2016 (7) TMI 1067 - AT - Central Excise

Demand of duty - manufacturing of cement - it was observed that on average basis each time they had filled excess quantity of Net Mass of Cement more than 50 kg in the bags than the declared standard net quantity of 50 kg per bag shown as clearance in their statutory records. Evidently, the assessee has paid Central Excise Duty on the Standard Net Weight, i.e., 50 kg per bag and the remaining quantity over and above of 50 kg has been cleared clandestinely without payment of Central Excise duty leviable thereon. Held that - keeping in view the nature of the cement, the tolerance limit of 1% stands allowed in terms of the said circular as also in terms of the Provisions of Rule 2 (1) (i) of the Standards of Weight and Measures (Packaged Commodities) Rules, 1977. It is a well settled law that Revenue cannot argue against the circulars issued by the Board. The variation in the weight of cement to the extent of around 1%, while filling the cement bags of 50 kgs is permissible in terms of the standards of weights and measures (Packaged Commodities Rules, 1997) and the duty in respect of excess quantity cannot be sustained. - Decided in favor of assessee.

Summary

Issues:
Revenue's appeal against dropping the demand due to excess cement quantity filled in bags.

Analysis:
The case involved a dispute where the Revenue appealed against the dropping of a demand by the Commissioner regarding excess cement quantity filled in bags. The respondent, engaged in cement manufacturing, was found to be filling bags with a net mass exceeding the declared 50 kg standard. The packing machines were set to fill slightly more cement to ensure customers receive at least 50 kg due to handling during transportation. The Commissioner considered the Standards of Weight and Measures Act, allowing a 1% variation for cement bags of 50 kgs. A circular permitted this variation for levy of central excise duty on cement. The Adjudicating Authority, following the circular, allowed the tolerance limit of 1% and dropped the proceedings. The Revenue did not dispute the circular's existence or that excess consideration was collected from customers.

The Tribunal upheld the Commissioner's decision, citing the circular and the Standards of Weight and Measures Act. It noted that Revenue cannot contest circulars issued by the Board, referring to a Supreme Court decision. Previous Tribunal decisions, such as Commissioner of Central Excise, Lucknow Vs. Marwa Cement India Pvt. Ltd. and Commissioner of Central Excise, Visakhapatnam Vs. Sagar Cements Ltd., established that a 1% variation in cement weight is permissible under the Packaged Commodities Rules, and duty on excess quantity cannot be upheld. Therefore, the Tribunal rejected Revenue's appeal, affirming the impugned order of the Commissioner.

In conclusion, the Tribunal's decision was based on the permissible 1% variation in cement weight allowed under the Packaged Commodities Rules and the circular permitting this variation for central excise duty levy. The Tribunal also relied on previous decisions establishing the permissibility of a 1% variation in cement weight. The appeal was dismissed, upholding the Commissioner's order and the circular's provisions regarding the tolerance limit for cement weight discrepancies.