TMI Blog2022 (5) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... to the industrial consumers. The department had no objection in case of very same goods cleared directly to the industrial consumers. Thus, there is an ambiguity in the treatment of the impugned goods by the department. It is the very same goods that are sold directly to the industrial consumers and also through channel partners. It is found that such a treatment by the department defies logic as the nature of the goods is not changed just by the way they are sold. The characteristics, the usage and the users are not changed. Invocation of longer period - HELD THAT:- The appellant s contentions are acceptable and the department has not made out any case for invocation of extended period. The impugned goods, in packages having weight more than 25 kg are not chargeable to duty under Section 4A, only for the reason that they are sold through channel partners; differential duty demanded on this count is set aside - All other demands, if any, within normal period are confirmed - Penalty is set aside. - Central Excise Appeal No. 22536 of 2014 [DB] - Final Order No. 20211/2022 - Dated:- 28-4-2022 - SHRI P.ANJANI KUMAR TECHNICAL MEMBER AND SHRI P. DINESHA, JUDICIAL MEMBER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued two Show Cause Notice dated 15.07.2013 and 01.05.2013 proposing, proposing to demand differential duty amounting to Rs. 1,28,81,098 and Rs 3,84,50,665, respectively for the period April 2011 to March 2012 and April 2012 to March 2013. The Learned Commissioner of Central Excise, LTU, Bangalore vide common Order-in-Original dated 28.01.2014. Hence, this Appeal No. E/22536/ 2014 3. Shri Learned Senior counsel for the appellants submits that the following are undisputed facts in the instant case. The impugned goods such as ACB, Contactors, and Relays etc are meant for industrial consumers only cleared either directly or through channel partners. There is no dispute on the clearances of goods directly to industrial consumers; dispute is only in relation to goods cleared to industrial consumers through channel partners; Appellants have discharged the duty on goods, weighing less than 25 kg, cleared to industrial consumers through channel partners on their own or on being pointed out by audit. The Appellants are not paying excise duty on MRP in respect of goods weighing more than 25 kg. Impugned Order has confirmed the differential duty demand by adopting MRP bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned senior counsel submits that affixation of MRP is not required even where the manufacturer sells his packaged goods to an industrial and institutional consumer through dealers; impugned goods manufactured by them are components used in an electrical switchboard and cannot be used as a standalone product; the products are not used by consumers / common individuals; it is evident from the technical write-up and the product catalogue; he relies on EWAC alloys Ltd 2010 (275) ELT 193 (Kar) (single member) and order dated 24.01.2020 in Writ Appeal No. 1770/2012 (Division Bench). 6. Learned senior counsel submits that from of the jurisdictional High Court the following are evident. The standard weights and measurements Act are framed having the ultimate consumer in mind; The word consumer has been defined in the Consumer protection Act, 1986 and does not include a person who obtains such goods for resale for any commercial purpose and therefore it should be a person who purchases goods for his personal use; The definition of Retail packages refer to packaging which are intended for sale to the ultimate consumer and clause specifically indicate that the word cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmodities) (Amendment) Rules, 2015 as per which (bb) industrial consumer means the consumer who buys packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that industry and the package shall have declaration not for retail sale ; it is pertinent to note that the Legal Metrology (Packaged Commodities) (Amendment) Rules, 2015 has brought about several amendments, however the amendment to Rule 2(bb) alone is by way of substitution and from any particular date. In other words it dates back to 2013; consumers who procure goods from the importer and wholesale dealer for use in their industry are brought at par with consumers who procure goods directly from the manufacturer so long as the package has a declaration not for retail sale . Learned senior counsel submits that where an amendment is brought about by way of substitution, it has retrospective effect and the same has to be read and construed as if altered words had been written into Act or Rules from their inception. Reliance in this regard is placed on the following decisions: (i) Government of India vs. Indian Tobacco Association - 2005 (187) E.L.T. 162 (S.C.) (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the similar facts and issue is in dispute; as held in Nizam Sugar Factory vs. CCE, A.P. 2008 (9) S.T.R. 314 (S.C.), extended period cannot be invoked in the subsequent Notice. Learned senior counsel submits that in the instant case, there cannot be any fraud or suppression with intention to evade payment of duty to attract Section 11AC of the Act, and hence, the imposition of penalty is not sustainable. 11. Learned Authorised Representative for the department reiterates the findings of OIO 12. Brief issue involved in the case is to see Air Circuit Breakers, MCCB and Switch Fuse unit classifiable under Chapter Heading 8536 2010, 8536 2020 and 8536 5090 meant for industrial consumers and weighing more than 25 kgs. are to be valued according to the transaction value under Section 4 of the Central Excise Act, 1944 or the MRP Value under Section 4A of the Central Excise Act, 1944. The appellants claim that their product are meant for industrial consumers and are not at all meant for individual consumers; in terms of Legal Metrology Rules, packages having more than 25 kg are not required to be declared with MRP; the appellant submits that the department has no objection when impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicability of the Chapter - The provisions of this chapter shall not apply to- (a) Packages of commodities contained 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 the institutional consumer like transportation, airways, railways, hotels, hospitalsor any other service institutions who buy packaged commodities directly by the manufacturer for use by that institution. (b) Industrial Consumer- Means the industrial consumers who buy packaged commodities directly from the manufacturer for use by that industry. 