MANU/CS/0273/2022

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL

WEST ZONAL BENCH, AHMEDABAD
Excise Appeal Nos. 10454 of 2014-DB and 10630 of 2014
Decided On: 20.10.2022
Appellants: Ultra Tech Cement Ltd.
Vs.
Respondent: C.C.E. & S.T.-Surat-I
Hon'ble Judges/Coram:
Ramesh Nair, Member (J) and Raju, Member (T)
Counsels:
For Appellant/Petitioner/Plaintiff: Anand Nainawati, Advocate
For Respondents/Defendant: R.P. Parekh, Authorised Representative
Case Category:
INDIRECT TAXES MATTERS
ORDER
Ramesh Nair, Member (J)
1. M/s. Ultratech Cement Ltd. and Revenue both have filed the present appeals against
Order-in-Original No. SUR-EXCUS-001-COM-019-020-13-14 dated 28.11.2013 passed
by the Commissioner of Customs & Central Excise, Surat.
2 . The issue, briefly stated, involved in this case is whether the cement cleared in
packed form i.e. in Bags of 50 kgs. to customers would be eligible for the benefit of
Notification No. 4/2006-C.E. : MANU/EXCT/0008/2006, dated 1-3-2006. The
adjudication authority in respect of clearance to M/s. GSCSCL, educational institutions,
builders & developers, organization and for self consumption has held that the said
clearances being not a retail sale and clearly out of the purview of the Standards of
Weight and Measure (Packaged Commodities) Rules, 1977 and hence eligible for
exemption under Clause 1C of the Notification No. 04/2006 : MANU/EXCT/0008/2006.
However out of total demand of Rs. 63,03,45,624/-, demand of Rs. 3,11,188/-
pertaining to clearance made to individuals only confirmed alongwith interest and
penalty. Ld. Commissioner has observed that sale to individual customers would not be
eligible for benefits of concessional rate of excise duty under Notification No. 04/2006-
CE : MANU/EXCT/0008/2006 dated 01.03.2006 as amended and/or Sr. No. 52 of
Notification No. 12/2012-CE : MANU/EXCT/0023/2012 dated 17.03.2012. Hence these
Appeals are filed by the both.
3 . Shri R P Parekh, Learned Superintendent (Authorized Representative) appearing on
behalf of revenue reiterated the grounds of the Appeals filed by the department and
submits that Sl. No. 1C of Notification No. 04/2006-CE : MANU/EXCT/0008/2006 dated
01.03.2006 prescribes concessional rate of duty in respect of cement cleared other than
in packaged form. The said Notification has been substituted by Notification No.
12/2012 : MANU/EXCT/0023/2012 also provides that where the retail sales price of the
goods is not required to be declared under the Legal Metrology (Packaged Commodities)

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Rules, 2011 and thus not declared, the duty shall be determined as in the case of goods
cleared in other than packaged form. Thus, both the Notification No. i.e. 04/2006-CE :
MANU/EXCT/0008/2006 dated 01.03.2006 and 12/2012-CE : MANU/EXCT/0023/2012
dated 17.03.2012 provide for the circumstances under which retail sales price need not
be declared. The Chapter II of Standards of Weight and Measures (Packaged
Commodities) Rules, 1977 deals with the provisions that are applicable to packages
intended for retail sales. The Rule 2A of said Chapter -II provides that the provisions of
this chapter i.e. chapter II will not apply to certain specified categories of clearances.
