TaxTMI 
TaxTMI 
2015 (9) TMI 403
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....ification No. 6/2006-C.E. and consequently, the appellants were not required to pay duty on the aggregate parts and are therefore, not entitled to take credit of the duty so paid? (ii) Whether in the facts and circumstances of the case, the Appellate Tribunal was justified in holding that the exemption granted from Excise duty under Sr. No. 92 of Notification No. 6/2006-C.E. to parts (falling under any Chapter of the First Schedule to the Central Excise Tariff Act, 1985) which are used within the factory of production for manufacture of tractors falling under Heading 8701, is an unconditional exemption for the purposes of Section 5A(1A) of the Central Excise Act, 1944?" 2. These substantial questions of law having been framed, both sides agree that in the light of the directions contained in this order and with consent of parties, we may dispose off this appeal finally. 3. The background facts and which can be briefly stated are that the appellants are, inter alia, engaged in the manufacture of tractors falling under Heading 8701 of the First Schedule to Central Excise Tariff Act, 1985. The appellants also manufacture aggregates of tractors such as IC....
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....iable to duty. It is not possible for the appellants to identify the inputs at the stage of their receipts as to where they will be used/consumed. The appellants vide their letter dated 14th July, 2004 informed the Deputy Commissioner of Central Excise, Mulund Division, Mumbai-V, with a copy endorsed to the Commissioner of Central Excise Range, Mumbai-V, that they would adopt the procedure as declared in this letter in respect of the clearances of final products and inputs and capital goods, consequent to the changes made in the Budget 2004-05. Annexure-C is a copy of said letter. 7. In continuation of the letter dated 14th July, 2004, the appellants wrote another letter dated 21st July, 2004 to the Deputy Commissioner of Central Excise, Malad Division, Mumbai-V. In this letter the appellants informed that they were availing the Cenvat credit in respect of the inputs received in the factory and reversing an amount equal to 8% of the sale value of exempted tractors in terms of Rule 6(3)(b) of the Cenvat Credit Rules and that they would like to reverse the full credit, i.e., equivalent to the credit availed per tractor at the time of clearance. Accordingly, the appellants reque....
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....eceived in the factory and used in the manufacture of tractors as well as used in the manufacture of parts cleared outside the factory. At the time of clearance of tractors, the appellants were paying the amount equal to 10% of the sale price of tractors after claiming the abatement of the said amount from the sale price, in view of the provision of Rule 6(3) of the Cenvat Credit Rules, 2004. However, it is urged that the appellants were not required to pay the amount of 10% of the sale price of tractors exported under bond in view of the provisions of Rule 6(6)(v) of the Cenvat Credit Rules, 2004. Accordingly the appellants did not pay 10% of the sale price of tractors cleared for export under bond. 12. The position after amendment to Cenvat Credit Rules, 2004 with effect from 16th May, 2005 particularly to Rule 6(3)(b) of the Cenvat Credit Rules, 2004 is set out in para 14 onwards of the memo of appeal. It is submitted that the credit on inputs which are exclusively used in the manufacture of exempted goods is not available. That is how the appellants informed the Deputy Commissioner of Central Excise by their letter dated 8th July, 2005 (Annexure-H). They set out the proce....
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.... outside and tractors which were treated by the department as exempted goods. Accordingly, whenever the tractors were cleared for home consumption, the appellants were paying an amount equal to 10% of the sale price of the tractors, in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004. However, the appellants did not pay 10% of the sale price of tractors exported in view of Rule 6(6)(v) of the Cenvat Credit Rules, 2004. During this period, the appellants were not maintaining separate accounts of the inputs and therefore, they were paying an amount equal to 10% of the sale price of the tractors cleared for home consumption. 17. The Revenue initiated proceedings relating to determination of sale price under Rule 6(3)(b) of Cenvat Credit Rules for the purpose of demanding the amount @ 10% payable on the exempted tractors since the appellants have been treating the sale price as inclusive of the amount payable under Rule 6(3)(b) and arriving at the said amount payable under Rule 6(3)(b) of the Cenvat Credit Rules. This issue has already been decided against the appellants by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) and the appeals filed by the appellants....
