CX - Sec 4A - Goods cleared in bulk does not mean that they are meant for Institutional consumers - It should be meant for Institutional consumers under SWAM Rules to pay duty u/s 4 - Appeal allowed: CESTAT
By TIOL News Service
MUMBAI, OCT 27, 2014: THE appellant is a manufacturer of ceramic tiles and clearing the same to their depots. The appellant sells these tiles to dealers who in turn sell to ultimate consumers. The appellant also sells tiles to buyers such as Real Estate Developers, Construction Co., Cooperative Housing Societies, Commercial Complexes, Educational Institutions & Hostels, Hotels, Hospitals, Interior Designer etc.
The appellant is discharging duty liability on MRP basis as per Section 4A but the revenue is of the view that as these tiles have been cleared to real estate developers etc. viz. industrial or institutional consumers, they are not required to affix MRP inasmuch as they are exempted from this requirement as per Rule 2A of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and, therefore, the appellants are required to pay duty on transaction value i.e. as per Section 4 of CEA, 1944.
The CCE, Raigad upheld the allegations levelled in the notices & confirmed the duty liability of Rs.1,11,95,715/- and imposed an equivalent penalty along with interest.
In the matter of the Stay application filed, the Bench while granting waiver of pre-deposit and ordering a stay from recovery observed –
5. We have carefully considered the submissions made by both the sides and also perused the purchase orders placed by the various customers. Even though the quantity is supplied in bulk, it is clearly indicated in the purchase orders that the goods have to be supplied in boxes of 15 tiles. This indicates that the supplies are made in retail packs on which MRP is printed. Further, we notice there is hardly any time-gap between receipt of the purchase order and effecting the supply, which would also show that the supplies are made out of the quantity already manufactured by the appellant, packed and kept ready for sale. In this view of the matter, and also considering the decision of this Tribunal in the case of H & R Johnson, cited supra, 2014-TIOL-845-CESTAT-MUM the appellant has made out a case for grant of stay.
We reported this order as 2014-TIOL-873-CESTAT-MUM.
The appeal was heard recently and the Bench observed –
++ We have examined the purchase orders and corresponding invoices for the supplies by the appellant. We find that in almost all the cases, supplies have been made within a period of one week of the obtaining of the purchase order. As the manufacturing of tiles by the appellant is a continuous process, therefore, these goods are meant for retail sale. Accordingly, the appellant has affixed MRP on each package of the tiles, even if the quantity supplied is in bulk but it is clearly indicated in the purchase order that the goods have to be supplied inboxes of 15 tiles which means that supplies are retail packs on which MRP is printed. As there is no time gap between the receipt of the purchase order and effected supply, which would also prove that supplies are made out of the quantity already manufactured by the appellant, packed and kept ready for sale.
The CESTAT also noted that a similar situation had come up in the case of H&R Johnson (India) Ltd. (2014-TIOL-845-CESTAT-MUM) and wherein the Tribunal while allowing the appeals with consequential relief had inter alia held that the discharge of duty liability on tiles supplied in retail packages to real estate developers/developers, etc. has to be made under Section 4A of the Central Excise Act, 1944.
The Bench further observed –
++ We find that as the goods were already manufactured and intended for retail sale, therefore, they have correctly discharged the duty and the goods cleared in bulk does not mean that they are meant for industrial/Institutional consumers. It should be meant for Industrial/Institutional consumers under the Standard Weights & Measures Rules to pay duty under Section 4 of the Central Excise Act, 1944.
Holding that the appellant had rightly discharged their duty liability, the order passed by CCE, Raigad was set aside & the appeal was allowed with consequential relief.
(See 2014-TIOL-2092-CESTAT-MUM)