On plain reading of provisions of Rule 2A, it is inferred that the exemption from
declaring the retail sales price of the packages under Rule 2A of Chapter II of the
Standards of Weights and Measures (Packaged Commodities) Rules, 1977 is applicable
only when the requirement of said Rule 2A are satisfied i.e. cement has been
sold/cleared in bags of more than 50kgs and that too to industrial/institutional
consumers. Both the clauses (a) and (b) of Rule 2A are required to be read jointly and
not in isolation since both the said clauses are connected by the word "and' and so have
to be read collectively. If the condition/requirement of even one of the said clauses (a)
& (b) is not fulfilled the exemption from declaring the retail sale price would not be
applicable. In view of the above, the position that emerges is that even if cement is
cleared in 50Kg bags to institutional/industrial consumers the exemption from declaring
the retail sale price would not be available and consequently the benefit of concessional
rate of duty in terms of Notification No. 04/2006-CE : MANU/EXCT/0008/2006 dated
01.03.2006 substituted by Notification No. 12/2012-CE : MANU/EXCT/0023/2012 dated
17.03.2012 would not be available. Since, in the instant case the assessee has cleared
cement in 50kg bags to the class of buyers, the exemption from declaring the retail sale
price and consequently benefit of Notification No. 04/2006-CE : MANU/EXCT/0008/2006
dated 01.03.2006 was not available to the assessee. Thus the commissioner has erred
in allowing the benefit of Notification No. 04/2006-CE : MANU/EXCT/0008/2006 dated
01.03.2006 to the assessee and thereby in dropping the demand of Rs. 63,00,34,436/-
alongwith consequential interest and imposition of penalty.
4. Shri. Anand Nainawati, Learned Counsel appearing on behalf of the assessee submits
that impugned order passed by the Ld. Commissioner setting aside the demand of Rs.
63,00,34,436/- is correct in law and is thus liable to be upheld. During the period from
April 2008 to 16.03.2012, serial No. 1A(i) of Notification No. 4/2006-CE :
MANU/EXCT/0008/2006 dated 01.03.2006 as amended from time to time, specified the
rate of duty applicable on cement falling under sub-heading No. 252329 manufactured
in a cement plant other than mini plant and cleared in packaged from if the retail sale
price (MRP) of the cement is not exceeding Rs. 190/- per 50 Kg, bags or Rs. 3800/- per
tones. In case of the MRP of the 50 Kg bag of cement exceeded Rs. 190/- such cement
attracted different rate of duty in terms of Sl. No. 1A(ii) of Notification No. 4/2006-CE :
MANU/EXCT/0008/2006 as amended by Sl. No. 51 of Notification No. 12/2012 :
MANU/EXCT/0023/2012 dated 17.03.2012. In case the cement is cleared in bulk (other
than in packaged form) different rates were stipulated from time to time in respect of
such cement in terms of Sl. No. 1C/Sl. No. 52 of the table annexed to the above
notification. In view of the third proviso to the explanation to Sl. No. 1C of the
Notification No. 4/2006-CE : MANU/EXCT/0008/2006 and Sr. No. 52 of Notification No.
12/2012-CE : MANU/EXCT/0023/2012 the rate of duty for the cement cleared in
packaged form in respect of which there is no statutory requirement to affix MRP, is the
same as the rate of duty for the cement cleared in bulk/other than packaged form. Thus
even if the cement is cleared in packaged form but in respect of such package retail sale
price of the goods is not required to be affixed/declared under the Standards of weights
and Measures (Packaged Commodities) Rules, 1977 (PC Rules, for short) and therefore
not declared, the rate of duty applicable to such cement in packaged form but in respect

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of which there is no statutory requirement to declare MRP, the same is treated as
cement cleared in bulk form for the purpose of determining the rate of duty.
4.1. He further submits that Rule 2A of PC Rules provides that the provisions of Chapter
-II of PC Rules shall not apply to situations mentioned in clause (a) and clause (b) of
the said Rule 2A. The department's appeal incorrectly proceeds on the basis that the
situations mentioned in clause (a) and clause (b) should be cumulatively satisfied in
order to get the exemption from Chapter II of PC Rules. The word "and' appearing at the
end of clause(a) of Rule 2A of PC Rules, is used for the purpose if indicating the
penultimate item in the list of items enumerated. It is not used for the purpose of
reading clause (a) and (b) cumulatively. In two different situations mentioned in clause
(a) and clause (b) the provisions of Chapter II of PC Rules will not be applicable.
Therefore, the contention made by the department is incorrect. He placed reliance on
following judgments.
