Manufacturer wins duty exemption claim for galvanized sheets under Notification No. 67/95

The Tribunal allowed the appellant, a manufacturer of galvanized corrugated sheets, to claim the benefit of exemption under Notification No. 67/95 and held that they were not required to pay duty on the intermediate product at the stage of galvanization. The appellant's appeal against the duty demand on the intermediate product was allowed, setting aside the previous decision requiring duty payment on the intermediate product.

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Issues:
- Appeal against duty demand on intermediate product
- Entitlement to exemption under Notification No. 2/2001
- Requirement to pay duty on intermediate product

Analysis:
The appellant, a manufacturer of galvanized corrugated sheets, appealed against the demand for duty on the intermediate product. The appellant procured HR coils, converted them into CR coils, and then underwent the process of galvanization and corrugation before clearing the final product on payment of duty. The issue arose when the appellant availed the benefit of Notification No. 2/2001 for clearances to Kutch area in Gujarat, which entitled them to exemption from duty. Initially, a show cause notice was issued to deny this benefit and demand duty on the intermediate product, i.e., galvanized sheets, as the final product was exempt from duty.

The adjudicating authority allowed the benefit of the notification but required the appellant to pay duty on the intermediate product. The Commissioner (Appeals) upheld this decision. The appellant argued that since they paid 8% of the value of the exempted final product as per Rule 6(3) of the Cenvat Credit Rules, 2004, they should not be liable to pay duty on the intermediate product.

On the contrary, the respondent contended that as the final product was exempt from duty, the appellant could not claim the benefit of the exemption under Notification No. 67/95. The respondent argued that duty should be paid at the stage of galvanization of sheets manufactured by the appellant.

After hearing both parties and considering the submissions, the Tribunal examined the undisputed facts of the case. It was established that the appellant cleared goods on payment of duty by claiming exemption under Notification No. 67/95, even though they were not entitled to this exemption. However, the appellant had paid 8% of the value of the exempted goods as per the Cenvat Credit Rules. Consequently, the Tribunal held that the appellant was entitled to claim the benefit of exemption under Notification No. 67/95 and was not required to pay duty at the stage of galvanization of sheets.

Therefore, the impugned order was set aside, and the appeal was allowed with any consequential relief.

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