2019 (11) TMI 556 - AT - Central Excise

Tribunal allows exemption for using cement in factory without duty payment

The Tribunal overturned the denial of exemption under Notification No. 67/95-CE for using cement within the factory without duty payment. It emphasized ... Captive Consumption - the appellant was using cement within their factory without payment of duty - Denial of exemption under Notification No. 67/95-CE dated 16th March 1995 - Demand for the reasons given therein the appellant’s claim that exemption in terms of Notification No. 67/95-CE was incorrect and therefore sought to recover the same along with applicable interest and penalty - HELD THAT:- The ‘capital goods’ or ‘goods’ as the case may be, are granted exemption from duty if the same are manufactured in a factory and used “within the factory of production in or in relation to manufacture of final products”. It is therefore clear that it is not necessary that cement in the case on hand is required to be necessarily used in the manufacture, it is also sufficient if cement is used ‘in relation’ to the manufacture of final product. The denial is incorrect and cannot be sustained - Appeal allowed - decided in favor of appellant. Issues:Denial of exemption under Notification No. 67/95-CE dated 16th March 1995 for using cement within the factory without payment of duty.Analysis:The appellant challenged the order of the Commissioner of Central Excise & Service Tax confirming the denial of exemption under Notification No. 67/95-CE. The appellant, a manufacturer of pig iron, cleared cement captively without duty payment, leading to the denial of exemption. The adjudicating authority upheld the demand, citing the appellant's activities as the reason for ineligibility for the claimed exemption. The appellant's first appeal was unsuccessful, prompting the current appeal.The Revenue contended that the appellant used cement within the factory without duty payment, leading to a show cause notice and subsequent demand confirmation. The appellant's reliance on Notification No. 67/95 was disputed, emphasizing the manufacturing of pig iron and clearance of cement without duty payment. The Revenue presented supportive decisions to bolster their stance.Upon review, the Tribunal noted that Notification No. 67/95 grants exemption for goods used within the factory in or in relation to the manufacture of final products. The Tribunal emphasized that cement need not be directly used in manufacturing but can be used in relation to the final product's manufacture. The Tribunal distinguished previous cases cited by the Revenue, highlighting the importance of the 'in relation to' aspect. Reference was made to a High Court judgment supporting the integral role of certain materials in the manufacturing process.Ultimately, the Tribunal found the denial of exemption incorrect and unsustainable. The impugned order was set aside, and the appeal was allowed with any consequential relief as per the law. The judgment was pronounced in open court on 20/09/2019.