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....e for credit of Service Tax paid on advertisement services used for manufacture of tractors cleared for home consumption on payment of NIL basic Excise duty. 21. The Commissioner of Central Excise after adjudication passed an order on 17th August, 2009 (Annexure-'T'). 22. The appeals were filed along with stay applications against these orders in the Central Excise and Service Tax Appellate Tribunal. We are right now not concerned with the proceedings where interim stay was sought. The appeals were heard finally and have been partially allowed. The demands as confirmed are in relation to the credit duty paid on aggregates captively used in the manufacture of tractors exported under bond together with interest and penalty. The demands in relation to credit of Service Tax paid on advertisement services and a demand of Rs. 7,12,75,282/- being the credit of duty paid on aggregates used in the manufacture of tractors exported under bond was confirmed and equally penalty of Rs. 1,00,00,000/- was imposed. 23. Aggrieved by such orders, this appeal has been filed. There is a connected Writ Petition. Their facts are that the petitioners are, inter alia, engaged in the manuf....
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....on assembly and sheet metal components used in the manufacture of tractors cleared for export, on the date of clearance of such tractors for export instead of paying duty on the 5th day of the month subsequent to the month in which they were captively consumed. The show cause notice dated 28th November, 2006 proposed to demand interest from the petitioners for the alleged delay in payment of duty on the captively consumed IC engines, transmission assembly and sheet metal components. Annexure-C is a copy of said show cause notice dated 28th November, 2006. 28. The Assistant Commissioner of Central Excise by his order dated 29th June, 2007 confirmed the demand of interest. In other words, there was no dispute about liability to pay duty on the aggregates captively consumed in the manufacture of tractors cleared for export. Annexure-D is copy of said letter. 29. Being aggrieved by the aforesaid order dated 29th June, 2007 passed by the Assistant Commissioner of Central Excise, the petitioners filed an appeal before the Commissioner of Central Excise (Appeals), Mumbai. The Commissioner of Central Excise (Appeals) Mumbai, by his Order-in-Appeal No. SB(43)43/MV/2009, dated 14....
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.... paid by the petitioners on the aggregates manufactured in their factory and captively consumed was not considered since the drawback of any goods manufactured in India and exported would only mean the rebate of duty chargeable on the materials used in the manufacture of such goods. In other words, according to the Additional Commissioner, the aggregate which were manufactured and used in the manufacture of tractors cleared for export were exempt under Notification No. 6/2006, dated 1st March, 2006 during the period in question and, therefore, even if the petitioners have paid duty on such aggregate, the same would not be considered for the purpose of fixing the drawback under Customs and Central Excise Duties and Service Tax Drawback Rules, 1995. 33. Aggrieved by the aforesaid decisions of the Additional Commissioner of Central Excise (Technical), Mumbai-V, fixing the brand rate, the petitioners filed 12 appeals to the Commissioner of Central Excise (Appeals). Annexure-S is an illustrative copy of one of the appeals filed by the petitioners before Commissioner of Central Excise (Appeals). 34. The Commissioner of Central Excise (Appeals) by his common Order-in-Appeal No....
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.... is absolute. It does not exempt something subject to a condition being fulfilled before or after removal. Therefore, the suggestion that the conditions enumerated in the Annexure to the Notification No. 6 of 2006 are exhaustive of exemption subject to condition is incorrect. Mr. Sridharan submits that the impugned orders are ex facie erroneous and illegal. The interpretation of the words "exemption subject to condition appearing in Section 5A(1A)" cannot be influenced by the manner of placement of the condition in the Notification. Therefore, the foundation in the impugned order and for the conclusion therein itself is not well founded. 38. Mr. Sridharan submits that the assessee has not made any direct or indirect attempt to take any undue or additional benefit by making payment of duty and not availing the exemption. The duty is paid on the aggregates consumed within the factory only to the extent used for the exports. The duty is so paid on the aggregates partly in cash and partly by utilizing Cenvat credit of the duty paid on the inputs used in the intermediates consumed captively for manufacture of tractors for exports. Mr. Sridharan submits that ordinarily when final p....
