were eligible for the concessional rate of duty under Notification No. 4/2006-CE. The Tribunal also upheld that there was no requirement to declare MRP on these goods, thus rejecting the Revenue's demands for differential duty. The appeals by M/s SIL were allowed, and those by the Revenue were dismissed.