(i) Grasim Industries Ltd. Vs. CCE, Trichy - MANU/CE/0434/2008 : 2009(238)
ELT 655
(ii) Mysore Cements Ltd. Vs. CCC, Bangalore - 2009-TIOL-1775-CESTAT-BANG
(iii) Chettinad Cement Corporation Ltd. Vs. CCE, Trichy -2009-TIOL-139-
CESTAT- MAD.
4.2. He also submits that the object and purpose of PC Rules is to protect the
consumers who purchase the packaged commodities based on the declaration made on
the packages. In the case of consumers who directly purchase the goods from the
manufactures, after negotiating the price and by specifying the quality, quantity, etc.,
the declaration on packages of such commodities about the commodity and its
maximum retail price are of no relevance. Such consumer do not purchase the goods
solely based on the declaration given on the packages of the commodity. The PC Rules
are not providing for the protection of such consumers. Therefore, the PC Rules do not
contain any provision requiring the manufacturer to declare the details of the
commodity including the MRP to be declared on the packages of such commodity sold to
the said consumer. When Explanation to Rule 2A(b) defines industrial consumers or
institutional consumers it only refers to those consumers who directly purchase the
commodity from the manufacturer for their own consumption. In the present case, the
entire quantity of cement on which the differential duty has been demanded was directly
purchased by the consumers for their consumption. In other words, the consumers in
question had bought the cement from the Respondents, not based on the declaration on
the packages and they also had not sold the said cement to any other consumer who
had to purchase the cement based on the declaration given on the packages of cement.
Therefore, the entire quantity of cement cleared in bags with clear indication that they
are for use of Industrial or institutional consumers and not for retail sale, are excluded
in terms of Rule 2A(b) of PC Rules from the application of other provisions of Chapter II
of PC Rules. Hence, the Respondent have correctly paid duty at the rate specified in Sl.
No. 1C of Notification No. 04/2006-CE : MANU/EXCT/0008/2006 dated 01.03.2006 and
Sr. No. 52 of Notification No. 12/2012-CE : MANU/EXCT/0023/2012 dated 17.03.2012.
4.3. He also submits that Builder, Contractors, government and Industrial Consumers
using the cement for construction purpose, are all covered by the meaning of
institutional consumers. Hence, clearance to them are covered by Sl. No. 1C of
Notification No. 4/2006-CE : MANU/EXCT/0008/2006 dated 01.03.2006 and Sr. No. 52
of Notification No. 12/2012-CE : MANU/EXCT/0023/2012 dated 17.03.2012.

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4.4. He further submits that the cement captively consumed for construction is not
intended for sale. In fact, it is not sold at all. Therefore, even though such cement is
packed in bags, the same having not sold cannot be covered by the provisions of
Chapter II of PC Rules. The department has not disputed the said fact that the cement
packed in bags and used for captive consumption was not sold. Therefore in respect of
the same Chapter II to P.C. Rules is not applicable. Hence the demand of duty, on the
cement packed in bags and used captively, on the ground that it is not covered by Sl.
No. 1C of Notification No. 4/2006 : MANU/EXCT/0008/2006 and Sl No. 52 of
Notification No. 12/2012 : MANU/EXCT/0023/2012 is incorrect and unsustainable. Even
though the quantity of cement captively consumed was packed, the same was not
intended for retail sale. Therefore, there is no requirement to declare MRP on the said
packed cement used within the factory of production. Hence, rate of Rs. 400/- Per MT.
specified against Sl. No. 1C of notification No. 4/2004-CE : MANU/EXCT/0008/2006-
dated 01.03.2006 as amended would be applicable. Accordingly they have correctly paid
the duty on the captive consumption of cement.
4.5. He also submits that issue involved in this matter already settled by the various
judgments. He placed reliance on the following judgments.
(i) ACC Ltd. Vs. CCE -MANU/CC/0197/2017 : 2018(359) ELT 572.
