2017 (8) TMI 1168 - AT - Central Excise

Concessional Rate of Duty - cement - retail sale - whether the clearances of cement made by the appellant will satisfy the conditionalities of Entry 1C of Notification No.4/2006-CE dt. 01.03.2006 to benefit from reduced duty liability of ₹ 400 per ton? - Held that - It is seen that the appellant had sold cement in packs of 50 kgs each. Except for 945.05 MTs (self-consumption) and 632.30 MTs (stock-in-transit closing stock at warehouse), the remaining portion of the disputed clearances totalling to 29415.25 MTs were sold either to manufacturers, users, asbestos and cement/pipe manufacturers, ready-mix concrete manufactures or otherwise to builders, as infrastructure/buildings/ government projects construction, educational institutions, hospitals and societies. From a combined reading of the above reproduced provisions of Rule 2A of the Rules, these genre of buyers would fall under the category of Institutional Consumer or Industrial Consumer, in our opinion. On this score itself, we find that the provisions applicable to packages intended for retail sale in Chapter II of the said rules, will not apply to the clearances of cement by the appellant to its Industrial or Institutional consumers. In respect of the clearances of 25489.250 MT (26434.30 MT Less 945.050 MT) referred to in the Annexure to the Show cause notice, these clearances will necessarily have to be held as packages not intended for retail sale and to which the provisions of Chapter II of the Rules shall not apply. In view of Rule 2A thereof, duty demands in respect of these clearances will therefore not sustain and will have to be set aside which we hereby do - In respect of remaining 945.05 MTs for self-consumption inside the factory and 632.30 MTs unsold quantity at warehouses (Sl.No.11 to 12) of para 2(i) above by no stretch of imagination would these clearances can be considered as retail sales. These clearances cannot be considered as retail sales and hence benefit of the said notification cannot be denied to them - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Eligibility for concessional rate of duty under Notification No. 4/2006-CE.
2. Classification of cement clearances as retail or non-retail sales.
3. Applicability of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 to the cement clearances.
4. Duty liability on self-consumption and unsold stock.

Detailed Analysis:

Issue 1: Eligibility for Concessional Rate of Duty
The appellant claimed a concessional rate of duty under Notification No. 4/2006-CE for cement cleared to various consumers. The core issue was whether these clearances met the conditions of Entry 1C of the notification, which provided for a reduced duty of ?400 per ton for cement not cleared in packaged form. The tribunal noted that the goods should not be "other than those cleared in packaged form" to benefit from the exemption.

Issue 2: Classification of Cement Clearances as Retail or Non-Retail Sales
The appellant sold cement in 50 kg bags to various consumers, including builders, contractors, government companies, manufacturers, charitable institutions, educational institutions, hospitals, and societies. The tribunal observed that these buyers fall under the categories of "Institutional Consumer" or "Industrial Consumer" as defined in Rule 2A of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Consequently, the provisions applicable to retail sale packages did not apply to these clearances.

Issue 3: Applicability of Standards of Weights and Measures (Packaged Commodities) Rules, 1977
The tribunal examined Rule 2A of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, which exempts certain packages from the requirement to declare retail sale prices. The rule specifies that the provisions do not apply to packages containing more than 25 kg or 25 liters, excluding cement and fertilizer sold in bags up to 50 kg, and to packaged commodities meant for industrial or institutional consumers. The tribunal referred to the case of Heidelberg Cement (India) Ltd. Vs. CCE, which held that the word "and" between Rule 2A(a) and 2A(b) should be read disjunctively, meaning each category is independently exempt from the rules.

Issue 4: Duty Liability on Self-Consumption and Unsold Stock
The appellant also claimed concessional duty for 945.05 MT of cement used for self-consumption and 632.30 MT of unsold stock. The tribunal determined that these clearances did not constitute "retail sales" as defined in Rule 3(q) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Therefore, the benefit of the concessional rate under Notification No. 4/2006-CE could not be denied for these quantities.

Conclusion:
The tribunal held that the duty demand in the impugned order could not be sustained. The clearances to industrial and institutional consumers, as well as self-consumption and unsold stock, did not fall under the definition of retail sales. Consequently, the appellant was entitled to the concessional rate of duty under Notification No. 4/2006-CE. The tribunal set aside the impugned order and allowed the appeal with consequential benefits as per law.

← Previous Next →