2017 (12) TMI 443 - AT - Central Excise

Valuation - whether clearances effected by the appellant to various customers have to be considered as supplies made to industrial / institutional customers or otherwise? - Held that - similar issue decided in the case of M/s HEIDELBERG CEMENT (INDIA) LTD And M/s ULTRA TECH CEMENT LTD Versus COMMISSIONER OF CENTRAL EXCISE 2014 (8) TMI 251 - CESTAT MUMBAI , 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 has a good case in their favor - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of Legal Metrology Act regarding display of retail sales price on cement bags cleared to industrial consumers, differentiation between institutional/industrial consumers, applicability of Rules on packaged commodities, confirmation of demand for differential duty, imposition of penalties.

Analysis:
The appeals involved the interpretation of the Legal Metrology Act concerning the display of retail sales price (RSP) on cement bags cleared to industrial consumers. The appellants, cement manufacturers, were required to declare RSP on cement bags cleared in 50 kg bags as per the Legal Metrology Act. The issue revolved around whether the clearances made by the appellants to various customers should be considered as supplies to industrial/institutional customers. The adjudicating authority confirmed the demand for differential duty, interest, and penalties, as the supplies were made without declaring RSP, which was required. The dispute centered on whether the supplies were made to industrial/institutional customers or not.

The Tribunal considered the provisions of the Legal Metrology Act and previous decisions to determine the nature of the supplies made by the appellants. Rule 2A of the Packaged Commodities Rules excluded packages meant for industrial/institutional consumers from certain provisions. The Tribunal analyzed the definitions of institutional and industrial consumers under the Rules to ascertain the applicability of the Act to the supplies made by the appellants. It was noted that the sale of cement for manufacturing Ready Mix Concrete (RMC) qualified as a sale to industrial consumers, while sales to builders/developers were considered sales to institutional consumers. The Tribunal emphasized that the Act did not restrict the quantity of goods contained in the package for industrial/institutional consumers.

In a similar case involving ACC Ltd., the Tribunal had followed the precedent set in the Heidelberg Cement Ltd. case and ruled in favor of the appellant. Considering the judicial pronouncements and the nature of the supplies made by the appellants to customers in the construction industry, the Tribunal held that the supplies should be considered as made to industrial/institutional consumers. Consequently, the impugned orders confirming the demand for differential duty and penalties were set aside, and the appeals were allowed. No findings were recorded on other arguments presented by both sides, as the main issue was resolved in favor of the appellant.

In conclusion, the Tribunal's decision focused on the interpretation of the Legal Metrology Act, differentiation between industrial/institutional consumers, and the applicability of Rules on packaged commodities. The judgment emphasized the nature of supplies made by the appellants to customers in the construction industry and ruled in favor of considering them as supplies to industrial/institutional consumers, leading to the setting aside of the demands and penalties imposed by the adjudicating authority.