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....vernment in this entire cycle is Rs. 175/-. 40. If there is an exemption, then, the result would be that Engine is exempt from payment of Central Excise duty and X who is the manufacturer of Engine avails the exemption provided to the Engine. In this case, X purchase Piston from A and manufactures Engine from such Piston. A has paid the duty of Rs. 100 on the Piston. However, X cannot avail the Cenvat credit of duty paid on the Piston since X has opted for exemption provided to Engine. Therefore, duty of Rs. 100/- paid on the Piston would be cost to X for the manufacture of Engine. X in turn supply Engine to C who is the manufacture of Car. C cannot avail any Cenvat credit on the Engine as the duty has not been paid on the Engine by X. However, Car is chargeable to duty of Rs. 175/-. Therefore, C will have to pay duty of Rs. 175/- on the Car in cash. In this case, the effectively total Excise duty paid on the manufacture of Car would be Rs. 275/- (Rs. 175/- paid by C + Rs. 100/- paid by A on Piston). In fact, granting exemption to Engine has the effect pushing up the amount of Excise duty is not in the interest of the consumer. 41. Let us take another situation in the a....
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....ction 11A is not applied or invoked the self-assessment is final and the payment of duty is final. The Revenue cannot in consequential proceedings claim that either the duty is not payable or what is paid is not duty. 44. Mr. Sridharan submits that in the present case, one and the only ground on which the Revenue rejected the drawback is by the application of Section 5A(1A). Once that section is not applicable no other or fresh grounds can be agitated by the Revenue. The drawback claim for the period in question namely May, 2005 to March, 2007 is Rs. 38.29 crores, assuming in favour of the Revenue (without admitting), that the entire amount has been paid from Cenvat account. Even if it also assumed in favour of the Revenue that the refund should be granted by credit in Cenvat account and not in cash. However, in view of the other events, which have occurred in the present matter, such a contention cannot be raised by the Revenue. For the year 2005-06, the petitioners have paid Rs. 104 crores in Cenvat account. For the year 2006-07, the petitioners have paid Rs. 49/- crores in cash over and above Rs. 115 crores paid in Cenvat account. In view of this, even if it is held that t....
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....arts of tractors used captively in the manufacture of tractors cleared for export and, then, to avail Cenvat credit of such duty. The contention of the appellant-assessee that exemption granted to parts of tractors is subject to the condition that they are captively consumed in the manufacture of tractors is misconceived and the same is liable to be rejected. Mr. Kantharia relied upon the findings of the Tribunal recorded in paras 9 to 11 in this behalf. He also submits the Chart which is tendered before this Court would reveal that the parts of tractors for home consumption are exempted from duty. Equally, parts of tractors for export have been exempted in terms of the Notification. The duty is paid though not required to be paid and the credit is utilized. Mr. Kantharia, therefore, submits that the true effect of the Notification has been considered by the Tribunal and in that regard, Mr. Kantharia relies upon para 2 of the additional affidavit in reply filed on behalf of the respondents (Affidavit of Mr. Rakesh Dahiya - Assistant Commissioner of Central Excise). He also submits that from para 3 of this affidavit, the respondents have demonstrated as to how in the case of an unco....
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....ted from duty, alternatively they are claiming refund or reversal of duty paid. This is a departure from the normal course. Mr. Kantharia submits that in the normal course, the Cenvat credit in respect of duty paid inputs would remain unutilized/lapse in cases where such inputs are used for manufacture of final products which were exempt. The petitioners cleared final products in domestic market without payment of duty. However they devised a novel method of utilizing the accumulated Cenvat credit on exempted final products meant for export. The petitioners, therefore, sought drawback for the same which is impermissible in view of Notification read with provisions of Section 5A(1A) of the Central Excise Act, 1944. 49. Once the exemption under Section 5A(1A) is absolute, then, the petitioners/appellants/assessees are not entitled to any benefit. Their claims are not bona fide. Hence, the appeal as also the Writ Petitions be dismissed. 50. Mr. Kantharia placed reliance on the judgment in case of Collector of Central Excise v. Parle Exports (P) Ltd. reported in 1988 (38) E.L.T. 741 (S.C.). 51. With the assistance of the learned Counsel appearing for the parties, we h....
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....ation under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be. (3) An exemption under sub-section (1) or sub-section (2) in respect of any excisable goods from any part of the duty of Excise leviable thereon (the duty of Excise leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any excisable goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of Excise chargeable on such goods shall in no case exceed the statutory duty. Explanation. - "Form or method", in relation to a rate of duty of Excise means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty is leviable : (4) Every notification issued under sub-rule (1), and every order made under sub-rule (2), of Rule 8 of the Central Excise ....
