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2016 (10) TMI 828 - AT - Central ExciseMRP based valuation or Transaction value - supply of Cement bulk customers like manufacturers, builders, contractors, educational institutions, societies and hospitals etc. - qualification of buyer as industrial/ institution consumers - Held that - We find that the original authority found that hospitals, co-operative societies, temples cannot be considered under the category of institutional or industrial consumers. We find the reasoning given by the original authority that schools, educational institutions and hospitals are not service industry in terms of Rule 2A of the Packaged Commodities Rules, 1977 is not tenable. The institutional consumer means those consumers who buy cement directly from the manufacturers for service industry like transportation including airway, railway, hotel or any other similar service industry. We find that educational institutions and hospitals are directly buying cement from the assessee-appellant and rightly eligible for concessional rate of duty as service institution - admittedly, the sale being direct without any intermediary involved, the criteria for retail sale has not been fulfilled. As such we find wherever such direct sale is effected the application of Packaged Commodities Rules, 1977 will not be governed by Rule 3 for enforcement - the denial of the concession in terms of the abovesaid notification for the assessee-appellant on these grounds is not justifiable. The reliance placed by the original authority on the decision of the Tribunal in Grasim Industries Ltd. vs. CCE, Trichy 2008 (10) TMI 462 - CESTAT, CHENNAI is not proper as the department has filed civil appeal before the Hon ble Supreme Court against the said order. Appeal filed by assessee-appellant allowed - appeal filed by Revenue rejected.
Issues:
1. Applicability of concessional rate of duty on cement sales to various customers. 2. Interpretation of Packaged Commodities Rules, 1977 in relation to retail sale. 3. Eligibility of certain customers as institutional or industrial consumers. 4. Validity of original authority's decision based on Tribunal's precedent. 5. Relevance of Board clarification in determining concessional rate eligibility. Analysis: Issue 1: Applicability of concessional rate of duty The case involved disputes over the applicability of concessional rate of duty on cement sales by the assessee to various customers. The Revenue demanded a significant amount, which the original authority partially confirmed. The assessee contested this confirmation, leading to the appeal. Issue 2: Interpretation of Packaged Commodities Rules The assessee argued that direct sales to consumers for their own use do not qualify as retail sales under Rule 3 of Packaged Commodities Rules, 1977. The absence of RSP markings on the packages sold directly was highlighted to support this argument. The Tribunal found that the focus of adjudication was on Rule 2A, which was a later insertion excluding certain packaged commodities from the Rules. Issue 3: Eligibility of customers as institutional or industrial consumers The Tribunal referred to previous decisions involving cement sales to builders, developers, and educational institutions to determine the eligibility of certain customers as institutional or industrial consumers. It was established that educational institutions and hospitals buying cement directly from the assessee were rightly considered eligible for concessional rate of duty as service institutions. Issue 4: Validity of original authority's decision The Tribunal found the original authority's reasoning that hospitals, co-operative societies, and temples do not qualify as institutional or industrial consumers to be untenable. The definition of institutional consumers was clarified to include educational institutions and hospitals as service industry consumers directly purchasing cement from the manufacturer. Issue 5: Relevance of Board clarification The Revenue's attempt to discard the Tribunal's decision in favor of a Board clarification was deemed improper. The Tribunal found no merit in the Revenue's argument, as no High Court or Supreme Court decision overruled the Tribunal's findings in a previous case. In conclusion, the Tribunal allowed the appeal filed by the assessee-appellant and set aside the impugned order, while rejecting the appeal filed by the Revenue. The judgment was pronounced on 28.09.2016.
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