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TMI Blog2025 (3) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... count cannot be sustained. This Tribunal in the case of Hi-Tech Computers [2024 (4) TMI 1234 - CESTAT BANGALORE] following the judgment of this Tribunal in the case of Starlite Components Ltd. [2013 (4) TMI 624 - CESTAT, MUMBAI] in similar circumstances held that the goods imported and cleared to industrial consumers cannot be assessed to CVD under Section 4A of the Central Excise Act, 1944. The claim of the appellant is that in most of the cases, they have cleared the imported goods on payment of SAD; however, in few/stray cases even though, they have not paid SAD at the time of its import but later cleared on payment of applicable Sales Tax on sale of such goods, hence the demand on this count also not sustainable. Extended period of limitation - penalty - HELD THAT:- From the records, since it is not clear as the extent of imported goods cleared on payment of SAD at the time of import and the procedure followed later under the said N/N.102/2007, the matter is remanded to the adjudicating authority to examine the demand relating to SAD. The appellant all along has been clearing the goods declaring in the respective Bills of Entry that the goods are not meant for retail sale a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudication, the demand was reduced to Rs.1,22,88,757/- with interest and equivalent penalty under Section 114A of the Customs Act; penalty of Rs.40.00 lakhs under Section 114AA of the Customs Act imposed on the company; penalty of Rs.5.00 lakhs imposed on Shri Vijay Kumar Sujhani and penalty of Rs.2,50,000/- each on Shri Nitish Hegde and Smt. Meherunissa under Section 112 and Section 114AA of the Customs Act, 1962 respectively. Hence, the present appeals. 3.1. At the outset, the learned advocate for the appellant has submitted that the appellant during the relevant period June 2008 to November 2012 had imported lubricants falling under Chapter 27 and 34 of the CTH 1975 which were used in the manufacture of finished goods as well as sold to industrial consumers as such. The goods which are meant to be used by the appellant were declared the value and applicable duties were discharged, whereas the imported goods which were to be cleared to the industrial consumers declared in the respective Bills of Entry as "not for retail sale" which were later either directly cleared to industrial consumers or were sold to distributors / dealers who in turn sold the same to industrial consumer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Metrology Act in respect of imported goods is similar to that of a local manufacturer/packer in respect of manufactured goods. Further, they have referred judgment in the cases of Henkel CAP Pvt. Ltd. Vs. CC(Import), JNCH, Mumbai-II [2012(282) ELT 566 (Tri.)] and UT Starcom Inc. Vs. CC (Port-Import), Chennai [2019(370) ELT 937 (Tri. Chennai)](affirmed in 2020(371) ELT A47 (SC)) wherein it is held that importer was not required to comply with the compliances relating o retail sale as the imported goods were sold to industrial / institutional consumers. Since the imported goods are sold directly by the appellant to the industrial consumers / distributors, the same are excluded from application of Chapter II and affixation of MRP in terms of Rule 3 of the Legal Metrology (Packaged Commodities) Rules, 2011. Further, he has submitted that the Legal Metrology (Packaged Commodities)(Amendment) Rules, 2011 prescribed that industrial consumer means the consumer who buys packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use and the package shall have declaration 'not for retail sale'. He has submitted that the said amendment was brought by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o RSP assessments. Even in the case of CCE Vs. Madras Cements [2019(11) TMI 1784, the Revenue's appeal was dismissed; however, it was made clear that where the sale was not found to be in favour of the industrial or institutional consumers, the concession in question shall not be available. He has submitted that packages of more than 25 kgs have been excluded from the purview of the present demand notice and the amount has been calculated on the basis of the data provided by the appellant. He has submitted that in some packages, the RSP declared by the appellant was not correct as the said goods were later sold at a price higher than the RSP declared; therefore the learned Commissioner has rightly confirmed the demand in such cases. He has further submitted that even though the appellant had contended that due to repacking at their factory, there is a revision of RSP since repacking / relabelling amounts to manufacture and discharged differential Excise duty but such argument was not advanced earlier. Further he has submitted that the definition of industrial consumer and institutional consumer has been amended w.e.f. 14.05.2015 as defined under the Legal Metrology Act, 2009 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T) dated 01.03.2008 as amended, lubricant oils and lubrication preparations falling under Chapter heading 2710 and 3403 are assessable to duty under Section 4A of CEA, 1944 for payment of additional duty of customs(CVD) under sub- section (1) of Section 3 of Customs Tariff Act, 1975. The appellant by declaring the goods in the Bills of Entry 'not for retail sale' claimed exemption from application of Section 4A of CEA, 1944 claiming that these