2018 (9) TMI 1711 - AT - Central Excise

Tribunal rules captively used cement bags qualify for duty concession under Notification No.4/2007-CE

M/s. MADRAS CEMENTS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, TRICHY

The Tribunal ruled in favor of the assessee, holding that cement bags diverted for captive use are entitled to the benefits of Sl.No.1A under Notification ... Benefit of N/N. 4/2007-CE, dated 01.03.2007 Sl.No.1A - Clearance of Cement bags marked with MRP for captive Consumption - Department was of the view that such cement already affixed with MRP, but not cleared for retail sale but for captive consumption will not be entitled to the benefits of the Notification Held that:- The assessee has diverted some of the cement bags already affixed with MRP for captive use but divergent views are expressed in respect of the rate of duty applicable for such captive consumption. The two contending Sl.Nos. of the notification are 1A and 1C. Sl.No.1A in fact, provides the concessional rates of duty for clearance of cement marked with MRP. Sl.No.1C prescribes a higher rate of duty for cement other than retail sales. In the present case, the cement bags marked with MRP have not been sold in retail. The identical issue has been considered by the Single Member Bench of the Tribunal in the case of M/s. Ultra Tech Ltd. [2017 (12) TMI 1299 - CESTAT MUMBAI], where it was held that On a perusal of the exemption notification the benefit of which was availed by the appellant, it would appear that the disputed rate of duty applies to goods other than those cleared in ‘packaged form’. The goods cleared in ‘packaged form’ are covered by sl. no. 1A of the said notification and benefit allowed. The benefit of Sl.No.1A of the Notification will be allowable for cement captively consumed - appeal allowed - decided in favor of appellant. Issues Involved:Interpretation of Notification No.4/2007-CE regarding Central Excise Duty rates for cement; Whether captively consumed cement bags are liable for payment of duty under Sl.No.1C or at tariff rates.Analysis:Issue 1: Interpretation of Notification No.4/2007-CEThe appeals involved a dispute regarding the applicability of Notification No.4/2007-CE for cement cleared for captive consumption. The key contention was whether cement bags already affixed with MRP but diverted for captive use would be entitled to the benefits of Sl.No.1A or Sl.No.1C of the notification. The Tribunal considered conflicting decisions in similar cases, notably the M/s. Ultra Tech Cement Ltd. and M/s. ACC Ltd. cases. The Tribunal analyzed the provisions of Sl.No.1A and Sl.No.1C, which prescribe different rates of duty for cement clearance, particularly focusing on the distinction between retail sales and captive consumption.Issue 2: Liability for Captively Consumed Cement BagsThe dispute in one of the appeals was specifically related to whether captively consumed cement bags should be liable for duty under Sl.No.1C of the notification or at tariff rates. The lower authority had ordered duty payment under Sl.No.1C, prompting the department to appeal, arguing for duty payment at tariff rates. The Tribunal examined the nature of captive consumption and the appropriate duty liability, considering the provisions of the notification and the implications of different rates under Sl.No.1C.Judgment:After hearing arguments from both sides and reviewing the records, the Tribunal referenced previous decisions to determine the correct interpretation of Notification No.4/2007-CE. The Tribunal concluded that the benefit of Sl.No.1A should be extended for cement bags diverted for captive use, aligning with the decision in the M/s. Ultra Tech Cement Ltd. case. Consequently, the Tribunal allowed the appeals filed by the assessee and rejected the department's appeal, affirming that the benefit of Sl.No.1A would be applicable for cement captively consumed, leading to the duty payment as per the concessional rates specified in the notification.