TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 661
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....leared by the appellant in the containers of 5, 10, 15, 20, and 25 kgs., the objection was raised by the audit that the containers measuring 5 to 25 kg. will not get covered under the provisions of Section 4A. Accordingly, proceedings were initiated against the appellant by way of issuance of two show cause notices dated 29-7-11 and 27-4-12 covering the period 14-1-07 to 31-3-11 and 1-4-11 to 31-3-12 respectively. The said show cause notices culminated into the impugned order passed by the Commissioner confirming the demands, by invoking the longer period of limitation and imposing penalties. 3. After hearing both sides, we find that short issue required to be decided in the present appeal is as to whether the packages containing 5 to 25 litres of tem-adhesive 'C' are required to be cleared in terms of provisions of Section 4A, which allows clearance on payment of duty based upon the MRP endorsed on the said packages after allowing the abatement. Admittedly the appellants product is classifiable under Heading 3506 which relates to prepared glues and other prepared adhesives. It is also further seen that the appellant is endorsing the said packages with the MRP. It is also not....
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....meant for industrial consumers or institutional consumers. Explanation - For the purpose of this Rule, - (a) Institutional consumer - means those consumers who buys packaged commodities directly from the manufacturers/packers for service industry like transportation including Airways, Railways, hotel or any other similar service industry. (b) Industrial consumer - means those consumers who buy packaged commodities directly from the manufacturers/packers for using the product in their industry for production, etc." As is seen from the above Rules, the same excludes the packed commodity meant for industrial consumer or institutional consumers. As per the definition of institutional consumers and industrial consumers, as appearing in the said Rules, the packed commodities must be bought directly from the manufacturers. In the present case, there is no dispute that the appellants are selling the adhesives through network of distributors, dealers and retails and the goods are not being bought by their customers directly from the appellants. As such, the reasoning of the adjudicating authority that the packages from 5 Kg to 25 Kgs. have....
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.... Tariff Act. Facts are not repeated and are adopted as contained in above order. 12. Learned Member (J) has come to conclusion that these products are rightly classifiable under Section 4A and will be applicable to all size of containers 5, 10, 15, 25 kgs. It has been held that sale of adhesives by M/s. Unipatch Rubber Ltd. is not considered sale under Section 4 and should be assessed under Section 4A which was already being done. Accordingly total stay has been granted. 13. I do not agree with the order recorded by learned Member (Judicial) and propose to write my own order. 14. I have examined the records as maintained on file. For reference, it is necessary to consider Notification No. 2/2006-C.E. (N.T.), dated 1-3-3006 and its successive notifications where adhesives have been specified by Central Government for MRP based valuation (Entry at Sr. No. 43). 15. Chapter Heading 3506 reads as under : "Prepared Glues and other prepared adhesives, not elsewhere specified or included; products suitable for use as glues or adhesives, put up for retail sale as glues or adhesives, not exceeding a net weight of 1 kg." 16. It comes out that stress is on retail....
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....e of being used in house, but no evidence has been placed on record, therefore, looking to the nature of the product, it is clear that Tem Adhesive 'C' is consumed by Institutional Consumers, and the provisions of Section 4A are not applicable in unit containers of 5 kgs & 25 kgs. Accordingly I hold." 20. Regarding observation that adhesives are not directly purchased is not applicable as direct sale or sale through distributors are similar. Depots are also extension of factory gate sale. Accordingly prima facie it comes out that use of adhesive other than packages of one litre is only for industrial use and mostly procured directly from suppliers or depots or distributors. Relating to limitation factor, findings are also not acceptable. Adjudicating authority has clearly brought out that returns were not showing capacity-wise containers and only bulk-wise description was given. In this regard, Commissioner's finding on limitation in Para 30.08 are reproduced below : "The noticee further defended that in their case the extended period is not invokable and demand is time-barred. In their defense, the notice submitted that they have submitted I that all the statutory returns ....
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....aiver of pre-deposit is to be granted. Or Whether based on the findings of Member (Technical), Section 4A under MRP is to be restricted to adhesives only packed in one litre and assessment under Section 4 is to be done in respect of other containers containing adhesives of 5 litres and above and used for industrial use and service industry. Consequently pre-deposit of 50% of duty is to be ordered. (Pronounced) Sd/- (Manmohan Singh) Member (Technical)) Sd/- (Archana Wadhwa) Member (Judicial) 24. [Per : Ashok Jindal, Member (J)]. - Due to difference of opinion between the Members of the referral Bench following issue is placed before me for consideration: "Whether in view of the findings of learned Member (Judicial) that provision of Rule 4A (MRP) are rightly applicable to adhesive falling under Chapter 3506 and of all sizes viz. 5 litres, 10 litres, 20 litres and 25 litres etc. and thus full waiver of pre-deposit is to be granted?" OR "Whether based on the findings of Member (Technical), Section 4A under MRP is to be restricted to adhesives only packed in one litre and assessment under section 4 is to be done in respect of other industrial use and ....
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....f Rule 2A of Packaged Commodities Rules, 1977 and relied on the statement that the impugned goods are ultimately sold to the industrial consumer, therefore, exemption is applicable and MRP is not required to be affixed. Accordingly, the applicant is not having a case of limitation as they have suppressed these facts and also their pricing pattern. 28. Heard both sides and considered the issue in detail. 29. In this case, the classification is not disputed as the goods have been classified under Central Excise Tariff heading No. 3506 91 90. The said Chapter is notified to affix MRP. Therefore, it is to be seen that whether the applicant is entitled for exemption as per Rule 2A of the Weights & Measures (PC) Rules, 1977 or not. In this case learned Technical Member has relied upon the statement of Shri O.P. Agarwal, Vice-President, Plant dated 28-8-2011 wherein there is an admission on this point that basic and only use of the product tem adhesive is for retreading of tyre. The noticee in their statement submitted that tem adhesives are capable of being used in house but no evidence has been placed on record. Therefore, looking into the nature of the product, it is clear ....