14. We find that crux of the appellant s argument is that the impugned goods are meant for industrial consumers only and a clear mention of the same is made on the packages; it is not the case of the department that the impugned goods are sold to consumers and are used by individual consumers; the very nature of the goods and the use as seen from the Technical Literature, would indicate that the goods cannot be used by individual consumers; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluation did not depend upon the factor whether it was a wholesale or sale in bulk or a retail sale. The whole section covered the goods which were packaged and sold as such with the rider that such package had to have a retail price thereupon under the provisions of SWM Act, Rules made thereunder or under any other law. Thus, viewed from the plain language of the Section, where the goods are excisable goods and are packaged and further such packages are required to mention the price thereof under the SWM Act, Rules made thereunder or under any other law and further such goods are specified by the Central Government by notification in the Official Gazette, then the valuation of such goods would be on the basis of the retail sale price of such goods and only to such goods the provisions of sub-section (2) shall apply whereby it is provided that the value of such goods would be deemed to be the such retail price declared on the packages. Of course, the assessee shall be entitled to have a reduction of abatement as declared by the Central Government by the notification in the Official Gazette. Even at the cost of repetition the following would be factors to include the goods in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the goods are not for use by any individual consumer. They rely on the judgment of Karnataka High Court in the case of Ewac Alloys (supra) and submit that it is not the nature of sale that affects the nature of the product. The product is only for industrial use and a declaration to the same is also made on the packages whether it is less than 25 kg or more than 25 kg and whether they are sold directly to the industrial consumers or through channel partners. We find that Hon ble High Court of Karnataka held as follows: 7. The learned single Judge has framed the following point for consideration: Whether the requirement of Rule 6 is to be complied with by a manufacturer who sells his packaged goods to an industrial consumer through a stockiest? 8. The learned single Judge was pleased to observe that the word consumer is not defined under the Act or the Rules and considered the word consumer from the dictionary. As per the Black s Law Dictionary, Eighth Edition, the word consumer is defined as a person who buys the goods or services for personal, family or household use, with no intention of resale, a natural person who uses products for personal rather than bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of amendment into the Rules, Rule 2(p) was also substituted introducing the very same words industrial consumer and institutional consumer in the proviso. Thus, it amounts to re-writing the Rules by the Court which is not permitted in law. The difference between the definition of institutional consumer and industrial consumer in Rule 2-A and Rule 2(p) appears to be thus. 13. In rule 2-A, industrial consumer or the institutional consumer are purchasing the packaged commodities directly from the manufacturer. In the case of retail package, the manufacturer of goods meant for industrial use may not be able to supply the goods directly. Therefore, they may take the assistance of a stockiest. If the customers are spread over the country and if the manufacturing unit is in one part of the country and they want to concentrate on manufacturing activity, they may not have resource or ability to arrange for the sale of their product throughout the country. In these circumstances, it is quite but natural that they need middle men or stockiest as distributors, through whom they would distribute their product or sell their products to an industrial or institutional user. In such an even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an ambiguity in the treatment of the impugned goods by the department. It is the very same goods that are sold directly to the industrial consumers and also through channel partners. We find that such a treatment by the department defies logic as the nature of the goods is not changed just by the way they are sold. The characteristics, the usage and the users are not changed. We find that Hon ble High Court of Karnataka has dealt with this issue in an elaborate manner and have concluded, as discussed above, that routing of the goods through dealers or intermediaries would not change the nature of the goods as long as they are not put to use by individual consumers. Going by the Technical Literature and the submissions of the appellant, we find that the goods are for industrial use only. Department has not shown any contrary evidence to show that the goods are used by individual consumers. Under the circumstances, we find that the ratio of the judgment of Hon ble High Court of Karnataka in the case of Ewac Alloys (supra) is squarely applicable. Moreover, the appellants have contended that the amendment carried out in 2015, to include the sales through dealers also, was by way of su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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