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2023 (2) TMI 659
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....o such extent. 2. The appellant had, during 2007-08 to 2012-13, availed credit of Rs. 42,13,65,443/- and proceedings were initiated against them to disallow Rs. 8,35,24,797/- pertaining to credit attributable to the other two factories in proportion to production that should, according to central excise authorities, have been excluded from the pool available for distribution. 3. The appellant had submitted before the adjudicating authority that the said factories, even though exempted from basic excise duty, could not be said to have been manufacturing 'exempted goods' within the meaning of rule 2(d) of CENVAT Credit Rules, 2004 as 'automobile cess' levied under the Industrial (Development and Regulation) Act, 1951, along with other applicable cesses thereon, was being fully discharged by them. This plea did not find resonance in the impugned order which held that '43. As per Rule 2(d) of Cenvat Credit Rules, 2004 exempted goods means excisable goods which are exempted from the whole of duty of excise leviable thereon and includes goods which are chargeable to Nil rate of duty. The Central govt. has the power to grant exemption full or partial from payment of duty by issue of a....
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....sion of the Tribunal in Fosroc Chemicals India Pvt Ltd v. Commissioner of Central Excise & Service Tax, Bangalore - LTU [2016 (42) STR 28 (Tri.-Bang.)] and that the decision of the Hon'ble Supreme Court in Bajaj Auto Limited v. Union of India [2019 (366) ELT 577 (SC)], following the earlier decision in SRD Nutrients Private Ltd v. Commissioner of Central Excise, Guwahati [2017 (355) ELT 481 (SC)] that discarded the claim of Revenue to limit exemption under the notification supra to the basic excise duty on the finding that the 'other cess' was also so entitled owing to being based on basic excise duty. It was also pointed out that exemption from basic excise duty on clearances effected by the units at Rudrapur and Haridwar was not in dispute. 6. On perusal of the decision of the Hon'ble High Court of Bombay in re Mahindra & Mahindra Ltd, we find that there is an elaborate discussion on the logic in the decision of the Tribunal to narrow the intent of rule 6 of CENVAT Credit Rules, 2004 to basic excise duties only. Taking note that the submission of Revenue mirrored the decision of the Hon'ble High Court of Uttarakhand in Hero Motocorp Ltd v. Commissioner of Central Excise, Dehradu....
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....ases, where the main duty, which was the basic excise duty, was exempted. It construed the expression "duty of excise" appearing in the definition of "exempted goods" (in respect of which Rule 6 applied) to be covering only the basic excise duty payable under the Act. The Court held that the basic excise duty was the substantial duty, out of the aggregate levies on the final product; apparently, the intention of rule-makers was that when the final product was exempted from payment of substantial part of the aggregate levies, the assessee, who opted for the benefit of exemption from duty under Section 3 of the Act, could not, at the same time, claim further benefit by way of Cenvat credit. The Court, accordingly, rejected the appellant's case that it was entitled to claim Cenvat credit of basic excise duty paid on the raw materials for payment of NCCD and the cesses on the final products exempted from payment of basic excise duty. Learned Counsel for the Department submits that the decision in Hero Motocorp squarely covers the present case, and the law stated therein deserves to be followed. 7(d). Having regard to (i) the nature of the various duties or cesses [which are in addit....
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.... duties, thus, holds no water. The singular use of the word "duty" cannot be considered as a decisive basis for construing the expression "exempt from the whole of duty of excise" in Rule 2(d). The only other reason cited by the Tribunal for its interpretation that Rule 3 of Cenvat Credit Rules, 2002/2004 allows a manufacturer credit of all duties of excise, i.e. basic duty of excise and additional duty of excise, and also of other duties and cesses such as education cess, national calamity contingent duty, etc., but "duty of excise" has been referred to Rule 3(1)(i) and 3(1)(ii) and nowhere else, whereas other cesses and duties have been separately referred to, is also neither here nor there. Once it is seen that these cesses and duties are also excise duties and on that basis are included in the Cenvat credit scheme, as indicated by Rule 3 itself, the fact that these are referred to as cesses or duties loses its significance altogether; it is hardly determinative for construing the expression "duty of excise". 7(f). The decision of Uttarakhand High Court in Hero Motocorp Ltd. relies, apart from the singular-plural dichotomy referred to above, heavily on the Supreme Court judgm....
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....rom the obligation to interpret the expression "duty of excise" in the two notifications. Whilst construing the expression, thus, the Court, in the first place, noted that the notifications were issued under Rule 8(1); if so, the expression "duty of excise" used in them ought to bear the same meaning which it had in Rule 8(1) and that meaning clearly was : excise duty payable under the Central Excises and Salt Act, 1944. Such "duty", for the purposes of the Rules, was defined in Clause (v) Rule 2 to mean "duty payable under Section 3 of the Act". It could not, in the circumstances, bear the extended meaning suggested by the assessee so as to include special excise duty or auxiliary excise duty. Moreover, the Court noted that when the first notification was issued, namely, as of 1 August 1974, there was no special duty of excise leviable on the concerned goods, i.e. "tyres". It came to be levied under various Finance Acts enacted year to year subsequently. The Court was of the view that, in the premises, it was difficult to understand how the expression "duty of excise" in a prior notification could possibly be read as comprehending special duty of excise which did not even exist at....
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....ion "duty of excise" is used in Cenvat Credit Rules, which themselves include the various duties and cesses referred to therein, including the education cess and auto cess, etc. as part of "Cenvat", which is an equivalent expression to "duty of excise" after the Act was amended by introducing Section 2A therein. The expression "duty of excise" used in Cenvat Credit Rules, thus, does not, by its own force or on its own logic, lend to a distinction between basic duty of excise under the Act and special excise duties or cesses or other duties leviable under other enactments. 7(g). We are in respectful disagreement with the judgment of Uttarakhand High Court in Hero Motorcorp Ltd., to the extent it holds that Rule 6 of Cenvat Credit Rules was intended to cover those cases, where the main duty, which is the basic excise duty, was exempted. The only reasons for this statement indicated in Hero Motorcorp Ltd. were that, firstly, when the rulemaker made the Cenvat Credit Rules, it had before it the understanding of the phrase "duty of excise" in terms of the judgment of the Supreme Court in Modi Rubber Ltd. and, secondly, the expression "whole of the duty' was appropriately traced to th....