Concessional excise duty on packaged cement sold to industrial consumers survives; penalty fails absent mala fide conduct.

Packaged cement sold in 50 kg bags directly to industrial or institutional consumers, and cement used for self-consumption, is treated as outside the retail-sale regime where retail sale price need not be declared under the Packaged Commodities Rules, allowing concessional duty under Notifications No. 4/2006-C.E. and 12/2012-C.E.; clearances to individual consumers remain retail sales and do not qualify. The note further indicates that duty on the individual-consumer segment is maintainable, but penalty under Rule 25 is not justified where duty and interest were paid and there was no clandestine removal or mala fide conduct.

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Issues: (i) Whether cement cleared in 50 kg bags to industrial or institutional consumers and for self-consumption was entitled to concessional duty under Notification No. 4/2006-C.E. and Notification No. 12/2012-C.E. (ii) Whether the demand sustained only in respect of clearances to individual consumers and the corresponding penalty under Rule 25 of the Central Excise Rules, 2002 were sustainable.

Issue (i): Whether cement cleared in 50 kg bags to industrial or institutional consumers and for self-consumption was entitled to concessional duty under Notification No. 4/2006-C.E. and Notification No. 12/2012-C.E.

Analysis: Entry 1C of Notification No. 4/2006-C.E. covers goods other than those cleared in packaged form, but the third proviso treats packaged goods as if cleared in other than packaged form where retail sale price is not required to be declared under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and is not declared. Rule 2A excludes from Chapter II packages meant for industrial consumers or institutional consumers, and the exclusion is not confined to a cumulative satisfaction of both clauses. The phrase between the clauses is to be read disjunctively, so cement sold directly to such consumers in 50 kg bags is outside the retail-sale regime. Clearances for self-consumption also do not answer the description of retail sales.

Conclusion: The concessional duty benefit was rightly available for clearances to industrial consumers, institutional consumers, and for self-consumption.

Issue (ii): Whether the demand sustained only in respect of clearances to individual consumers and the corresponding penalty under Rule 25 of the Central Excise Rules, 2002 were sustainable.

Analysis: Clearances made to individual consumers were treated as retail sales and were not covered by the exemption framework. The duty demand limited to that segment was therefore maintainable. However, the record showed payment of duty with interest and no clandestine removal or mala fide conduct. In such a setting, penalty under Rule 25 was not warranted.

Conclusion: The duty demand on clearances to individual consumers was sustained, but the penalty was set aside.

Final Conclusion: The departmental appeal failed, the assessee succeeded on the principal exemption issue, and relief was granted by sustaining only the limited duty demand while deleting the penalty.

Ratio Decidendi: Where packaged cement is sold directly to industrial or institutional consumers, or used for self-consumption, and the applicable packaged-commodities rules do not require declaration of retail sale price, such clearances are to be treated as outside the retail-sale regime for excise exemption purposes; penalty is not justified absent mala fide conduct.

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