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2016 (10) TMI 906 - CESTAT HYDERABAD

2016 (10) TMI 906 - CESTAT HYDERABAD - TMI - Valuation - Superfine Spray Plaster - Retail Sale Price in terms of Section 4A or transaction value in terms of Section 4 of the CEA, 1944 - supply of Superfine Spray Plaster in bulk from NCC-Maytas for their consumption in construction - Held that: - decision in the case of CCE, Bangalore Vs. Mysore Cements Ltd. [2010 (8) TMI 246 - KARNATAKA HIGH COURT] relied upon where it was held that construction activity has been considered as a service industry .....

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on value - appeal allowed - decided in favor of appellant. - E/188/2007, E/83/2008; E/740/2008 - A/30742-30744/2016 - Dated:- 18-8-2016 - Ms. Sulekha Beevi, Member(Judicial) and Mr. Madhu Mohan Damodhar, Member(Technical) Shri M.S. Nagaraja, Advocate for the appellant. Shri Arun Kumar, Deputy Commissioner(AR) for the respondent. ORDER Details of the appeals involved are as under:- Appeal No. Order-in-Appeal No. Period Differential duty with interest & Penalty E/ 188/2007 No.5/2006 (H-III)(D) .....

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pellants have been clearing Superfine Spray Plaster packed in 25 kg. PP bags to M/s. NCC Maytas (JV), Pocharam at the rate of ₹ 175/- per bag as per the Purchase Order. The appellants had paid excise duty on the transaction value in terms of Section 4 of the Central Excise Act, 1944(CEA for short) on the goods sold in bulk for captive consumption by the construction industry. The appellants vide letter No.ACPC/3983/2003-04 dt. 30/12/2003 informed the Assistant Commissioner of Central Excis .....

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not on the basis of transaction value in terms of Section 4 of the CEA, 1944. Adjudicating authority vide Order-in-Original No.41/2005 dt. 27/09/2005 accepted the contention that the goods were to be assessed in terms of Section 4; however, the said authority disallowed the deduction of ₹ 10/- per bag as forwarding charges or freight charges and confirmed duty of ₹ 35,923/- along with interest. The Department challenged the above order before Commissioner(Appeals) who passed Order-in .....

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goods having been used in the industry is not sufficient, but the goods should be of the nature of 'raw material' and the subject goods are finished products and not raw material. Lower authorities have thereafter followed the above order of the Commissioner(Appeals) for the subsequent period confirming the demand of differential duty. On appeal, the Commissioner(Appeals) rejected the appeals relying on the earlier Order-in-Appeal dt. 31/10/2006. Hence appeal No.E/83/2008 for the period .....

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clearly recorded that M/s.NCC-Maytas was not selling the goods to anybody but was using it themselves in the construction activity. b. The exemption under Rule 34(1)(a) applies to any package containing a commodity if the markings on the package unambiguously shows that the goods have been specially packed for the exclusive use of any industry as a raw material or for the purpose of servicing any industry. In the instant case, the appellants have sold the Surface Coating Material to M/s. NCC-May .....

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upply for the purpose of servicing the said construction industry. Therefore, supply of Surface Coating Materials to NCC-Maytas for their own consumption in construction industry was exempt under Rule 34(1 )(a) of the Standards of Weights and Measures (Package Commodities) Rules, 1977, from declaration of Retail Sale Price among other declarations as required. Therefore, the appellants were not required to declare the Retail Sale Price on the goods sold to the Construction Industry and were not .....

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uot;pack not meant for retail sale". Hon'ble Apex Court held that that the words servicing any industry would be applicable to such packaging and it would have to be held that Section 4A will not apply. The ratio of this case has been relied on a Humber of decisions like LeGrand India Ltd. Vs Commissioner of Cus [2014(304) ELT 305(Tri-Mum)]. He also placed reliance on Grasim Industries Ltd 2004 (175) ELT 779 (Tri-Del) ] wherein Tribunal upheld the appellant's contention that goods s .....

