TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 360
X X X X Extracts X X X X
X X X X Extracts X X X X
....azid (3) Thiacetazone (4) Ethambutol (5) Sodium PAS 6) Pyrazinamide (7) Dapsone (8) Clofazamine (9) Tetracycline Hydrochloride (10) Pilocarpine (11)Hydrocortisone (12)ldoxuridine (13)Acetazolamide (14) Atropine (15) Homatroprn (16)Chloroquine (17)Amodiaquine (18)Quinine (19)Pyrimethamine (20)Sulfamethopyrezine (21)Diethyl Carbamazine (22) Arteether or formulation of artemisinin. 1.3 The said medicaments, at Sr. No. 54 & 59 of Notification No.4/06-CE are exempt subject to fulfillment of various conditions stipulated therein. The Appellants have cleared the said medicaments at nil rate of duty availing exemption for home clearances. However, when the said medicaments were cleared for export, the same were exported either under Bond/LUT under Notification No.42/01-CE(NT) dated 26.06.2001 issued under Rule 19 of Central Excise Rules, or under the claim for rebate under Notification No. 19/04-CE(NT) dated 6.9.2004 issued under Rule 18 of Central Excise Rule, under a bonafide belief that exemption notification issued under Section 5A was not available for export. 1.4 Wherever goods are exported under Bond/LUT, proofs of export were filed within the period of one year from the date of e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der Bond/LUT and hence, they were required to pay presumptive tax of 5% of the value of the exempted goods exported under Rule 6(3) of Cenvat Credit Rule. Hence this appeal. 2. Learned Counsel Ms. Manasi Patil with Shri Viraj Reshamwala, Advocates appearing on behalf of the appellant submits that the Appellants were availing exemption under Notification No 4/2006-CE at Sr.Nos. 54 and 59 for clearances of medicaments (i.e. formulations) falling under TI 3004 90 57 that exemption at Sr.No.59 is subject to condition that the formulations should have been manufactured from bulk drugs specified in list 1, while at Sr.No.54 bulk drugs or formulations are subject to the condition that the same should be specified in list 3. that barring provision under Section 5A(1A) of CEA, 1944 would apply only in case of absolute exemption. Rule 6 of CCR, 2004 would not apply to exempt medicaments cleared under Bond/LUT for export under Notification No.42/01-CE(NT) dated 26.06.2001 issued under Rule 19 of CER, 2002 in light of Rule 6(6)(v) of CCR, 2004. 2.1 She further submits that as per Rule 6(6)(v) of Cenvat Credit Rules, 2004 maintenance of separate accounts or reversal of credit is not required o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....83 (T) Hunsur Plywood Works -1996 (82) ELT 256 (T) 2.5 She submits that once the conditions of Rule 18 read with Notification No. 19/2004-CE(NT) are fulfilled and the fact of export on payment of duty is not disputed, disputing the credit availed on inputs used for manufacture of goods exported under claim for rebate, on the ground that, the same goods were cleared for home consumption by availing exemption under Notn.4/2006- CE [Sr. No.54 & 59], is incorrect, especially when there is no such bar for entitlement of rebate under Rule 18, CER., 2002; 2.6 She submits that on export of goods, either of the following benefits is available, with regard to taxes borne on the inputs used for manufacture of such export goods: i. refund of cenvat credit of duty paid on inputs attributable to goods exported under Rule 5 of Cenvat Credit Rules, 2004 r/w Notfn.No.5/2006- CE(NT) dated 14.3.2006; or ii. rebate of duty paid on inputs attributable to goods exported under Rule 18 r/w Notfn.No.21/2004-CE(NT) dated 6.9.2004; or iii. Drawback of duty paid on inputs attributable to goods exported under drawback rules. 2.7 She submits that, in any case, demand covered under SCN dated 02.08.201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(d) Trans Engineers India Pvt. Ltd. = 2015 (40) STR 490 (T) -do- Upheld by Bombay High Court-2018-TIOL-133-HC-MUM-CX 2.11 She further submits that, in any case, in Appellants' own case, on the very same issue pertaining to refund, for the period 07/07/2013 and 09/07/2013, Hon'ble CESTAT vide Order No. A/11704/2019 dated 09.08.2019 [2019-TIOL-2868-CESTAT-AHM], has allowed the appeal by sanctioning the refund claim and remanded the matter for the purpose of considering the aspect of unjust enrichment. That Appellants' case pertaining to the refund claim of Rs. 71, 01,440/- for export of exempt medicaments under rebate/bond or LUT, Commissioner (A) vide order dated 27.12.2022 after considering the said order of CESTAT dated 09.08.2019 [2019-TIOL-2868-CESTAT-AHM], has allowed the appeal by way of remand. Personal penalty upon Shri Vinayak Shirodkar, Vice President, is not sustainable as he is working at Head Office, not controlling the activities at factory and also not having any personal gain being a salaried employee. With the above submissions and those made before Lower Authorities, grounds of appeal, the Appellants humbly pray for setting aside the impugned Order-in-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esaid. Explanation.- For the purposes of this notification, the rates specified in column (4) of the said Table are ad valorem rates, unless otherwise specified. S. No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No 54. 28, 29 or 30 The bulk drugs or formulations specified in List 3 Nil - 59. 