(ii) M/s. Ultratech Cement Ltd. Vs. CCE- 2014-TIOL-1433-CESTAT-MUMBAI.
(iii) Ambuja Cement Ltd. Vs. CCE - MANU/CE/1138/2016 : 2018(360) ELT
121(T)
(iv) Sanghi Industries Ltd. Vs. CCE - MANU/CS/0074/2017 : 2018 (361) ELT
909
(v) M/s. Ultratech cement Ltd. Vs. CCE, Delhi - MANU/CE/0685/2014 :
2015(317) ELT 505 (T)
(vi) Mysore Cements Vs. CCE - MANU/KA/1017/2010 : 2010 (249) ELT 398 (T)
(vii) Paraskti Cement Industries Ltd. Vs. CCE- 2019(2) TMI 1095
(viii) M/s. Jaypee Sikandrabad Cement Vs. CCE - 2019 (3) TMI 44
(viii) M/s. Bharathi Cement Corporation Vs. CCE- Noida - 2019 (3) TMI 44
(ix) Shree Digvijay Cement Corporation Co. Ltd. Vs. CCE, Rajkot -2019(6) TMI
1543
5 . Heard both sides and perused the records. The core issue that comes up for our
consideration in these appeals is whether the clearances of cement made by the
assessee will satisfy the conditions of Entry 1C of Notification No. 4/2006-C.E. :
MANU/EXCT/0008/2006, dated 1-3-2006 to benefit from concessional rate of duty.
5.1. We find that the said entry 1C covers the following goods:
"All goods, whether or not manufactured in a mini cement plant, not covered in
S. No. 1B, other than those cleared in packaged form;"
Discernibly, to benefit from the said exemption, the primary requirement is that the
goods should not be "other than those cleared in packaged form"

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The Third Proviso to the Entry 1C of the notification clarifies which goods should be
considered as "cleared in other than packaged form". The said provision reads as under:
"Provided also that where the retail sale price of the goods are not required to
be declared under the Standards of Weights and Measures (Packaged
Commodities) Rules, 1977, and thus not declared, the duty shall be determined
as is in the case of goods cleared in other than packaged form;"
5.2. We therefore now will require to go to the Rules to ascertain whether the retail
sale price are required to be declared or otherwise on the types of goods cleared by the
appellant. The provisions of Standards of Weights and Measures (Packaged
Commodities) Rules, 1977 (SoW & M Rules) require that retail sale price should be
mentioned on packages intended for retail sale. However, Rule 2A of the Rules clarify
that these requirements shall not apply to-
(a) packages of commodities containing 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 those consumers who buy 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.
5.3. It is seen in the present that the assessee had sold cement in packs of 50 kgs. to
customers/buyers. From a combined reading of the above reproduced provisions of Rule
2A of the Rules, these genre of buyers would fall under the category of Institutional
Consumer or Industrial Consumer, in our opinion. On this score itself, we find that the
provisions applicable to packages intended for retail sale in Chapter II of the said rules,
will not apply to the clearances of cement by the appellant to its Industrial or
Institutional consumers.
6 . Further revenue argued that for exemption from retail sale price it will apply only
where the conditions of both (a) and (b) of Rule 2A ibid are satisfied and that since
packs contain only 50 kgs., and not more than 50 kgs., they would still be considered
as packages intended for retail sale. However, we find that in the case of Heidelberg
Cement (India) Ltd. v CCE Nagpur & Raigad [MANU/CM/0293/2014 : 2015 (315) E.L.T.
53 (Tri.-Mumbai)], the Tribunal has ruled that word "and" between Rule 2A(a) and
2A(b) has to be read disjunctively and not conjunctively. The relevant portion of the
decision is reproduced below for ready reference:
"5.2 From the above, it can be seen that packages of commodities containing a
quantity of more than 25 kg. or 25 litre excluding cement and fertilizers sold in
bags upto 50 kg. and packaged commodity meant the industrial or institutional
consumer are excluded from the provisions of the said Rules. In other words,
the Rules exclude two categories - the first category is packaged commodity

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 containing a quantity of more than 25 kg. or 25 litre and cement and fertilizer
bags containing more than 50 kg. The second category is packaged commodity
meant for industrial or institutional consumer. As regards the second category
there is no restriction with respect to the quantity of the goods contained in the
package. There is a "semi colon' between the two clauses. This would clearly
indicate that the word "and' between the two clauses have to be read
disjunctively and not conjunctively. In other words, in respect of both the
above categories, the provisions of PC Rules would not apply."