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....ld require reference to the relevant Notification. The copy of the Notification has been annexed by both sides and it is agreed that the Notification No. 6/2006, dated 1st March, 2006 would be the applicable Notification. The same reads as under : "G.S.R. (E) - In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in Column (3) within the Chapter, Heading or sub-heading or Tariff Item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), as are given in the corresponding entry in Column (2) of the said Table, from so much of the duty of Excise specified thereon under the First Schedule to the Central Excise Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in Column (4) of the said Table and subject to the relevant conditions specified in the Annexure to this notification, and condition number of which is referred to in the corresponding entr....
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....ntral Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, is followed. 4. If, a certificate issued by the Collector/District Magistrate/Deputy Commissioner of the District in which the plant is located, is produced to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction, to the effect that such goods are cleared for the intended use specified in Column (3) of the Table. 5. If no credit of duty paid on the chassis and compressor has been taken under Rule 3 or Rule 11 of the Cenvat Credit Rules, 2002. 6. If, - (i) made from unrecorded articles falling under Heading 8523; and (ii) (a) not intended for sale; or (b) intended for sale or supply to All India Radio or any other Department of Government of India in the Ministry of Information and Broadcasting; or (c) intended for sale or supply, in the form of U-matic video tapes formats of width not less than 19 millimetres, to Doordarshan. 7. If, - (a) in....
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....hat effect; (c) Within seven days of the receipt of the said claim for refund, the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, after such verification, as may be necessary, shall determine the amount refundable to the manufacturer and shall intimate the same to the manufacturer. In case the credit taken by the manufacturer is in excess of the amount so determined, the manufacturer shall, within five days from the receipt of the said intimation, reverse the said excess credit from the said Account Current maintained by him. In case the credit availed is lesser than the amount of refund determined, the manufacturer shall be eligible to take credit of the balance amount; and (d) The recovery of the credit availed irregularly or availed in excess of the amount of credit so determined, and not reversed by the manufacturer within the period specified under paragraph (c) above, shall be recovered as if it is a recovery of duty of Excise erroneously refunded. In case such irregular or excess credit is utilized for payment of Excise duty on clearance of excisable goods, the said goods shall be considered to have been....
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....months from the date of clearance of the goods or such extended period as may be permitted by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, that the goods have been put to use, or are in the use, as the case may be, of the mission or consulate; (ii) the goods will not be sold or otherwise disposed of before the expiry of three years from the date of clearance of the goods, and (iii) in the event of non-compliance of sub-clause (i), the diplomatic or consular mission will pay the duty which would have been leviable at the time of clearance of goods, but for this exemption. 14. If, - (a) the goods are purchased by diplomatic agents/career consular officers directly from the manufacturer; (b) before the goods are cleared from the factory, the manufacturer produces to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction over his factory, a certificate from the Protocol Division of the Ministry of External Affairs that the concerned diplomatic agen....
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.... the Delhi MRTS project; and (ii) the goods are part of the inventory maintained by the Delhi Metro Rail Corporation Ltd. and shall be finally owned by the Delhi Metro Rail Corporation Ltd. 19. If the goods are exempted from the duties of Customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under Section 3 of the said Customs Tariff Act when imported into India. 20. If, before clearance of goods, the manufacturer produces a certificate from an officer, not below the rank of Director in the Marine Products Export Development Authority, in the Ministry of Commerce and Industry, Government of India, to the effect that the goods procured constitute monofilament long line system for tuna fishing and are intended to be used for tuna fishing." 54. The stand of the petitioners/appellants is that the final products cleared from their unit, namely, at Kandivili are tractors falling under Heading 87.01, tractor skids 87.08, IC engines 84.08, transmission assembly 84.83 and parts thereof falling under 87.08, 84.09 and 84.83. Consequent upon the Union Budget 2004-05 vide Notification No....
