Cement cleared in 50kg bags with declared retail price qualifies for exemption under notification 4/2007-CE

CESTAT Hyderabad allowed the assessee's appeal regarding cement clearance exemption benefits. The tribunal held that cement cleared in 50kg bags with declared retail sale price qualified for exemption under notification 4/2007-CE, following SC precedent in Sagar Cements Ltd case. The demand was also time-barred as revenue failed to establish fraud or willful misstatement within the limitation period. The tribunal set aside the impugned order, ruling in favor of the assessee on both merits and limitation grounds.

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Issues Involved:

1. Applicability of Exemption Notification No. 4/2007-CE.
2. Invocation of extended period of limitation under Section 11A of the Central Excise Act, 1944.
3. Imposition of interest and penalties under Rule 25(1) of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944.

Summary:

1. Applicability of Exemption Notification No. 4/2007-CE:

The Assessee claimed the benefit of exemption Notification No. 4/2007-CE (S.No.1A) for cement cleared in 50 kg bags at a retail sale price not exceeding Rs. 190 per bag. The dispute centered on whether the Assessee's goods were covered by the third proviso to S.No.2 of the explanation to the exemption notification, which states that if the retail sale price is not required to be declared and thus not declared, the goods shall be treated as cleared in other than packaged form and charged accordingly. The Tribunal found that even if the retail sale price was not required to be declared, it was declared by the Assessee, thus the third proviso did not apply. The Assessee's case was found to be similar to Sagar Cements Ltd, where the benefit of exemption at S.No.1A was extended.

2. Invocation of extended period of limitation under Section 11A of the Central Excise Act, 1944:

The Tribunal held that there was no evidence of fraud, collusion, wilful misstatement, or suppression of facts by the Assessee. The Assessee had filed ER-1 returns and responded to audit observations. Therefore, the invocation of the extended period of limitation for issuing the show-cause notice was not justified. The demand was found to be time-barred.

3. Imposition of interest and penalties under Rule 25(1) of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944:

Since the demand was not sustainable on merits and was also time-barred, the Tribunal concluded that the question of interest and imposition of penalties on the Assessee did not arise. The impugned order was set aside, and the appeal filed by the Assessee was allowed, while the appeal filed by Revenue was dismissed.

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