30 Formulations manufactured from the bulk drugs specified in List 1. Explanation. - For the purposes of this notification, the expression "formulation" means medicaments processed out of or containing one or more bulk drugs, with or without the use of any pharmaceuticals aids (such as diluent, disintegrating agents, moistening agent, lubricant, buffering agent, stabiliser or preserver) which are therapeutically inert and do not interfere with therapeutical or prophylactic activity of the drugs, for internal or external use, or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply. Nil - From the reading of the above notification it can ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ule 2 shall include an activity, which is not a 'service' as defined in section 65B(44) of the Finance Act, 1994 [provided that such activity has used inputs or input services]. Explanation 4. - Value of such an activity as specified above in Explanation 3, shall be the invoice/agreement/contract value and where such value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Finance Act, 1994 and the rules made thereunder.] [(2) A manufacturer who exclusively manufactures exempted goods for their clearance upto the place of removal or a service provider who exclusively provides exempted services shall pay the whole amount of credit of input and input services and shall, in effect, not be eligible for credit of any inputs and input services.] [(3) (a) A manufacturer who manufactures two classes of goods, namely :- (i) non-exempted goods removed; (ii) exempted goods removed; or (b) a provider of output service who provides two classes of services, namely :- (i) non-exempted services; (ii) exempted services, shall follow any one of the following options applicable to him, namely :-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pplicable in case the excisable goods removed without payment of duty are either - [(i) cleared to a unit in a special economic zone or to a developer of a special economic zone for their authorised operations; or] (ii) cleared to a hundred per cent. export-oriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995, number G.S.R. 602(E), dated the 28th August, 1995; or [(iva) supplied for the use of foreign diplomatic missions or consular missions or career consular offices or diplomatic agents in terms of the provisions of Notification No. [12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated the 17th March, 2012]; or] (v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or (vi) gold or silver falling within Chapter 7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to such payment, on the basis of documentary evidence of the payment so received.] From the above rule it can be seen that the demand of an amount under Rule 6(3) of Cenvat Credit Rules, 2004 shall arise only in case where the input or input service is commonly used in the manufacture of dutiable and exempted goods. As opined by us herein above since appellant have not availed the exemption Notification No. 4/2006-CE question of application of rule 6(3) does not apply. Moreover in respect of the goods cleared under claim for rebate the appellant have admittedly paid the excise duty. Once the excise duty has been paid the demand under rule 6(3) shall not be sustainable. 4.4 Without prejudice we also find that in catena of judgments, it has been held that even though if on any product duty is not payable for any reason but the assessee paid the duty the Cenvat cannot be denied consequently the provision of Rule 6(3) of Cenvat Credit Rules, 2004 will not be applied. Some of the judgments are given below:- (a) In the case of Drish Shoes Ltd - 2010 (254) ELT 417 (HP), the Hon'ble High Court passed the following judgment:- "8. It is not in dispute that the respondent is engaged in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce. Rules of 2004 are applicable in respect of inputs received by the manufacturer after 10th day of September, 2004. Since finished leather was exported between August, 2004 and March, 2005 and it was not clear as to when the inputs were received, so reference has been made to both the sets of rules. As already noticed, the provisions of both the rules are similar, except that under the Rules of 2002, exception contained in sub-rule (5) of Rule 6 was applicable only to the exempted goods, while under the Rules of 2002, exception applies to all excisable goods, irrespective of the fact whether they are exempted or subject to levy of duty. 13. Assistant Commissioner file, rejecting the claim of the respondent, held that since the finished leather exported by the respondent was exempt from duty, no bond or Letter of Undertaking was required to be furnished and the furnishing of bond by the respondent was only a device to claim CENVAT credit under the CENVAT Credit Rules. He took the view that Rule 6(1) clearly stated that CENVAT credit was not permissible in respect of exempted goods. 14. The Commissioner (Appeals), while accepting the appeal and reversing the order of Assistant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ession " exempted goods", as it includes both dutiable as 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. 22. In view of the aforesaid answers to the questions of law, appeal is dismissed." (b) In the case of Repro India Ltd - 2009 (235) ELT 614 (Bom.), the Hon'ble Bombay High Court has passed the following judgment:- "5. The question for consideration is whether in respect of exempted goods for export, the inputs in respect of which are dutiable, can be cleared by giving bond under Rule 19 of the Central Excise Rules, 2002. For the purp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t their goods only under bond in terms of Rule 13 and not in terms of Rule 12 as such goods cannot be exported on payment of duty and rebate claimed under Rule 12." Thus the Ministry of Finance vide letter dated 8th November, 2001 has specifically clarified that even the exempted goods can be cleared for export under bond in terms of Rule 13 of the erstwhile Central Excise Rules, 1944, which is pari materia with Rule 19 of the Central Excise Rules, 2002. The Circulars issued by the Central Government are binding on the Central Excise Department. The Madras High Court in Tamil Nadu (Madras State) Handloom Weavers Co-operative Society Ltd. v. Assistant Collector of Central Excise, Erode, 1978 (2) E.L.T. (J57) has expressly held that the goods figuring in the Schedule to Central Excise Tariff Act for which duty specified is Nil are also excisable goods. This view has been approved by the Supreme Court in Wallace Flour Mills v. CCE, 1989 (44) E.L.T. 598 (S.C.). As such though the printed books attract nil rate of duty under Heading 49.01 of the First Schedule to the Central Excise Tariff Act, 1985 they are indeed excisable goods. If they are to be exported, Rule 19(1) read with Rul....