7 . In respect of the clearances it will necessarily have to be held as packages not
intended for retail sale and to which the provisions of Chapter II of the Rules shall not
apply. In view of Rule 2A thereof, duty demands in respect of these clearances will
therefore not sustain. Further we also find that the issue is no longer res integra. It has
been held in the following cases that cement cleared in packaged form (50 kg. bags) to
charitable organizations, builders/developers/ready mix concrete (RMC) manufacturers,
contractors and construction firms, infrastructural development projects, educational
institutions, societies and hospitals, government bodies, captive consumption,
manufacturers of finished goods will qualify as sale to industrial/institutional
customers:
• Sanghi Industries Ltd. v. CCE, 2017-VIL-462-CESTAT-AHM-CE
• Ambuja Cement Ltd. v. CCE [2017-TIOL-189-CESTAT-DEL]
• Prism Cement Ltd. v. CCE & CCE v. M/s. Prism Cement,2016-VIL-776-
CESTAT-DEL-CE
• Heidelberg Cement (India) Ltd. v. CCE, [MANU/CM/0293/2014 : 2015 (315)
E.L.T. 53 (Tri.-Mum)]
• Ultratech Cement Ltd. v. CCE, [MANU/CE/0685/2014 : 2015 (317) E.L.T. 505
(Tri.-Del)]
• CCE v. Mysore Cements Ltd., [MANU/KA/1017/2010 : 2010 (259) E.L.T. 30
(Kar.)]
• Mysore Cements Ltd. v. CCE, [MANU/KA/1017/2010 : 2010 (249) E.L.T. 398
(Tri. Bang.)]
• Grasim Industries Ltd. (Unit-I) v. CCE, [2009 (238) E.L.T. 655 (Tri. -
Chennai)]
• Shree Cement Ltd. v. CCE, 2016-VIL-1020-CESTAT- DEL-CE
• Chettinad Cement Corp. Ltd. v. CCE, [MANU/CC/0278/2015 : 2015 (329)
E.L.T. 845 (Tri. -Chennai)]
• Grasim Industries Ltd. v. CCE, [2004 (175) E.L.T. 779 (Tri. -Del.)]
8. In respect of demand of duty for the "self-consumption" quantity of cement, we find
that the said clearances cannot be considered as "retail sales". They would also not fall
within the ambit of definition of "retail sale" and Rule 3(q) of the SoW & M Rules, which
defines "Retail Sale Price" as follows:
"retail sale", in relation to a commodity, means the sale, distribution or delivery

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 of such commodity through retail sales agencies or other instrumentalities for
consumption by an individual or a group of individuals or any other consumer
8.1. In this view, we are unable to accept the argument of the revenue that these types
of clearances fall foul of the Notification No. 4/2006-C.E. : MANU/EXCT/0008/2006
These clearances, in our considered view, cannot be considered as retail sales and
hence benefit of the said notification cannot be denied to them.
9. As regard the assessees Appeal Bearing No. E/10454/2014 against the confirmation
of demand of Rs. 3,11,188/-. We find that the said demand was confirmed in respect of
the clearance of the Cement in 50 Kgs bags to individual consumers. The submission of
the appellant is that since the said clearance is made directly by the appellant to the
individual consumers, there is no intermediary involved such as distributor/dealer etc.