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.... of availing of this exemption. Mr. Sridharan would rely upon the annexure and submits that Condition No. 2 can be said to be a condition for the purposes of availing of the Notification. However, we find Condition No. 2 to mean that the description of excisable goods matches with the contents of Column No. 3 of the table. In other words, the goods are cleared for the intended use specified in Column No. 3 of the table. We do not find that any such issue was raised. In fact, there is absolutely no dispute about the description of the goods and their use. The parties have fully understood the description of the goods and the use to which they are put. When the condition that is required to be satisfied is not specified in Column No. 5, then, it is not open to the petitioners/assessees to invoke some general stipulation or contents of some format and term the same as a condition which is required to be fulfilled so as to avail of the exemption. In our view, there is merit in the contention of Mr. Kantharia that the exemption was unconditional. 56. If the exemption was unconditional, then, the petitioners/assessees could not have insisted on payment of duty on the exempted goods....
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....by the assessee. Sub-section (1A) clarifies that when goods are exempted in terms of Section 5A(1) and the exemption is from the whole of the duty of Excise leviable thereon and has been granted absolutely, then, the manufacturer of such excisable goods shall not pay the duty of Excise on such goods. There is no question of then the Revenue calling upon the assessee to pay the duty or the assessee coming forward and offering to pay it. The goods which are otherwise subjected to tax shall not suffer it in view of the exemption notification and till it is in force. The amendment cannot be brushed aside. That is to clarify the doubts and remove them. The doubts which are clarified and removed are that when there is an absolute exemption from the payment of the whole duty of Excise leviable on such exempted goods, then, should the manufacturer of such excisable goods pay or shall not pay the duty of Excise on such goods. If he cannot pay the duty, then, there is no question of seeking any rebate or refund or drawback as is now purported to be done. That would be plainly contrary to this clear legal position. Mr. Kantharia is right in urging that the legislature has not imposed any cond....
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.... is no explanation, therefore, as to why such an attempt has been made in the case of the final product namely cleared for export. 61. Mr. Sridharan would submit that this was not done so to claim any undue or additional benefit. The duty is paid on the aggregates consumed within the factory only to the extent used for the export. The duty is so paid on the aggregates and partly in cash and partly by utilizing Cenvat credit of the duty paid on the inputs used in the intermediates consumed captively for manufacture of tractors for exports. The alternative claim, therefore, was made and which should have been granted according to Mr. Sridharan because there is no question of any unjust enrichment. 62. In that regard, what we find is that the Cenvat Credit Rules, 2004 which are relied upon, define in Rule 2(d) the term "exempted goods". They mean excisable goods which are exempted from the whole of the duty of Excise leviable thereon and include goods which are chargeable to Nil rate of duty. Similar is the definition of the term "exempted service" and appearing in Rule 2(e). Thus, goods and service which carry the levy or the tax but which are exempt from the whole of the....
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....usal of the same indicates that where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export or used in providing output service which is exported, then, the Cenvat credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of duty of Excise on any final product cleared for home consumption or for export on payment of duty or Service Tax on output service. Rule 6 sets out the obligation of the manufacturer of dutiable and exempted goods and provider of taxable and exempted services and the same reads as under : "6. Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services. - (1) The Cenvat credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or for provision of exempted services, except in the circumstances mentioned in sub-rule (2) : Pr....
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....ollowing notifications of the Government of India in the Ministry of Finance (Department of Revenue), namely :- (1) No. 70/92-Central Excise, dated the 17th June, 1992, G.S.R. 595(E), dated the 17th June, 1992; (2) No. 62/95-Central Excise, dated the 16th March, 1995, G.S.R. 254(E), dated the 16th March, 1995; (3) No. 63/95-Central Excise, dated the 16th March, 1995, G.S.R. 255(E), dated the 16th March, 1995; (4) No. 64/95-Central Excise, dated the 16th March, 1995, G.S.R. 256(E), dated the 16th March, 1995; (viii) Liquefied Petroleum Gases (LPG) falling under Tariff Items 2711 12 00, 2711 13 00 and 2711 19 00 of the said First Schedule; (ix) Kerosene falling within Heading 2710 of the said First Schedule, for ultimate sale through public distribution system. The manufacturer shall pay an amount equivalent to the Cenvat credit attributable to inputs and input services used, or in relation to, the manufacturer of such final products at the time of their clearance from the factory; or (b) &nbs....
