Captive exemption under Notification 67/95-CE applies when international competitive bidding clearances fall within Rule 6(6)(vi).

Aluminium slabs used captively in making aluminium sheets were treated as prima facie eligible for captive consumption exemption under Notification No. 67/95-CE, because Rule 6(6)(vi) of the Cenvat Credit Rules, 2001 excludes goods cleared without payment of duty for international competitive bidding from the credit reversal requirements in Rule 6(1) to 6(4). On that basis, the condition linked to Rule 6 compliance was regarded as satisfied, and prior Tribunal rulings on the same exemption structure supported the view. Interim relief followed, with pre-deposit of duty and penalties waived.

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Issues: Whether aluminium slabs used captively in the manufacture of aluminium sheets cleared without payment of duty against international competitive bidding were entitled, prima facie, to exemption under Notification No. 67/95-CE despite the operation of Rule 6 of the Cenvat Credit Rules, 2001.

Analysis: Notification No. 67/95-CE extends captive consumption exemption where the final products are dutiable and also where a manufacturer produces dutiable and exempted final products, provided the obligation under Rule 6 of the Cenvat Credit Rules, 2001 is discharged. Rule 6(6)(vi) creates an exception for goods cleared without payment of duty for international competitive bidding under Notification No. 6/2006, with the result that the requirements of sub-rules (1) to (4) of Rule 6 do not apply and no reversal of credit is required. On that basis, the condition in Notification No. 67/95-CE was treated as satisfied. The view was also supported by prior Tribunal decisions dealing with the same exemption structure.

Conclusion: The captive exemption was held prima facie available and the pre-deposit of duty and penalties was waived.

Final Conclusion: The assessee obtained interim relief on the footing that the captive exemption could not be denied merely because part of the final product was cleared under the international competitive bidding exemption.

Ratio Decidendi: Where goods are cleared without payment of duty against international competitive bidding under the specified exemption, Rule 6(6)(vi) excludes the applicability of the credit reversal requirements, and the captive consumption exemption cannot be denied for alleged non-compliance with Rule 6.

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