Appellant entitled to exemption for Clinker in Cement manufacture. Impugned orders set aside.

The Tribunal held that the appellant is entitled to the benefit of Exemption Notification No. 67/95-CE for the intermediate product Clinker used in the manufacture of Cement, which was cleared under Exemption Notification No. 6/2006-CE. The Tribunal set aside the impugned orders and allowed the appeals with consequential relief, if any.

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Issues Involved:

1. Eligibility for Exemption Notification No. 67/95-CE for intermediate product Clinker used in the manufacture of Cement.
2. Applicability of Exemption Notification No. 6/2006-CE for final product Cement supplied against "International Competitive Bidding."
3. Compliance with Rule 6 of Cenvat Credit Rules, 2004.

Issue-Wise Detailed Analysis:

1. Eligibility for Exemption Notification No. 67/95-CE for Intermediate Product Clinker:

The primary issue is whether Clinker, an intermediate product used in the manufacture of Cement, is eligible for Exemption Notification No. 67/95-CE dated 16.03.1995. The appellant argues that despite the final product Cement being cleared under Exemption Notification No. 6/2006-CE, Clinker should still be eligible for exemption under Notification No. 67/95-CE. According to the appellant, Clause VI of the proviso to Notification No. 67/95-CE applies, as they have fulfilled the obligations under Rule 6 of the Cenvat Credit Rules, 2004. The Tribunal found that the appellant manufactured Clinker, which was used to produce Cement cleared under Exemption Notification No. 6/2006-CE, and thus, Clinker is eligible for exemption under Notification No. 67/95-CE.

2. Applicability of Exemption Notification No. 6/2006-CE for Final Product Cement:

The Cement was cleared against "International Competitive Bidding" under Exemption Notification No. 6/2006-CE, which prescribes a nil rate of duty. The Tribunal noted that the final product, Cement, satisfied the condition of being exempt from basic customs duty and additional duty of customs when imported into India. This condition aligns with the provisions of Rule 6(6)(vii) of the Cenvat Credit Rules, 2004, which exempts goods supplied against international competitive bidding from the duties of customs.

3. Compliance with Rule 6 of Cenvat Credit Rules, 2004:

The appellant complied with Rule 6 of the Cenvat Credit Rules, 2004, which exempts them from maintaining separate accounts for inputs used in manufacturing dutiable and exempted final products. The Tribunal referenced the case of Thermo Cables Ltd, where it was held that manufacturers clearing final products against international competitive bidding under Notification No. 6/2006-CE are not liable to maintain separate accounts or pay an amount equal to 10% of the value of exempted goods. The Tribunal concluded that since the appellant’s final product, Cement, was cleared under Notification No. 6/2006-CE, the exemption under Notification No. 67/95-CE is applicable to Clinker.

Conclusion:

The Tribunal concluded that the appellant is entitled to the benefit of Exemption Notification No. 67/95-CE for Clinker used in the manufacture of Cement, which was cleared under Exemption Notification No. 6/2006-CE. The Tribunal set aside the impugned orders and allowed the appeals with consequential relief, if any.

(Pronounced in the open court on 02.11.2018)

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