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....ly, the amount equivalent to Cenvat credit attributable to exempted services, in the following manner, namely :- Cenvat credit attributable to exempted services (provisional) = (A/B) multiplied by C, where A denotes total value of exempted services provided during the preceding financial year, B denotes total value of taxable and exempted services provided during the preceding financial year, and C denotes total Cenvat credit of inputs and input services taken during the month; (b) pay the amount attributable to exempted services determined as above for each month, on or before 5th day of the following month; (c) determine the Cenvat credit attributable to exempted services for the whole financial year in the following manner, namely :- Cenvat credit attributable to exempted services = (X/Y) multiplied by Z, where X denotes total value of exempted services provided during the financial year, Y denotes total value of taxable and exempted services provided during the financial year, and Z denotes total Cenvat credit of input....
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....se (105) of Section 65 of the Finance Act has been provided, the provider of output service is not required to determine, provisionally, and pay Cenvat credit attributable to exempted services for each month but he shall determine the Cenvat credit attributable to exempted services for the whole year as prescribed in part (iii) item (c) and pay the amount so calculated on or before 30th June of the succeeding financial year. (vi) where the amount determined under part (v) is not paid within the said due date, i.e., the 30th June, the provider of output service shall, in addition to the said amount, be liable to pay interest at the rate of twenty four per cent per annum from the due date till the date of payment. Explanation III. - For the removal of doubts, it is hereby clarified that the credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or exempted services. (4) No Cenvat credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services, other than t....
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....ed that the petitioners/assessees were not permitted to avail of such course. Even the Commissioner in the Order-in-Original has not allowed the petitioners/assessees to take assistance of the Cenvat Credit Rules, 2004. In para 26 of the Order-in-Original, the Commissioner has observed that the services are exclusively related to tractors which are exempted from payment of duty. The advertisement services are claimed to be services and which are used exclusively for manufacture of exempted goods. Secondly, the basic concept of grant of Cenvat benefit is to take care of the cascading effect of tax element contained in the expenses. However, in the case of exempted goods there would be no such cascading effect. The assessees deliberately availed a wrong and inadmissible Cenvat credit of the Service Tax paid on advertisement services/input services in contravention of the provisions of Rule 6(1) read with Explanation III to Rule 6(3) of the Cenvat Credit Rules, 2004. Rule 6(1) clearly prohibits availing of Cenvat credit on such quantity of input or input service which is used in the manufacture of exempted goods or exempted services, except in the circumstances mentioned in Rule 6(2).....
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....e orders of Commissioner confirming the duty demand of Cenvat credit except for Rs. 8,28,20,311/- in Appeal No. E/675/09-Mum and Rs. 7,12,75,282/- in Appeal No. E/1190/09-Mum and Rs. 9,36,861/- in Appeal No. E/1182/09-Mum cannot be sustained. Accordingly, we set aside the demands of duty of Rs. 4,55,99,931/-, Rs. 10,52,45,486/-, Rs. 6,63,10,952/- in Appeal No. E/675/09-Mum, Rs. 1,03,58,014/- in Appeal No. E/1060/09-Mum, Rs. 3,81,83,890/- in Appeal No. E/1190/09-Mum, and Rs. 82,34,084/- in Appeal No. E/1182/09-Mum. Consequently, we also set aside the penalty imposed equal to the amount of duty. We also set aside the order for recovery of interest on the dues." 66. That was because the excisable goods removed without payment of duty are cleared for export under bond in terms of Central Excise Rules, 2002. 67. Mr. Sridharan would, however, rely upon sub-rule 6(6) and particularly clause (5) thereof and urge that the sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are, inter alia, cleared for export under bond in terms of the provisions of Central Excise Rules, 2002. 68. We do not find that this argum....
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....s been granted absolutely, the manufacturer shall not pay the duty of Excise on such goods. This provision has been inserted with some purpose and that is to discourage manufacturers from paying Excise duty on exempted goods. The clear effect of absolute exemption has been emphasized in this sub-section so as to discourage the practice of manufacturers paying duty on such excisable goods and which are exempted from payment of whole of Excise duty absolutely and, thereafter, claiming an adjustment or credit or refund or rebate or drawback. Therefore, the argument which appealed to the Tribunal and in relation to the demand as dealt with by it in para 8 could not be said to be applicable. Once the basic foundation was the exemption not being absolute but conditional and that being found to be baseless, the Tribunal was in no error in confirming the demand partially. 72. The justification given before the Tribunal and equally before us is that the assessee did not pay 10% of the sale price of the tractors exported in view of Rule 6(6)(v) of the Cenvat Credit Rules. We have already found that reliance on this sub-rule and clause (v) thereof, was entirely misplaced. Those are in r....
