|
2023-TIOL-21-SC-CX
CCE & ST Vs A R Polymers Pvt Ltd
CX - Valuation - Section 4/4A of the CEA, 1944 - Manufacture and Sale of footwear to defense/paramilitary forces in bulk for their use - Appeal filed by Department against order of CESTAT allowing the respondent assessees appeal - Brief facts are that it was found that the respondent was manufacturing the footwear as per a contract entered into between the parties, and a rate for the sale and purchase of the footwear was fixed under the contract; that the respondent was printing and attaching MRP stickers on the insole of the said shoes only to avail the benefits of the notification 12/2012-CX dated 17.03.2012 and Section 4A of the Act - As per the notification, footwear under Rs. 500/- is wholly exempted and Central Excise Duty is limited to 6% where the rate of the footwear is between Rs. 501/- to Rs. 1000/- - DGCEI was of the view that the goods are to be valued u/s 4 of the CEA, 1944 and, therefore, demand notice was issued demanding differential central excise duty - CESTAT overturned the judgment of the adjudicating authority confirming the demand and held that the benefit of the abovementioned notification extends to the Respondent, therefore, the present appeal by Revenue.
Held: Primary question is whether the goods sold by the respondent are eligible to claim tax benefits within the purview of the abovementioned notification under Section 4A of the Central Excise Act - Supreme Court in the case of Jayanti Food Processing Pvt. Ltd. = 2007-TIOL-150-SC-CX while deciding on a similar issue, held that for goods to be included under the assessment of Section 4A of the Central excise Act, it must comply with five factors - Purchasers in this case are military and paramilitary institutions, both of whom purchase the goods in bulk from the respondent, and then further distribute it to their employees - Rule 3(b) of the Legal Metrology (Packaged Commodities) Rules, 2011 exempts the sale to institutional consumers from its purview - Since Section 4A of the Act mandates the applicability of the abovesaid rules, the transaction automatically becomes ineligible to claim refuge under Section 4A of the Act - For the sale of goods to take refuge under Section 4A of the Act and pass the test of point (iii) in the Jayanti Judgment, there must be a requirement in the Legal Metrology Act, 2009 or the rules made thereunder to declare the price of such goods relating to their retail price on the package - It would also mean that a mere affixation of the MRP on goods does not qualify it to claim benefits under Section 4A of the Act, and that there must be a "requirement" for the affixation of such MRP - Purchaser institutions are intermediaries, who after the purchase of the said goods, distribute it further to the final consumer - Where the purchaser institution is deemed to not be a consumer, the sale also cannot be held to be a retail sale as per the Act - Since the impugned sale is not a retail sale as per the Act, there exists no mandate of law on the Respondent herein to affix an MRP on the goods sold, and hence the said impugned transaction cannot claim benefit under Section 4A of the Act - Tribunal, in its reasoning for passing the impugned judgment, only considered whether the goods in question were notified by way of a gazette, and did not consider the other four relevant conditions laid down by the Jayanti Foods judgment - Tribunal has committed a grave error in law and hence the impugned judgment is liable to be set aside - Respondent is directed to pay the differential amount to the relevant tax authority - Appeals are allowed: Supreme Court [para 5, 6, 9, 12, 13, 15, 16, 18, 19, 20]
- Appeals allowed: SUPREME COURT OF INDIA |
|
