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CX - Switchgears sold in numbers, hence, even if weighing over 25 kg each not exempted under SWAM - S. 4A correctly applied: CESTAT

By TIOL News Service

NEW DELHI, OCT 09, 2017: THE appellants manufacture switchgear [CH 85.36] which is notified u/s 4A of the CEA, 1944 for the purpose of assessment on the basis of MRP.

The dispute in the present case is in relation to the switchgears weighing more than 25 kg. each and cleared to their dealers. These switch gears have been assessed by the appellants under Section 4 ibid while the adjudicating authority held that these are liable to be assessed u/s 4A as they were not directly sold to the Industrial consumers.

Having so held, the adjudicating authority went ahead to determine the MRP (as none was printed) by adopting their list prices and adding sales tax and octroi etc.

The result was confirmation of differential CE duty demand of Rs.45,37,620/- for the period January to July, 2008 alongwith interest and penalty.

The assessee is before the CESTAT.

After considering the submissions made by both sides, the Bench extracted rule 2A of the SWAM (Rules), 1977 which reads -

"Rule 2A. 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 the purpose of this rule,-“(a) Institutional consumer.- Means those consumers who buy packaged commodities directly from the manufacturers/ packers for service industry like transportation [including airways, railways], hotel or any other similar service industry.

(c) Industrial Consumer.- Means those consumers who buy packaged commodities directly from the manufacturers/ packers for using the product in their industry for production, etc .]”

The CESTAT, thereafter,observed -

++ The main contention of the appellant is that packages of switchgear weighing individually more than 25 kg. are exempt from affixing MRP. But switchgear manufactured by the appellant are evidently not being sold by weight or by measure but are sold in terms of numbers. Hence such goods even if weighing over 25 kg.each, which are duly packaged and sold to the dealers by the appellants, cannot be said to be covered under the exemption under Rule 2A(a) of the above rules.

++ From the pattern of sale adopted by the appellant it is also evident that the goods are sold through dealers and not directly sold to industrial or institutional customers in bulk.

++ We also note that the commodities manufactured by the appellant are not covered by the exemption contained in Rule 34 of the P.C. Rules, 1977.

++ The activity of packing/repacking, labelling etc. on the impugned goods in their factory amounts to manufacture and in the present case are liable to duty in terms of Section 4A.

Concluding that there is no reason to interfere with the impugned order, the same was upheld and the appeal was rejected.

(See 2017-TIOL-3625-CESTAT-DEL)


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