TaxTMI 
TaxTMI 
2015 (9) TMI 403
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....mpt from Excise duty under Sr. No. 92 of Notification 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 ....
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.... Excise duty and other final products all of which are liable 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 a....
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.... from 9th July, 2004 onwards they were taking credit on all the inputs received 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....
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.... quantity of inputs received and used in the manufacture of dutiable parts cleared 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, Exci....
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....he credit of duty/tax paid on inputs/input services exclusively used in the manufacture of tractors exported under bond and also in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004. The demand was made 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 penalt....
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....on Cess as stated above. 27. Proceedings are initiated against the petitioners for the period 2005-06 and 2006-07 on the ground that during the said period, the petitioners had paid duty on IC engines, transmission 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 Commiss....
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.... Central Excise, communicating his decision on fixing the brand rate of drawback. 32. In the aforesaid letters, it was informed by the Additional Commissioner of Central Excise that while fixing the drawback rate, the duty 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 Exci....
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....e distinction and demarcation between absolute exemption on one hand and exemption subject to conditions being fulfilled before or after removal. He submits that Section 5A(1A) consciously and advisedly confines itself to an exemption which 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 p....
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.... 150/- on Engine. C manufactures the Car and clears the same to the customer on payment of duty. C avails Cenvat credit of Rs. 150/- (paid on Engine) and pays duty of Rs. 175/- on the Car. Therefore, effectively total Excise duty paid to the Government 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 ....
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....se proceedings correctness of the duty paid cannot be questioned. Under the scheme currently in force, the assessee has to pay the duty and self-assess it. If the assessment is incorrect a notice for short payment can be issued under Section 11A. If Section 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 Reven....
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....f availing of any credit of duty paid in respect of such exempted goods. More so, when the exemption is unconditional. If parts of tractors are absolutely exempted from payment of duty of Excise, then, the assessee was not liable to pay any duty of Excise on parts 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 ....
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....illegally utilizing the accumulated Cenvat credit available on the duty paid inputs for payment of Excise duty on exempted goods, and thereafter claim refund of the duty by claiming drawback of duty under the garb that the goods described as aggregates are exempted 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 Petiti....
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....ying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette at any time within one year of issue of the notification 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 r....
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...., then, manufacturer of such excisable goods shall not pay the duty of Excise on the goods which have been exempted from the whole of duty of Excise leviable thereon. 53. The argument before us is that the goods have not been exempted from payment of duty absolutely but conditionally. That would 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....
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....isfaction of an officer not below the rank of the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction, that such goods are cleared for the intended use specified in Column (3) of the Table. 3. Where such use is elsewhere than in the factory of production, the exemption shall be allowed if the procedure laid down in the Central 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) &nb....
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....nufacturer has collected an amount, as representing the duties of Excise, in excess of the duties payable under this exemption from the buyer, an evidence to the effect that the said amount has been duly returned to the buyer; and (5) where the manufacturer has not collected an amount, as representing the duties of Excise, in excess of the duties payable under this exemption from the buyer, a declaration by the manufacturer to that 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)&e....
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....bsp; a certificate from the Protocol Division of the Ministry of External Affairs that the concerned foreign diplomatic or consular mission is entitled to exemption from Excise duty based on the principle of recipro-city; and (b) an undertaking from the head of the concerned diplomatic mission or consulate or by an officer duly authorized by him, that - (i) he will produce a certificate, within three 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) &n....
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....clearance of the goods, the manufacturer produces to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, a certificate from the Chairman or the Managing Director or the Director (Rolling Stock, Electrical and Signalling) or the Director (Finance) of the Delhi Metro Rail Corporation Ltd., to the effect that - (i) the goods are procured by or on behalf of the Delhi Metro Rail Corporation Ltd. for use in 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 ....
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....d that table and we find that Column No. 5 refers to the condition which has to be satisfied and fulfilled for the purposes of availing all the benefits of the Notification, namely, exemption. Wherever, the Notification refers to a specific condition which has to be fulfilled that has been referred in Column No. 5 and with reference or serial number. In so far as the subject entry is concerned, the rate of duty is Nil. There is absolutely no condition which is required to be fulfilled for the purposes 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....
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....ecessary in the public interest so to do, it may, by a Notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the Notification, excisable goods of any specified description from the whole or any part of the duty of Excise leviable thereon. But at the same time, the legislature introduces and inserts sub-section (1A) in Section 5A by Act 18/2005, then, we cannot ignore that provision as is intended 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....
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....rs manufacture parts or aggregates. These parts or aggregates are exempted from payment of duty as clarified above. It is these parts or inputs and with the aid and assistance of which the final product namely tractor is manufactured and which is cleared for home consumption as also export by the assessees. At no stage, the appellants/petitioners have lodged any claim for refund/rebates/drawback in case of the inputs which are used and utilized for manufacture of tractors and cleared for home consumption. There 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 questi....
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....hall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims a rebate of duty under the Central Excise Rules, 2002, in respect of such duty. Explanation. - For the purposes of this rule, the words 'output service which is exported' means any output service in respect of which payment is received in India in convertible foreign exchange and the same is not repatriated from, or sent outside, India." 63. A bare perusal 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 du....
