2018 (9) TMI 823 - HC - Central Excise

High Court Upholds Duty Demand & Interest Order; Dismisses Appeal on Cenvat Credit Rules

M/s Modern Insulators Limited Versus Additional Commissioner, Central Excise Commissionerate, Jodhpur, The Commissioner, Central Excise Commissionerate, Jodhpur, Commissioner (Appeals), Central Excise Commissionerate, Jaipur And The Customs, Excise & Service Tax Appellate Tribunal, New Delhi

The High Court dismissed the appeal challenging an order confirming demand of duty and interest under the Central Excise Act, 1944. The appellant's ... CENVAT Credit - common inputs used in manufacture of taxable as well as exempt goods - Rule 6 (3) (i) of the Cenvat Credit Rules, 2004 - crux of the argument of appellant is that there was no need to give retrospective effect to the amendment carried out by the notification dated 27.02.2010 because this notification substitutes the original provision of Clause (vii) of sub-rule (6) of Rule 6 of the Rules of 2004, which itself was inserted vide Notification dated 28.01.2005. Held that:- The learned CESTAT, New Delhi, considered the judgment rendered in the case of S.P. Fabricators Pvt. Ltd. Vs. CCE, Belapur [2013 (9) TMI 1108 - CESTAT MUMBAI] held that said decision is regarding applicability of exclusion made under Rule 6 (6) on SEZ developers, therefore, the amendment by such notification brought into new type of clearance of exclusion under Rule 6 (6). In absence of indication to the effect in the statutory provision it cannot be held that said amendment should be considered as retrospectively. Appeal dismissed. Issues:Challenge to order confirming demand of duty and interest with grant of extraordinary cost under Central Excise Act, 1944. Interpretation of Rule 6 of the Cenvat Credit Rules, 2004 regarding exemption goods clearance without payment of duty. Applicability and retrospective effect of Notification No.6/2010 CE on exemption notifications. Consideration of judgments by authorities and Hon'ble Supreme Court in deciding retrospective effect of amendments.Analysis:The appellant, engaged in manufacturing Electric Insulators, challenged an order confirming demand of duty and interest under Central Excise Act, 1944 for clearing exempted goods without payment of duty. The dispute revolved around the interpretation of Rule 6 of the Cenvat Credit Rules, 2004, specifically regarding the requirement to pay 10% of the value of exempted final products when inputs were not accounted separately. The appellant argued that the amendment by Notification No.6/2010 CE should not have retrospective effect as it substituted a provision without expressly stating retrospective application.The appellant contended that the benefit of exemption from excise duty under Rule 91 of Notification No.6/2006 CE was extended to goods cleared under Mega Projects, and no amendment was made in the relevant provision of Rule 6 of the Rules of 2004. The appellant raised a substantial question of law on whether the CESTAT was justified in extending the benefit of the amendment retrospectively. The CESTAT upheld the demand of duty but set aside the penalty, noting that the show cause notice was within the limitation period and there was no suppression by the appellant.In considering the appeal, the High Court reviewed the CESTAT's decision and relevant judgments. The Court noted that the amendment by Notification No.6/2010 CE did not indicate retrospective application, leading to the conclusion that the appellant's clearance of goods without payment of duty to Mega Power Projects was unsustainable. The Court referenced the judgment in S.P. Fabricators Pvt. Ltd. case and Govt. of India Vs. Indian Tobacco Association case to support its finding that no substantial question of law arose for consideration.Ultimately, the High Court dismissed the appeal, emphasizing the concurrent findings of the authorities below and the consideration of relevant legal principles and judgments. The Court concluded that the appellant's arguments did not warrant further review, leading to the dismissal of the appeal.