and the goods were not sold through a Retail Sale Shop Agency or any other
instrumentality, therefore, such clearances is not covered under retail sale, accordingly,
there is no need of a fixing retail sale price on the packages in terms of the legal
metrology (Packaged Commodities) Rules, 2011. We find that the adjudicating authority
while confirming the demand of Rs. 3,11,188/- given the following findings:-
"15.16 Further, the assessee in their defence reply submitted a copy of 010 63
to 68/BVR/Commissioner/2008 dated 31.12.2008 passed by the Commissioner
of Central Excise, Bhavnagar in case of M/S Ultratech Cement limited Gujarat
Cement Works. Amreli Gujarat on the same issue wherein the demand against
clearances made to only individual customers are confirmed. An inquiry
regarding the status of the said OIO is made with Central Excise Bhavnagar
Commissionerate, Gujarat and the Additional Commissioner, Central Excise
Bhavnagar informed vide their office letter No. V/2-1/Misc/RRA/2013-14 dated
23.10.2013 that no appeal against the said order has been filed. This case
being based on the same issue of the same notice, hence the same is relied
upon in this case also.
15.17 Further on the basis of information submitted by the assessee vide their
letter dated 31.07.2013 and the report submitted by the JAC.C. Ex. Div-IV,
Surat-I vide its letter F No IV/Misc-Adjudication/2012-13 dtd 27.11.2013, I find
that only 2037 M T. of clearances made to individuals are not entitled for
exemption under Notification No. 04/2006 : MANU/EXCT/0008/2006 ibid and
hence out of total demand of Rs. 63,03,45,624, demand of Rs. 3,11,188/-
pertaining to clearances made to individuals only is sustainable. I find that
these clearances have been effected during the period from June-2012 to March
2013 only. Further the assessee have paid Rs. 3,11,188/- against short
payment and Rs. 30,218/- towards applicable interest on it, therefore the same
is liable for appropriation against the confirmed demand as mentioned above."
9.1. From the above finding, we observed that it is appellant's own submission that in
Order-In-Original No. 63 to 68/BVR/Commissioner/2008 dated 31.12.2008. The
demands in respect of clearances made to only individual customers were confirmed
against which no appeal was filed. Moreover, in all the judgments up to Supreme Court
on the issue in hand it has been decided that the assessee is eligible for exemption
Notification No. 4/2006-C.E : MANU/EXCT/0008/2006 in respect of clearances made to
institutional consumer or industrial consumers, however, in none of the case any benefit
was extended to assessee in respect of the clearances made to the individual customers,
therefore, merely because the goods were sold by the appellant directly to the
individual customer. In our considered view would not be eligible for exemption

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Notification No. 4/2006-C.E. : MANU/EXCT/0008/2006 Accordingly, we uphold the
demand of Rs. 3,11,188/-
9.2. As regard, the corresponding penalty of equal amount of Rs. 3,11,188/- imposed
under Rule 25. The appellant have vehemently submitted that this is not a case of
malafide on the part of the appellant. It was their submission that the clearances were
made on payment of duty availing exemption Notification No. 4/2006-C.E. :
MANU/EXCT/0008/2006 We find that this is not a case of clandestine removal or even
the malafide intention cannot be attributed to the appellant. As the appeal have cleared
the goods on payment of concessional rate of duty by availing notification, the appellant
had a bonafide belief that they are eligible for Notification No. 4/2006-C.E. :
MANU/EXCT/0008/2006 Needless to say that the interpretation of Notification No.
4/2006-C.E : MANU/EXCT/0008/2006 has travelled through various forum and finally
the issue was settled by the Hon'ble Supreme Court in number of judgments, therefore,
in the nature of this case it cannot be said that the appellant had any malafide intention
in short payment of excise duty. Moreover, the appellant paid the duty of Rs. 3,11,188/-
along with interest thereon of Rs. 30,218/-. For this reason also the penalty under Rule
25 of Central Excise Rules, 2002 is not impossible, accordingly, the penalty is set aside.
1 0 . As a result, revenue's appeal bearing No. E/10630/2014 is dismissed and
assessee's appeal's bearing No. E/10454/2014 is partly allowed in the above terms.
(Pronounced in the open court on 20.10.2022.)
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