2005 (7) TMI 121 - AT - Central Excise

Summary

Issues Involved:
1. Determination of whether a sale is wholesale or retail.
2. Inclusion of price preference in assessable value for excise duty.

Detailed Analysis:

1. Determination of whether a sale is wholesale or retail:

M/s. Hindustan Lever Ltd. (HLL):
- The appellants claimed exemption under Notification 6/2002-C.E., as amended by Notification No. 6/2003-C.E., for products such as Vanaspati, Bakery Shortening, and Margarine, asserting that the goods were not meant for retail sale but for the Bakery/Catering Industry.
- The Revenue contended that the goods, although labeled "not for retail sale," were sold to consumers, thus constituting retail sales.
- The Tribunal examined various case laws to determine the nature of the sale. The definition of 'wholesale' and 'retail' was considered, emphasizing that wholesale involves large quantities sold to those intending to resell, while retail involves smaller quantities sold directly to consumers.
- The Tribunal referenced several precedents, including the Supreme Court's decision in Collector of Central Excise, Madras v. Abex Rubber Co., which stated that bulk sales to a single consumer could constitute wholesale sales, and the Tribunal's decision in Collector of Central Excise, Madras v. Madras Rubber Factory Ltd., which emphasized the relevance of the quantity sold.
- The Tribunal concluded that sales to the Bakery/Catering Industry by HLL were wholesale transactions, as the goods were not meant for the ultimate consumer and were labeled "not for retail sale."

M/s. Steel Complex Ltd.:
- The appellants declared a price different from the commercial invoice and supplied steel products to Government Units, asserting that these sales should be considered retail as the goods were used for construction purposes.
- The Tribunal noted that the quantum of sales was crucial in determining whether a sale was wholesale or retail. The adjudicating authority observed that the majority of sales consignments weighed about 10 MTs, which could not be termed retail sales.
- The Tribunal upheld the Revenue's view that the sales were wholesale transactions due to the large quantities involved, despite the goods being used by Government Units for their own consumption.

2. Inclusion of price preference in assessable value for excise duty:

M/s. Steel Complex Ltd.:
- The appellants argued that the 10% price preference given to them by Government Departments, pursuant to a Kerala Government Circular, should not be included in the assessable value as it was in the nature of a subsidy.
- The Tribunal distinguished this case from others like Mazagon Dock Ltd. v. CCE, Belgaum, where subsidies were paid by the government and not by the buyer. In the present case, the extra amount came from the buyers (Government Units) to the appellants.
- The Tribunal concluded that the 10% price preference should be included in the assessable value, as it was not a subsidy from the government but an extra amount paid by the buyers.
- The Tribunal also noted that the appellants had not disclosed the price preference to the department, constituting suppression of facts. Consequently, the demand for duty was confirmed, but the penalty under Section 11AC was reduced to Rs. 10,000, considering the appellant's efforts to revive under the BIFR scheme.

Conclusion:
- The appeal by M/s. Hindustan Lever Ltd. was allowed, recognizing the sales as wholesale.
- The appeal by M/s. Steel Complex Ltd. was dismissed, with the Tribunal confirming the inclusion of the 10% price preference in the assessable value and reducing the penalty to Rs. 10,000.