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ribers retaining their ownership will not get exemption from Rule 34 and should be assessed under 4A and not under Section 4 of the Central Excise Act, 1944. He pointed out that the CBEC Board Circular dated 17.01.2007 was issued clarifying earlier circular dated 28.02.2002 that bulk sale of ice-cream in packages to hotel /catering industry is required to comply with the provisions of SWM(PC) Rules 1977 and accordingly assesee is required to declare retail price on such packages. The Ld AR also .....

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o not call for any interference. 5. Heard both sides and have gone through the records. 6. On appreciating the facts placed before us, we find that the Hon ble Supreme Court in the Jayanthi Food Processing case cited supra has laid down the law in regard to a situation in which goods are supplied for purpose of supplying any industry,etc to be eligible for exemption from affixation of MRP/Section 4A valuation. It is seen that the Apex Court has taken into consideration Circulars dated 28.02.2002 .....

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s with MRP indicated upon them to DOT/MTNL who lent the same to subscribers while retaining their ownership. It is not the case that such instruments were being supplied as raw materials or for the purpose of servicing any industry. The facts of the case in Liberty Shoes (supra) is also placed similarly. In fact the Liberty Shoes judgment draws upon the ratio of Jayanthi Food Processing case to distinguish that such supply of foot wear to institutional buyers by Liberty Shoes would not constitut .....

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ulses containing quantity more than 15 kg. It is true that if the unamended section is to be made applicable, the ice-cream pack of four litres would certainly be covered under Section 2A. However, Rule 3 explains that provisions of Chapter II would apply to packages intended for retail sale and expression package wherever it occurs in the chapter shall be construed accordingly. It is, therefore, clear that the package which was sold by the assessee could not be termed as retail package nor the .....

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to such package which does not require the price to be displayed on the package. What is required to be stated is (a) name and address of the manufacturer (b) identity of commodity and (c) total number of retail packages or net quantity. Shri Ravindra Narain is quite justified inrelying on Rule 2(x) and Rule 2(q). The Tribunal does not refer to these vital Rules. 16. There is one more substantial reason supporting the appellant. Shri Ravinder Narain invited our attention to Rule 34 in Chap .....

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the package which is sold by the assessee mentions that it is specially packed for the exclusive use of the catering industry. Learned Counsel further argues that such package was for the purposes of servicing the hotel industry or catering industry as the case may be. Learned Counsel is undoubtedly right when he seeks to rely on Rule 34 which provides for exemption of the packages which are specially packed for the exclusive use of any industry for the purposes of servicing that industry . Shr .....

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not manufacture the ice-cream and is depended entirely upon the sale of ice-cream to it by the assessee for ultimately catering the commodity in the package, i.e. ice-cream to the ultimate consumer. In our view this can be squarely covered in the term servicing any industry . The word service is a noun of the verb to serve . This Court in Coal Mines Provident Fund Commissioner v. Ramesh Chander Jha [AIR 1990 SC 648] in a different context, observed as under : The word service in Section 2(17)(h) .....

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s would, no doubt, be covered in the term servicing the hotel industry . Even otherwise the word service as per Concise Oxford English Dictionary means : (i) perform routine maintenance or repair work on (a vehicle or machine); (ii) provide a service or services for; It is an act of helpful activity - help, aid or to do something. It also includes supplying of utilities or commodities. In that view we are not prepared to give a narrow interpretation to the term service any industry . We, therefo .....

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any industry were not applicable to such package . We, therefore, accept the arguments of the learned Counsel and reject the contention raised by Shri Subba Rao. If that is so, the appeal would have to be allowed and it would have to be held that Section 4A will not apply to the ice-cream sold by the assessee. 8. It is interesting to note that the issue whether construction industry is a service industry was analysed by the Hon ble High Court of Karnataka in the case of CCE, Bangalore Vs. Mysor .....

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Construction is treated as an industry under the various statutes and it in feet, is one of the biggest industries in any Country, the construction industry is a service industry and therefore, the assessee is entitled to the concessional rate of excise duty and therefore, it set aside the order passed by the adjudicating authority and held that, the assessee is entitled to the benefit of the Notification. Aggrieved by the said order, the revenue is in appeal. 3. The learned counsel for the .....

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