2013 (9) TMI 998 - AT - Central Excise

Benefit of Notification No. 30/2004-C.E. dated 9-7-2004 - Applicability of Rule 6(3) of the Cenvat Credit Rules 2004 - Held that - As per the show cause notice in respect of the demand amounting to 2, 50, 81, 937/- the cotton fabrics have been exported under bond and therefore in terms of Rule 6(6)(v) of Cenvat Credit Rules the demand is unsustainable. As regards the balance amount of 76, 81, 014/- wherein the cotton fabrics have been exported under claim for rebate of duty it is seen that at the material point of time there were two rates of duty applicable to cotton fabrics - one a nil rate prescribed under Notification No. 29/2004-C.E. as amended and the other 4% adv. prescribed under Notification No. 59/2008-C.E. dated 7-12-2008. Both these rates were unconditional rates. Therefore it is not the case that the goods have been completely exempted. When two different Notifications prescribe two rates of duty the assessee is at liberty to opt for whichever is beneficial to him. It is further on record that the assessee had consulted the department and as per the department s advice the assessee had opted for payment of duty @ 4% under claim for rebate in respect of exports in some cases. Therefore it is not a situation where the duty credit on inputs were availed in respect of exempted goods and dutiable goods simultaneously. Hence the provisions of Rule 6(3) of the Cenvat Credit Rules 2004 is not applicable in the facts of the case - Decided in favour of assessee.

Summary

Issues:
- Interpretation of Rule 6(1), 6(2), and 6(3) of the Cenvat Credit Rules, 2004 in relation to export of goods.
- Application of Notification No. 29/2004-C.E. and Notification No. 59/2008-C.E. on cotton fabrics.
- Compliance with duty payment and exemption provisions for cotton fabrics.
- Consultation with departmental authorities regarding duty payment on cotton fabrics.
- Assessment of Cenvat credit availed on inputs for both exempted and dutiable goods.

Analysis:
1. Interpretation of Cenvat Credit Rules: The appellant argued that Rule 6(1), 6(2), and 6(3) of the Cenvat Credit Rules, 2004 do not apply to export of goods, challenging the sustainability of the demand made under these rules. The Tribunal examined the provisions of Rule 6(6)(v) which exempt excisable goods removed without payment of duty when cleared for export under bond. The demand made under Rule 6(3) was found unsustainable for goods exported under bond, leading to the appeal being allowed on this ground.

2. Application of Notifications on Cotton Fabrics: The contention arose regarding the application of Notification No. 29/2004-C.E. and Notification No. 59/2008-C.E. on cotton fabrics. The Tribunal noted that both notifications prescribed different rates of duty on cotton fabrics, with one providing a 'nil' rate and the other a '4% adv.' rate. As both rates were unconditional, the appellant had the liberty to choose the beneficial rate. The Tribunal found that the appellant had consulted departmental authorities for clarification on duty payment, and their compliance with duty payment provisions was deemed acceptable.

3. Compliance with Duty Payment and Exemption Provisions: The department argued that the appellant did not declare the composition of the cotton fabrics exported, questioning the factual correctness of the appellant's claim regarding the rates of duty on cotton fabrics. However, the Tribunal found that the appellant had paid duty at the prescribed rates in some cases and exported goods under bond without payment of duty in others, based on the advice received from the department, which was considered a valid approach.

4. Consultation with Departmental Authorities: The appellant had sought clarification from jurisdictional authorities regarding duty payment on cotton fabrics, as evidenced by letters submitted to the jurisdictional Assistant Commissioner. The Tribunal acknowledged this proactive step taken by the appellant in seeking guidance from the department, which further supported the appellant's compliance with duty payment requirements.

5. Assessment of Cenvat Credit on Inputs: The Tribunal concluded that the demand made under Rule 6(3) of the Cenvat Credit Rules, 2004 was not applicable in this case, as the appellant had not availed duty credit on inputs for exempted and dutiable goods simultaneously. The Tribunal found that the appellant's approach of paying duty at the prescribed rates based on the advice received from the department was in line with legal provisions, leading to the impugned demands being deemed unsustainable in law, resulting in the appeal being allowed.