Appellant entitled to Captive Consumption Exemption for Clinker in Cement Manufacturing

The tribunal allowed the appeal, confirming that the appellant is entitled to the benefit of Captive Consumption Exemption Notification No. 67/95-CE for the Clinker used in manufacturing cement cleared under Notification No. 6/2006-CE. The tribunal set aside the impugned order and granted consequential relief to the appellant.

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Issues Involved:
1. Whether the benefit of captive consumption exemption notification no. 67/95-CE dated 16.03.1995 can be denied to the quantity of Clinker used within the factory for manufacturing cement cleared against International competitive bidding with duty exemption under Serial No. 91 of Notification No. 6/2006-CE dated 01.03.2006.

Issue-wise Detailed Analysis:

1. Applicability of Captive Consumption Exemption Notification No. 67/95-CE:
The core issue is whether the appellant can avail the benefit of Notification No. 67/95-CE for Clinker used in manufacturing cement, which is subsequently cleared under duty exemption as per Notification No. 6/2006-CE. The tribunal examined whether the intermediate product (Clinker) used in the manufacture of the final product (cement) qualifies for exemption under the said notification.

2. Previous Tribunal Decisions:
The appellant's counsel referenced several prior judgments, including SHREE DIGVIJAY CEMENT CO LTD, THERMO CABLES LTD, KEI INDUSTRIES LTD, BHARAT ALUMINIUM CO LTD, and ULTRATECH CEMENTS LTD, where similar issues were adjudicated favorably for the appellants. These cases established that the exemption under Notification No. 67/95-CE is applicable even when the final product is cleared under an exemption notification, provided certain conditions are met.

3. Provisions of Notification No. 67/95-CE:
The tribunal analyzed the text of Notification No. 67/95-CE, particularly the proviso which states that the exemption does not apply to inputs used in the manufacture of final products exempt from the whole duty of excise or chargeable to nil rate of duty. However, exceptions are provided for clearances to units in Special Economic Zones, Export Oriented Undertakings, and under specific other notifications, including when obligations under Rule 6 of the CENVAT Credit Rules are met.

4. Rule 6(6)(vii) of CENVAT Credit Rules, 2004:
The tribunal highlighted that under Rule 6(6)(vii) of the CENVAT Credit Rules, 2004, the provisions of sub-rules (1), (2), (3), and (4) do not apply to goods cleared against international competitive bidding under Notification No. 6/2006-CE. This rule supports the appellant's position that they are not required to maintain separate accounts for inputs used in dutiable and exempted goods, nor pay an amount equal to 10% of the value of exempted goods.

5. Tribunal's Conclusion:
Based on the plain reading of Notification No. 67/95-CE and the provisions of Rule 6(6)(vii) of the CENVAT Credit Rules, 2004, the tribunal concluded that the appellant is eligible for the exemption. The tribunal referenced the judgments in Thermo Cables Ltd and Kei Industries Ltd, which supported the appellant's claim that the intermediate product (Clinker) used in manufacturing the final product (cement) cleared under exemption is entitled to the benefit of Notification No. 67/95-CE.

6. Final Order:
The tribunal set aside the impugned order, allowing the appeal and confirming that the appellant is entitled to the benefit of Notification No. 67/95-CE for the Clinker used in the manufacture of cement cleared under Notification No. 6/2006-CE. The appeal was allowed with consequential relief.

Pronouncement:
The judgment was pronounced in the open court on 05.01.2023.

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