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....ed in the manufacture of fertilizer; (iv) Naphtha (RN) and furnace oil falling within Chapter 27 of the said First Schedule used for generation of electricity; (v) (newsprint, in rolls, sheets or reels, falling within Chapter 48) of the said First Schedule; (vi) final products falling within Chapters 50 to 63 of the said First Schedule; (vii) goods supplied to defence personnel or for defence projects or to the Ministry of Defence for official purposes, under any of the following 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) Li....
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.... is exercised or proposed to be exercised; (c) description of taxable services; (d) description of exempted services; (e) Cenvat credit of inputs and input services lying in balance as on the date of exercising the option under this condition; (ii) the option given under part (i) for a financial year shall not be withdrawn during the remaining part of the financial year; (iii) the provider of output service shall, - (a) determine, provisionally, 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 attributabl....
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.... determined as per part (iii) item (d), along with the date of payment of the amount short-paid, (e) interest payable and paid, if any, on the amount short-paid, determined as per part (iii) item (e), and (f) credit taken on account of excess payment, if any, determined as per part (iii) item (f), (v) where the amount equivalent to Cenvat credit attributable to exempted services cannot be determined provisionally since no taxable service referred to in sub-clause (d) of clause (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 provide....
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....1 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting; or (vii) all goods which are exempt 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 sub-section (1) of Section 3 of the said Customs Tariff Act when imported into India and supplied against International Competitive Bidding in terms of [Notification No. 6/2002-Central Excise, dated the 1st March, 2002 or Notification No. 6/2006-Central Excise, dated the 1st March, 2006, as the case may be]." 64. In the case at hand, the Tribunal concluded 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 ....
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....eliance was placed on these rules but in the light of the above clear provisions, the Tribunal did not permit the assessees to place reliance on the same in its entirety. Para 8 of the Tribunal's order reads as under :- "We find that in the case of Repro India Ltd. (supra), the Bombay High Court has held that exempted goods can be exported under Bond/UT-1 in terms of Rule 19 of the Central Excise Rules, 2002. It has also been held that in terms of Rule 6(6)(v) of the Cenvat Credit Rules, 2004, the provisions of Rule 6(1) and 6(3) are not applicable in respect of excisable goods cleared without payment of duty for export under Bond. In view of this, the 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 a....
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.... upon the same reasoning of the Tribunal and to submit that even the demands which are confirmed ought to have been set aside relying on the conclusions in para 8. 71. However, that was an issue in relation to wrong availment of Cenvat credit on aggregates used captively in the manufacture of exempted tractors cleared for export. In relation to that the Tribunal placed reliance on the clear language of Section 5A(1A). Section 5A(1A) inserted by Act 18/2005 with effect from 13th May, 2005. Once this provision has been inserted and the exemption under sub-section (1) of Section 5A in respect of any excisable goods from the whole of the duty leviable thereon has 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 r....
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....ooks such as letter pads, etc., falling under Heading 48.20 of the First Schedule to the Central Excise Tariff Act, 1985 and liable to duty at 16% and printed books and other products of Printing Industry falling under Heading 4901 of the First Schedule of Central Excise Tariff Act, 1985 which were chargeable to nil rate of duty at the relevant time. The printed books were entirely exported by the petitioners. The controversy was about the Cenvat credit taken in respect of the duty paid on the inputs used in the manufacture of these products. The said credit is utilized for payment of duty on packaged software and stationery books. The refund in cash was claimed for credit 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 ....
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.... to be confirmed. The assessee preferred an appeal to the Tribunal and which reversed the department view holding that the assessee had the option not to avail of the exemption but to pay the duty and avail of the Modvat credit. The department went in appeal to the Hon'ble Supreme Court against the decision of the Tribunal but because the issue was technical and there was no revenue implication, the Hon'ble Supreme Court refused to interfere with the Tribunal's view. 76. A similar approach was adopted in the case of Commissioner of Central Excise and Customs, Vadodara v. Narmada Chematur Pharmaceuticals Ltd. reported in 2005 (179) E.L.T. 276. 77. The reliance placed 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 pas....
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....d from time to time were considered and allowed in terms of the Order-in-Original referred to in para 10. Against these orders, the Revenue went in appeal but the appeal was dismissed. That is how the matter was carried in revision to the Central Government and in revision the stay was sought but refused. 81. The undisputed facts have been noted from para 19 and from para 21 a reference was made to the Cenvat Credit Rules. The observations which have been relied upon by Mr. Sridharan are to be found in paras 22 and 23. These paras are reproduced as under : "22. It is true that under Rule 6(1) of the 2004 Rules, credit of duty paid on inputs is not allowable when the inputs 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 provi....
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....spute. However, if the attention of the Division Bench had been invited to the wordings of the sub-rules and in their proper perspective, then, the reference made by the Bench to some of the rules would have been accurate. However, we need not pursue the matter any further once it is held that the reliance on this judgment is wholly misplaced. 84. These all matters which arose firstly before the amendment to the Central Excise Act, 1944 by which the sub-section (1A) was inserted in Section 5A of the Act. Therefore, the question of option now does not arise. Further, in so far as the Cenvat credit and in terms of the Cenvat Credit Rules, 2004, what one finds is that the credit as is claimed 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 ....