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2024 (1) TMI 387
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..... Mansi Patil, Learned Counsel appearing for the appellant at the outset submits that the whole case of the department is that when Notification No. 04/2006-CE was available to the appellant, which is the absolute notification. The appellant was supposed to clear the goods under said notification hence, there is a liability of 5% amount of value of exempted goods under such notification. 2.1 She submits that this Tribunal in the appellants own case taken a clear view that the Notification No. 04/2006-CE (Sr. No 54 and 59) is conditional one. Therefore, there is no compulsion on the appellant to avail such notification. Accordingly, on the basis of exemption Notification No. 04/2006-CE, the department cannot insist for payment of 5% under Rule 6(i) of Cenvat Credit Rules, 2004. She also placed reliance on the following judgments: CESTAT Order No. FO/11450-11451/2023 dated 07.07.2023- Macleods Pharmaceuticals Ltd. (Period: April, 2010 to March 2011) Sangji Industries - 2008-TIOL-844-CESTAT-AHM Share Medical Care-2007 (209) ELT 321 (SC) Indian Petro Chemicals- 1997 (92) ELT 13 (SC) H.C.L. Limited- 2001 (130) ELT 405 (SC) 3. Shri Tara ....
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....rnment, on being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below read with the relevant List appended hereto, as the case may be, and falling 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 Tariff 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 the Condition number of which is referred to in the corresponding entry in column (5) of the Table aforesaid. 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 ....
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.... be calculated and paid by the manufacturer or the provider of output service, in terms of the provisions of sub-rule (2) or sub-rule (3), as the case may be : Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory. Explanation 2. - Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made there under. Explanation 3. - For the purposes of this rule, exempted services as defined in clause (e) of rule 2 shall include an activity, which is not a 'service' as defined in section 65B(44) of the Finance Act, 1994 [pro....
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....-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be withdrawn during the remaining part of the financial year. Explanation 2. - No CENVAT credit shall be taken on the duty or tax paid on any goods and services that are not inputs or input services. Explanation 3. - For the purposes of this sub-rule and sub-rule (3A),- (a) "non-exempted goods removed" means the final products excluding exempted goods manufactured and cleared upto the place of removal; (b) "exempted goods removed" means the exempted goods manufactured and cleared upto the place of removal; (c) "non-exempted services" means the output services excluding exempted services.] [(3A) ------------------------------------------------------------------------------------------------------------- [(4) ---------------------------------------------------------------------------------------------------------------- [(5) --------------------------------------------------------------------------------------------------------------- (6)....
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....e or to a developer of a Special Economic Zone for their authorised operations.] [(7) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the taxable services are provided, without payment of service tax, to a unit in a Special Economic Zone or to a developer of a Special Economic Zone for their authorised operations or when a service is exported [or when a service is provided or agreed to be provided by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India.] (8) For the purpose of this rule, a service provided or agreed to be provided shall not be an exempted service when :- (a) the service satisfies the conditions specified under rule 6A of the Service Tax Rules, 1994 and the payment for the service is to be received in convertible foreign currency; and (b) such payment has not been received for a period of six months or such extended period as maybe allowed from time-to-time by the Reserve Bank of India, from the date of provision :] [Provided that if such payment is received after the specified or extended period allowed by the Reserve Bank of Indi....
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....5) (vi) of the repealed Rules, provided that sub-rules (1), (2), (3) and (4) shall not be applicable, in case of exempted goods, which are : "(i) xxxxxx (ii) xxxxxx (iii) xxxxxx (iv) xxxxxx (v) cleared for export under bond, in terms of provisions of the Central Excise Rules, 2002." 10. Rule 6(6)(v) of the 2004 Rules provides that the provisions of sub-rules (1), (2), (3) and (4) of Rule 6, shall not be applicable in case the excisable goods removed without payment of duty are : "(i) xxxxxx (ii) xxxxxx (iii) xxxxxx (iv) xxxxxx (v) cleared for export under bond in terms of provisions of the Central Excise Rules, 2002." 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. 12. ....
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....e 3 and sub-rule (1) of Rule 6 of the CENVAT Credit Rules, 2002, as also the Rules of 2004, so as to avoid indirect double taxation on inputs. However, this rule is not absolute. It is subject to exception clause, contained in Rule 6(5) of the Rules of 2002 and 6(6) of the Rules of 2004, and one of the exceptions is in respect of excisable goods, which are cleared for export under bond in terms of the provisions of Central Excise Rules, 2002. 17. Sub-rule (5) of Rule 6 of the Rules of 2002 was applicable only in case of exempted goods. That meant that the exception was not applicable in case of dutiable goods. It appears that this led to anomalous situations. For example, if the goods were dutiable and were exported, credit for CENVAT could not be claimed in respect of input of those goods, at least under the aforesaid exception clause. To overcome this kind of anomalous situations, exception clause contained in sub-rule (6) of Rule 6 of CENVAT Credit Rules, 2004 has been made applicable to all excisable goods. 18. Learned counsel for the appellant argued that term 'excisable goods' used in sub-rule (6) of Rule 6 of 2004 Rules, meant only dutiable goods. Submissio....
