Cement MRP-packaged captive clearances can qualify for concessional duty where the notified description remains satisfied.

Cement bags affixed with MRP but diverted for captive use were treated as covered by the concessional rate in Sl. No. 1A of Notification No. 4/2007-CE because the goods remained in packaged form and within the notified description, so captive consumption alone did not defeat the exemption. For the same reason, tariff rate was not warranted on self-use clearances, and the classification under Sl. No. 1C was sustained on the facts. The Tribunal therefore accepted the assessee's claim on the applicability of Sl. No. 1A while rejecting the departmental challenge to the adoption of Sl. No. 1C.

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Issues: (i) Whether cement bags affixed with MRP but diverted for captive use were entitled to the benefit of Sl. No. 1A of Notification No. 4/2007-CE dated 01.03.2007; (ii) whether such captive clearances were liable to duty at tariff rate or under Sl. No. 1C of the notification.

Issue (i): Whether cement bags affixed with MRP but diverted for captive use were entitled to the benefit of Sl. No. 1A of Notification No. 4/2007-CE dated 01.03.2007.

Analysis: Sl. No. 1A granted a concessional rate for cement cleared in packaged form with MRP, while Sl. No. 1C covered cement other than retail sale. The goods in question were marked with MRP but were not sold in retail and were instead used within the factory. The Tribunal followed the earlier view that the benefit of the notification could not be denied merely because the goods were used captively, where the goods remained in packaged form and the applicable notification governed the rate of duty on clearance.

Conclusion: The benefit of Sl. No. 1A was held allowable for cement captively consumed.

Issue (ii): Whether such captive clearances were liable to duty at tariff rate or under Sl. No. 1C of the notification.

Analysis: The Tribunal distinguished the earlier decision dealing with tariff rate vis-a -vis Sl. No. 1C and followed the view that tariff rate was not justified for self-use clearances of cement bags. For the departmental appeal, the lower authority had already applied Sl. No. 1C, and the Tribunal found no reason to interfere with that determination on the facts before it.

Conclusion: Duty was not payable at tariff rate, and the order applying Sl. No. 1C was sustained.

Final Conclusion: The assessee succeeded on the applicability of Sl. No. 1A for captive-consumed cement bags, while the departmental challenge to the adoption of Sl. No. 1C failed. The common order thus resulted in relief to the assessee on the substantive classification issue.

Ratio Decidendi: A notification prescribing duty rates for goods cleared in packaged form with MRP can extend to captive consumption where the goods remain within the notified description, and tariff rate cannot be imposed merely because the goods are used within the manufacturer's own factory.

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