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....dit which cannot be so utilized, to the extent, it is attributable to printed books exported by it. 74. The Assistant Commissioner of Central Excise (Respondent No. 2 to the Petition) accepted the letter of undertaking furnished by the petitioners and allowed the petitioners to clear all the dutiable goods as also excisable goods attracting nil rate of duty. Thereafter, the Assistant Commissioner of Central Excise, Belapur-III Division, directed the petitioners that they should clear only dutiable goods such as packaged software under this bond and they cannot clear exempted goods or goods chargeable to nil rate of duty under this bond. He directed the petitioners that the non-dutiable goods cannot be cleared under letter of undertaking and by a further communication directed them to pay an amount equal to 10% of the sale price of the exempted goods, namely, printed books exported by it based on Rule 6(3)(b) of the Cenvat Credit Rules, 2004. It is these communications, letters and the directions therein which were impugned in the Writ Petition. 75. The findings and conclusions of this Court from paras 6 to 9 in judgment of the Repro India Ltd. would show that they are r....
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....aced by Mr. Sridharan on the judgment of this Court in the case of Union of India v. Sharp Menthol India Ltd. reported in 2011 (270) E.L.T. 212, requires a detailed reference to that decision. 78. There, the Writ Petition was filed by Union of India to challenge the order passed by the Joint Secretary to the Government of India dated 21st January, 2011, whereunder he dismissed a stay application of the Commissioner of Central Excise. The Commissioner of Central Excise was seeking stay of the order passed by the Commissioner (Appeals) till disposal of a revision application. The stay application was rejected and apprehending that the order passed by the Commissioner (Appeals) would take effect and the respondent Sharp Menthol will claim rebate of duty paid on export of peppermint oil by debiting the credit of duty paid on inputs used in the manufacture of final products, that the Writ Petition was filed in this Court. There was another Writ Petition of the assessee seeking enforcement of the order passed in its favour and the Revenue/Commissioner's Writ Petition was heard together with that of the assessee. 79. The matter was heard finally by consent and it was to be dec....
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....s are used in the manufacture of exempted final products. But Rule 6(2) of 2004 Rules provide that where the inputs are used in the manufacture of exempted as well as dutiable final products, then, credit of duty paid in inputs used in the manufacture of dutiable final products is allowable, provided separate accounts regarding the receipt, consumption and inventory of the input used in the manufacture of dutiable final product are maintained. However, Rule 6(6) of 2004 Rules provides that the provisions contained in Rules 6(1) to 6(4) of 2004 Rules shall not apply in certain specified cases, where the excisable goods are cleared without payment of duty. Clause (v) of Rule 6(6) of the 2004 Rules provides that where the exempted goods are cleared for export without payment of duty under Central Excise Rules, 2002, then, the provisions contained in Rules 6(1) to 6(4) of 2004 Rules shall not apply. Thus, Rule 6(6) of 2004 Rules carves out an exception to the applicability of the provisions contained in Rules 6(1) to 6(4) in certain specified cases. 23. In the present case, admittedly, the exempted menthol crystals have been cleared for exports under bond without payment of duty ....
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....ed and in relation to input and input service as defined in Rule 2(k)(1) is in relation to exempted goods and exempted services. In that regard, we have held that Cenvat credit cannot be availed of in case of such inputs or input services at all. Cenvat credit can be availed of provided the circumstances mentioned in Rule 6(2) are satisfied and that there is maintenance of separate accounts. The Cenvat credit can be taken only in quantity of input or input services which is intended for use in the manufacture of dutiable goods or in providing output services on which tax is payable. However, that is in relation to only the dutiable final product. Therefore, no assistance can be derived from these judgments by Mr. Sridharan. Once we have taken the above view, then, it is not necessary to refer to other judgments relied upon by Mr. Sridharan with regard to interpretation of exemption notifications. It is only when the exemption claimed is conditional or that two views are possible on a reading of the exemption notification that these judgments can have any application. These judgments also, therefore, do not assist the assessees-appellants. 85. In the Writ Petition No. 8772 of ....