TaxTMI 
TaxTMI 
2018 (7) TMI 2069
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....6(1) of Cenvat Credit Rules, 2004 (for short CCR, 2004). The assessee have been manufacturing Life Saving Drugs and availing exemption benefit under Notification No. 6/2006-C.E., dated 1-3-2006 as amended. The assessee has been clearing life saving drugs for export under bond in addition to clearance in the domestic market. They were also taking the credit in respect of inputs used in the manufacture of exempted life saving drugs on the basis of sub-rule (6) of Rule 6 of the CCR, 2004 cleared for export under bond as per Rule 19 of Central Excise Rules, 2002 (for short CER, 2002). 3. Counsel for the appellant Mr. Kinshuk Jain has taken through the order of the Tribunal and contended that sub-section (1A) which was inserted on 13-5-2005 in Section 5A of the Central Excise Act, 1944 reads as under :- (1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods. 3.1 He has further taken us to ground (F) of the appea....
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....which reads as under :- (1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods. 14. In case every manufacturer chooses not to opt the absolute exemption then in such case the purpose of the legislature granting full exemption would be defeated and the benefit which is required to be passed on to the buyers of the goods would not reach to them. This appears not the intention of the legislature while granting unconditional exemption to any of the goods." 3.3 He has also invited our attention to the order of the Tribunal and argued that the judgment sought to be relied upon by the Tribunal will not apply to the facts of the present case. 4. Counsel for the respondents has pointed that under Rule 6(6) of the Cenvat Credit Rules, 2004 sub-clause (v) reads as under : "6. The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods moved without ....
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....hat the respondents want to do is in fact to levy 10% on the sale price of the printed books in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004. In our opinion this is wholly impermissible. The provisions as now contained in Rule 6 of the Cenvat Credit Rules, 2004 were contained in Rules 57C and 57CC of the Central Excise Rules, 1944 as they stood prior to 1st April, 2000. From 1st April, 2000 till 30th June, 2001 similar provisions were contained in Rule 57AD of the Central Excise Rules, 1944. In the context of these Rules circular dated 8th November, 2001 of the Ministry of Finance was issued. It dealt with the question whether 8% has to be paid on the sale price of exempted goods. Under Rule 6(3)(v) of Cenvat Credit Rules, 2004, 8% has been increased to 10%. The relevant portion of the Circular dated 8th November, 2001 reads as under :- "Further, it is now clearly and specifically mentioned in Rule 57AD(4) that the provisions relating to non-availability of modvat credit and reversal @ 8% is not applicable in case the exempted goods are cleared for export under bond in terms of the provisions of Rule....
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....ated 31st March, 2003. Rule 6(6)(iv) relates to supplies to United Nations or an international organisation for their official use. These are exempt by Notification No. 108/95. Rule 6(6)(v) relates to export under bond. Rule 6(6)(vi) relates to gold or silver arising during refining of copper. These are exempt from payment of duty by Notification No. 5/2006-C.E., dated 1st March, 2006. It would thus be clear that all the clauses of Rule 6(6) are enacted only to deal with the situation when the final products are exempt from payment of duty. If a final product is not exempted from duty, Rule 6(1) is not attracted at all and hence Rule 6(6) is unnecessary. Rule 6(6) is precisely needed only when the final products are exempt from payment of duty. In this context the Revenue itself has accepted that under the provisions of Cenvat Credit Rules, 2002 there were provisions for removal of exempted goods under bond but the same was not available with effect from 9th September, 2004 under Cenvat Credit Rules, 2004. We may reproduce Rule 6(5) of the Cenvat Credit Rules, 2002 which reads as follows :- "(5) The provisions of sub-rule (1), sub-rule (2), sub-rule (3) and s....
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....e identical and the difference in Rule 6(6) of the Cenvat Credit Rules, 2004 and Rule 6(5) of the Cenvat Credit Rules, 2002 is not relevant for the purpose of the present case. Rules 6(1), 6(2), 6(3) and 6(4) of the Cenvat Credit Rules under Cenvat Credit Rules, 2002 as well as under the Cenvat Credit Rules, 2004 remains the same. As noted earlier the object and purpose of Rule 6(6) of Cenvat Credit Rules, 2004 is to promote the policy of the Government that the benefit of duty paid on input is available as credit in respect of certain exempted goods as well as the exempted goods exported under bond. The minor change in the wordings of Rule 6(6) of the Cenvat Credit Rules, 2004 by using the term "excisable goods" instead of exempted goods is that the term 'exempted goods' may not cover the dutiable goods which are exported under bond. Therefore, in order to widen and cover both dutiable and exempted goods exported under bond, Rule 6(6) of Cenvat Credit Rules, 2004 uses the expression "excisable goods". As an illustration, if a car which is dutiable is exported under bond without payment of duty there may be doubt as to whether credit on the inputs will be available, since the car i....
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....itled to claim rebate of duty paid on exported peppermint oil under Rule 18 of the Central Excise Rules, 2002. (3) Commissioner of Central Excise v. Drish Shoes Ltd., 2010 (254) E.L.T. 417 wherein it has been held as under :- 11. The only difference between the Rules of 2002 and 2004 is that while in case of 2002 rules, exception clause contained in sub-rule (5) of Rule 6 was applicable in case of only exempted goods, while exception clause contained in sub-rule (6) of Rule 6 of 2004 rules, applies both to exempted goods, as also goods subject to duty, because the term used in sub-rule (6) is "excisable goods" and not "exempted goods", as was the case in Rules of 2002. (4) Commissioner of C. Ex. and Cus., Aurangabad v. Jolly Board Ltd. - 2017 (50) S.T.R. 131 (Bom.) wherein it has been held as under :- 7. These appeals can only be entertained on substantial questions of law. As far as contention of the Learned Counsel for the appellant about observance of Rule 18 of the Central Exci....
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....preting the provisions of Rule 6(5) of Cenvat Credit Rules, 2002 and Rule 6(6) of Cenvat Credit Rules, 2004, has held that expression "excisable goods" is wider than the expression "exempted goods", as it includes both dutiable and also exempted goods. 20. In view of the above discussion, we hold that an assessee, manufacturing goods chargeable to nil duty, is eligible to avail Cenvat credit paid on the inputs under the exception clause to Rule 6(1), as contained in Rule 6(5) of Cenvat Credit Rules, 2002 and Rule 6(6) of Cenvat Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported. Question No. 1 is answered accordingly. 21. As regards question No. 2, it is clear from a bare reading of Rule 5 of Cenvat Credit Rules, 2004 that a manufacturer, who exports the final products which are exempt from duty, can claim refund of Cenvat. So, this question is also answered against the appellant." 8. It would be clear that in the decision of the Himachal Prades....
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.... 14. Therefore, on a plain reading, we see no difficulty in the Assessee's case falling in the exception carved out in Rule 6(6)(v) of the 2004 Rules. The purpose, apparently, behind carving out of such exceptions appears to be, to neutralise the impact of the duties paid by the exporters, with regard to input tax, whether paid on goods or services. The objective, obviously, is not to export duties, so as to provide much needed competitive edge to Indian exporter in foreign markets. 14.1 India is a party to the WTO regime and, therefore, it is permissible for it to neutralise duties on inputs, whether in the form of goods or services. 15. Thus, having regard to the Rules, qua which we have rendered our view above, and the perceptible object as to why sub-rule (6) of Rule 6 of the 2004 Rules has been put in place, we are not inclined to interfere with the impugned judgment rendered by the Tribunal. (16) Accordingly,....