goods were cleared to industrial consumers directly or through their stockists/distributors. In the impugned order, the learned Commissioner referring to the definition of 'industrial consumer' and 'institutional consumer' under the Legal Metrology (Packaged Commodities) Rules, 2011 held that since the goods are not directly purchased by the industrial consumers from the manufacturer and the appellant being an importer, the sales/clearances made directly or through their distributors to the industrial consumers cannot fall within the definition of 'industrial consumers' even if such goods are ultimately consumed by industrial consumers. Against the said finding of the adjudicating authority, the categorical plea of the appellant through their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retation of the definition, scope and meaning of industrial consumer and institutional consumer as prescribed in Rule 2A of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Their lordships held as follows:- "24. Therefore, Rule 34 expressly exclude the application of Rule 6 to any package containing a commodity if the marking on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as raw material or for the purpose of servicing any industry, mine or quarry. Therefore the intention is clear. The packages meant for industry, mine or quarry, did not fall within these Rules. After deleting the said provisions, Rule 2-A has been introduced. It reads as under : "2-A Applicability of the Chapter. - The provisions of this Chapter shall not apply to:- (a) packages of commodities containing quantity of more than 25 Kg or 25 litre excluding cement and fertilizer sold in bags up to 50 Kg; and (b) packaged commodities meant for industrial consumers or institutional consumers. Explanation. - For this purpose of this rule. (a) Institutional consumer.- Means those consumers who buy packaged commodities dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven in the explanation to Rule 2-A. In case of Rule 2-A, as is clear from the explanation, the consumers who buy packaged commodities directly from the manufacturers are excluded from the purview of Chapter II. In other words, the requirement of Chapter II are not attracted to the packages purchased directly from manufacturers. However, in the case of retail package, it is not necessary that the industrial or institutional consumer should purchase the packaged commodities from the manufacturer. By adding the proviso, explaining the meaning of the word, 'ultimate consumer', it has been made clear that a retail package which is meant for ultimate consumer excluded industrial or institutional consumer. 27. In fact, Revenue relied on the judgment of the Bombay High Court in the case of Larsen & Toubro Limited v. The Union of India in W.P. No. 5856/07 disposed of on 29-2-2008 [2012 (275) E.L.T. 153 (Bom.)], where, after noticing Rule 2-A and the definition of 'retail package' as contained in Rule 2(p), it was held that the explanation of institutional and industrial consumer in Rule 2-A must also be read into the proviso to Rule 2(p), for the purpose of Chapter II. While construing Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that packaged commodity cannot be construed as a retail package. Therefore, after deleting Rule 34(a), in the very definition of 'retail package', the legislature while defining the meaning of 'ultimate consumer' to whom a retail package is meant, excluded institutional or industrial consumer. 30. Therefore, a harmonious reading of these provisions, keeping in mind the object with which the Act is passed, it is reasonable to arrive at the conclusion that the meaning assigned to industrial consumer and institutional consumer in the explanation 2-A cannot be attributed to the meaning of those consumers in proviso to Rule 2(p). Rule 2(p) and Rule 2-A operate in distinct and separate fields. Therefore, the object is very clear. This Act is meant only for an individual consumer or a group of individuals who purchase packaged commodities from a retail dealer. To protect their interest, this Act and Rules are enacted and compliance of Rule 6 was made mandatory. The proviso contained in the definition of 'retail package' as per Rule 2(p) defines the ultimate consumer, which shall not include industrial or institutional consumers. Therefore, it is clear that the protection under this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not paid SAD at the time of its import but later cleared on payment of applicable Sales Tax on sale of such goods, hence the demand on this count also not sustainable. The Notification allowing exemption from SAD as was in force during the relevant time reads as follows:- Special CVD - Exemption to all goods when imported for subsequent sale In exercise of the powers conferred by sub- section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India for subsequent sale, from the whole of the additional duty of customs leviable thereon under sub-section (5) of section 3 of the said Customs Tariff Act (hereinafter referred to as the said additional duty). 2. The exemption contained in this notification shall be given effect if the following conditions are fulfilled : (a) the importer of the said goods shall pay all duties, including the said additional duty of customs leviable thereon, as applicable, at the time of importation of the goods; (b) the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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