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6 of the 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, to 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 13 . In the new rule 57AD, it has been explicitly provided what was implicity in erstwhile rules 57C and 57CC. Further, the present rule 57AD(4) clearly goes on to show that the exempted goods are eligible to be exported under bond. To interpret otherwise will render the new rule 57AD(4) redundant. In vie....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... going to the export products. Rule 6(6)(v) has been consciously and expressly enacted with the specific objective to ensure that duty is not levied even on inputs going to the export products. This method of adjustment, both from the point of Government and the assessee is to allow the assessee to take Cenvat credit on the inputs used in the export products and allow the assessee himself to adjust it for payment of duty on other products. If the adjustment is not possible, Cenvat credit is refunded in cash. This appears to be the Scheme of Rule 5 of the Cenvat Credit Rules, 2004. With a view to achieve this object, the Central Government has specifically enacted Rule 6(6)(v) of the Cenvat Credit Rules, 2004 to the effect that the bar created by Rule 6(1) will not apply for goods exported. Considering the conscious and express provisions contained in Rule 6(6)(v) for exported goods, to deny the permission to export under bond and/or to levy 10% on the value of the exported goods under Rule 6(3)(b) on the footing that the printed books exempt and, therefore, attract Rule 6(1) would be incorrect and completely nullify and frustrate Rule 6(6)(v). 9. We may also consider the variou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dated the 28th August, 1995, number GSR 602(E) dated the 28th August, 1995; or (vi) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002." We may reproduce Rule 6(6) of the Cenvat Credit Rules, 2002, which read as under :- "The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either - (i) cleared to a unit in a special economic zone; or (ii) cleared to a hundred per cent export oriented undertaking; or (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995 number G.S.R. 602(E) dated the 28th August, 1995; or (v) cleared for export under the items of the provisions of the Central Excise Rules, 2002; or (vi) gold or silver falling within Chapter 71 of the said First Schedule, arising i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cable in cases the goods removed without payment of duty, therefore in case of goods cleared under Bond/LUT also the demand under Rule 6(3) of Cenvat Credit Rules, 2004 will not sustain. The contention of the revenue is that during the relevant time under the Notification No. 42/2001-CE(NT) dated 26.06.2001 there was condition (1) (iv) of the notification, the same is reproduced below:- "(iv) that export of excisable goods which are chargeable to nil rate of duty or are wholly exempted from payment of duty, other than goods cleared by a hundred per cent export-oriented undertaking, shall not be allowed under this notification;)" 4.6 The revenue has interpreted that as per the above condition the appellant was not supposed to clear the goods under Notification No 42/2001-CE(NT) dated 26.02.2001 therefore the clearance of goods cannot be treated as export under bond and consequently the benefit of Rule 6(6)(v) is not available to the appellant. We find that even though there is a condition in Notification No. 42/2001-CE(NT) but the fact in this case is the appellant have cleared the goods under LUT which was accepted by the revenue at the time of export therefore the clearance is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e if the demand under Rule 6(3) is made, all these schemes which is with the objective that no duty should be charged on input will be defeated. For this reason also the duty paid on the inputs which is used in export goods cannot be demanded under Rule 6(3) of Cenvat Credit Rules, 2004. As the whole exercise is revenue neutral, for this reason also the demand under Rule 6(3) is not sustainable. As per our above discussion the demand under Rule 6(3) is not sustainable on various counts. 4.9 Without prejudice we also find that the appellant have contested strongly the demand on time bar. In this regard we find that the show cause notice dated 02-08-2012 was issued for the period April-2010 to March-2011. Accordingly, the extended period of limitation was invoked. As per the undisputed fact the appellant was registered and were maintaining all the records such as RG-1 Central Excise invoices were issued under Rule 11 of Central Excise Rule, 2002 indicating export under form UT-1. 4.10 At the time of export, the appellant have been filing application for removal of goods for export in form ARE-1 wherein the tax invoice showing exports under bond was made and the said ARE-1 were sign....