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of <h1>High Court Reinstates Full Duty Exemption, Tribunal Remands for Reassessment</h1> <h3>M/s Osaka Alloys and Steels Pvt. Ltd. Versus CCE & ST, Jammu & Kashmir</h3> M/s Osaka Alloys and Steels Pvt. Ltd. Versus CCE & ST, Jammu & Kashmir - 2015 (328) E.L.T. 625 (Tri. - Del.) Issues Involved:1. Applicability of exemption Notification No. 56/02-CE vs. Notification No. 1/2010-CE.2. Validity of amendments to Notification No. 56/02-CE by Notifications No. 19/08-CE and 34/08-CE.3. Determination of special rate of value addition by the Commissioner.4. Eligibility for exemption under Notification No. 56/02-CE post the Jammu & Kashmir High Court judgment.Issue-wise Detailed Analysis:1. Applicability of Exemption Notification No. 56/02-CE vs. Notification No. 1/2010-CE:The appellant's manufacturing unit, located in Jammu & Kashmir, commenced production in March 2012. Initially, the appellant applied for a special rate of value addition under Notification No. 1/2010-CE, but later claimed eligibility under Notification No. 56/02-CE, which was more beneficial. The Tribunal held that the appellant could opt for Notification No. 56/02-CE despite initially applying under Notification No. 1/2010-CE, referencing the Apex Court's judgment in Share Medical Care vs. Union of India, which allows an assessee to claim benefits under a more favorable notification at a later stage.2. Validity of Amendments to Notification No. 56/02-CE by Notifications No. 19/08-CE and 34/08-CE:The amendments to Notification No. 56/02-CE by Notifications No. 19/08-CE and 34/08-CE, which restricted the exemption benefit, were quashed by the Jammu & Kashmir High Court in the case of M/s Reckitt Benckiser vs. Union of India. This judgment reinstated the original benefits under Notification No. 56/02-CE, allowing exemption of 100% of the duty paid through PLA without the cap introduced by the amendments.3. Determination of Special Rate of Value Addition by the Commissioner:For the financial year 2012-13, the Commissioner fixed the value addition rate at 69.27%. The appellant contested this rate, arguing that the cost of raw materials and packing materials should be considered nil as no Cenvat credit was taken. The Tribunal upheld the Commissioner's calculation, stating that the cost of raw materials and packing materials consumed must be deducted regardless of whether Cenvat credit was availed.4. Eligibility for Exemption Under Notification No. 56/02-CE Post the Jammu & Kashmir High Court Judgment:The Tribunal concluded that the Jammu & Kashmir High Court judgment in M/s Reckitt Benckiser vs. Union of India applies to all assessees who opted for Notification No. 56/02-CE, even after the amendments. Therefore, the appellant, whose unit is located in the specified area and who satisfies the conditions of Notification No. 56/02-CE, is eligible for the exemption benefits without the restrictions imposed by the amendments.Conclusion:The Tribunal set aside the impugned orders and remanded the matters to the Commissioner for a de novo decision. The Commissioner must verify if the appellant's unit meets the conditions of Notification No. 56/02-CE and extend the benefits accordingly. If the appellant opts for Notification No. 1/2010-CE, the special rate of value addition for 2012-13 is fixed at 69.27%, and the rate for 2013-14 should be determined similarly based on the provided data.Disposition:Both appeals were disposed of, and the matters were remanded for further examination and decision by the Commissioner.
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