2023 (10) TMI 587 - AT - Central Excise

Tribunal rules in favor of cement manufacturer appellant regarding sales to institutional customers /2006-CE

M/s. Pragati Cement (India) Private Limited (Formerly – Purulia Cement Private Limited) Versus Commissioner of Central Excise, Bolpur

The Tribunal held in favor of the cement manufacturer appellant, ruling that their sales of cement in 50 kgs bags to certain buyers qualified as sales to ... Clearance of cement in bulk packs, on tender, to various institutional/industrial consumers by availing benefit of Notification No.4/2006-CE dated 01.03.2006 on the transaction value - requirement to affix MRP on the packages of the said goods - HELD THAT:- The issue has already been settled by this Tribunal, wherein this Tribunal in the case of M/S. ULTRATECH CEMENT LIMITED VERSUS COMMISSIONER OF CGST & EXCISE, DURGAPUR [2023 (7) TMI 1110 - CESTAT KOLKATA] has held the demand of duty is not sustainable against the appellant as the cement in 50 kgs bags sold to the above buyers qualifies as sale to institutional/industrial customers to avail the benefit of the above cited Notification. As the issue is no more res integra, therefore, the appellants have cleared cement in 50 kgs. bags to the buyers qualified as institutional or industrial customers, therefore, they are entitled for the benefit of Notification No.4/2006-CE dated 01.03.2006. There are no merit in the impugned order and the same is set aside - appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED Whether clearances of cement in 50 kg bags to builders, developers, institutional or industrial consumers qualify as sales to institutional/industrial customers for purposes of entitlement to the exemption under the relevant notification and therefore whether duty can be demanded where such clearances were treated as retail sales requiring MRP labelling. 2. ISSUE-WISE DETAILED ANALYSIS Issue: Entitlement to notification benefit for cement cleared in 50 kg bags to specified buyers (institutional/industrial) versus characterization as retail sales requiring MRP and denial of notification benefit. Legal framework: The applicable statutory scheme provides concessional or exempt treatment for clearances to institutional/industrial consumers under the notification relied upon by the appellant; conversely, sales characterized as retail clearances where MRP labeling is required are not eligible. Precedent treatment: The Tribunal treated earlier appellate decisions as binding in the present factual matrix, noting prior determinations that 50 kg bag clearances to builders, developers, governmental bodies and bona fide industrial users qualify as institutional/industrial sales and attract the notification benefit. Prior findings that ready-mix-concrete producers who use cement in manufacture may also qualify were acknowledged. Decisions denying benefit where cement was used to construct non-excisable assets were distinguished on the basis that such users would still qualify as builders/institutional purchasers. Interpretation and reasoning: The Court examined the nature of the buyers and end-use. It reasoned that buyers such as builders, developers, government entities and industrial consumers who procure 50 kg bags for construction or for use in manufacture (where applicable) fall within the scope of institutional/industrial customers contemplated by the notification. The presence of construction use (factory buildings, residences, roads, repairs) does not exclude classification as builders or institutional purchasers. The Tribunal also considered that revenue did not allege any statutory requirement for RSP/MRP printing under the Metrology Act in the relevant transactions; absence of such a requirement undermines the argument that these were retail sales necessitating MRP and attendant denial of notification benefit. Given these factors and consistent appellate jurisprudence, the characterization of the clearances as retail sales was not sustainable. Ratio vs. Obiter: Ratio - Where cement in 50 kg bags is sold to buyers who are builders, developers, government or bona fide industrial consumers, such clearances qualify as institutional/industrial sales and are entitled to notification benefit; a mere use for construction by an industrial purchaser does not convert the sale into a retail clearance. Obiter - Observations regarding specific factual distinctions (e.g., ready-mix-concrete producers or particular industrial users) serve as explanatory guidance but the operative rule is the classification of the buyer and end-use within the notification's scope. Conclusion: The demand for duty premised on characterization of the sales as retail and the consequent ineligibility for the notification benefit is unsustainable. The impugned demand is set aside and the appellants are entitled to the benefit of the notification for cement cleared in 50 kg bags to qualifying institutional/industrial buyers, with consequential relief as applicable.