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....cation also stipulates that the manufacturer-exporter may furnish a Letter of Undertaking in a prescribed form in lieu of a bond. 5. The petitioners have produced the relevant portion of Letter F.232/20/01-Central Excise dated 8th November, 2001 of Ministry of Finance which has been extracted in Order-in-Original dated 31st March, 2004 by the Commissioner of Central Excise in the case of Lyka Labs Ltd. which reads as under :- "It is deduced that according to CERA since the goods are even otherwise wholly exempted they cannot be exported under Rule 13. In this connection the following would indicate that even exempted goods can be exported in accordance with the provisions of Rule 13. Rule 13 provides that the Central Government may by Notification in Official Gazette permit export of specified goods subject to safeguards, conditions and limitations. In the notification issued under Rule 13, the Government has specified all excisable goods to be eligible for export under bond in terms of Rule 13. The Notification does not make any distinction between the dutiable and exempted goods nor debars the exempted goods from export under Rule 13. Exempted goods are....
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.... required to be paid on the final product which attracts Nil rate of duty, other amounts/sums become payable to the Revenue on account of the failure of the assessee to export. This bond/undertaking is required to be furnished so that the petitioners, undertake to surrender back all the benefits which the assessee has obtained from the Government on the footing that the goods will be exported, but which have not been so exported. 7. We may also consider the provisions of Rule 6 of the Cenvat Credit Rules, 2004. The relevant portion of Rule 6(6)(v) reads as under :- "(6) 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)....... (ii) ..... (iii) ..... (iv) ..... (v) cleared for export under bond in terms of provisions of the Central Excise Rules, 2002." The petitioners had manufactured both dutiable and exempted final product (packaged software and printed books respectively). The petitioner has taken credit on input used in the manufacture of dutiable as well as exempted final products. If the exempted products ar....
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.... goods and do not maintain the account as contemplated by rule 6(2) the petitioner would be required to pay 10% on the sale price of the printed books not so exported. Even though Rule 6(1) of the Cenvat Credit Rules, 2004 provides that no Cenvat credit will be available in respect of the inputs used in the manufacture of exempted products, Rule 6(6)(v) of the Cenvat Credit Rules creates an exemption inter alia in respect of the excisable goods removed without payment of duty for export under bond in terms of Central Excise Rules, 2002. Considering the language of Rule 6(6)(v) of the Cenvat Credit Rules, 2004 the petitioners are entitled to avail Cenvat credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt. 8. The Cenvat credit is allowed n (sic) the duty paid on inputs to mitigate the effect of double taxation of levying duty on inputs as also on the final product. If, however, the exempted final product is exported it calls for a special relaxation/dispensation to make the goods of the country internationally competitive. As an illustration suppose a fina....
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....rch, 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 sub-rule(4) shall ....
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....e 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 is cleared without payment of duty under Rule 6(5) of Cenvat Credit Rules, 2002. It could be argued that it covers only the exempted goods exported and not dutiable goods exported. In order to cover such a situation also, Rule 6(6) of Cenvat Credit Rules, 2004 used the expression 'excisable goods' which is wider to include b....
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....it of Rule 6(6)(v) of Cenvat Credit Rules, 2004 cannot be disallowed by the revenue for the simple reason that such parallel provision was neither made nor any such rider is provided with condition (1)(iv) of Notification No. 42/2001-CE(NT), even there is no mentioned in Rule 6(6)(v) of Cenvat Credit Rules, 2004 that such clearance should be strictly made under Notification No.42/2001-CE(NT). In this position the allegation of revenue for demand of an amount under Rule 6(3) Cenvat Credit Rules, 2004 cannot be sustained. 4.7 This issue has been considered in various judgments where under it was categorically held that even though exempted goods is cleared without payment of duty, the Cenvat Credit of the inputs used in such export goods cannot be denied. Some of the judgments are cited below:- (a) 2000 (122) ELT 115 (T) - Omkar Textile Mills (b) 2002 (149) ELT 469 (T) - SRF Ltd. (c) 2000 (121) ELT 557 (T) - Steelco Gujarat (d) 1999 (114) ELT 618 (T) - JCT Ltd. (e) 2000 (118) ELT 783 (T) - Alpha Drug India Ltd. (f) 1996 (82) ELT 256 (T) - Hunsur Plywood Works 4.8 Without prejudice to the above findings, we furthe....
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....e appellant's records were audited by Audit party. In this fact, there is absolutely no suppression of facts on the part of the appellant. Accordingly the demand for extended period is clearly hit by limitation. The appellant have relied upon the following judgments in support of the demand with regard to limitation:- (a) Pushpam Pharmaceuticals - 1995 (78) ELT 401 (SC) (b) Cosmic Dye Chemical - 1995 (75) ELT 721 (SC) (c) Tamil Nadu Housing Board - 1994 (74) ELT 9 (SC) (d) Chemphar Drugs & Liniments - 1989 (40) ELT 276 (SC) (e) Nestle India - 2009 (235) ELT 577 (SC) (e) 4.11 As regard the appeal of Shri Vinayak Shirodkar, in the impugned order a penalty of Rs 5,000/- under Rule 15A of Cenvat Credit Rules, 2004 was imposed. This penalty was imposed consequent to the confirmation of demand against the appellant company. As per our above discussion since the demand of amount itself is not sustainable, personal penalty imposed on Shri Vinayak Shirodkar will also not sustain. Accordingly, the penalty is set aside. 5. As per our above discussion and findings, the demand under Rule 6(3) of Cenvat Credit Rules, 2004 in the impu....