2010 (9) TMI 1052 - AT - Central Excise

N/N. 6/2002-CE dated 01.03.2002 - The appellants were taking credit in respect of duty paid on chassis and paying normal rate of full duty on the motor vehicles by including the value of chassis - The case of the revenue is that as per the provisions of N/N. 6/2002 dated 01.03.2002 as amended, vide clause (IV) of Entry (I) of serial no. 214, the duty is payable on motor vehicle under chapter heading 87.04 of the Tariff at the rate of 16% subject to the condition no. 53 of the notification - Held that - the issue involved in this appeal is already settled by the Tribunal in the case of HMM Coaches Ltd. vs. CCE 2008 (6) TMI 121 - CESTAT NEW DELHI , where it was held that if there was no bar on taking credit on chassis as a condition in the notification, then Rule 3(7) would not be applicable - appeal allowed - decided in favor of assessee.

Summary

Issues:
- Interpretation of Notification 6/2002-CE dated 01.03.2002
- Applicability of Rule 3 of the Cenvat Credit Rules
- Entitlement to take credit in respect of duty paid on chassis
- Bar on taking credit on chassis as per the notification
- Settlement of the issue by previous Tribunal decisions
- Application of Section 5A(1A) and its implications

Interpretation of Notification 6/2002-CE dated 01.03.2002:
The case revolved around the interpretation of Notification 6/2002-CE dated 01.03.2002, specifically focusing on the duty payable on motor vehicles under chapter heading 87.04 of the Tariff at the rate of 16%. The notification imposed conditions regarding the credit of duty paid on chassis falling under heading no. 87.06. The revenue argued that the explanation to Rule 3 of the Cenvat Credit Rules prevails over such notifications, leading to the denial of credit on chassis and liability to clear the motor vehicle as per the notification.

Applicability of Rule 3 of the Cenvat Credit Rules:
The Tribunal analyzed Rule 3 of the Cenvat Credit Rules, emphasizing that the term "any inputs" should be construed as "all inputs." The rule aimed to prevent double benefits by denying credit when an exemption was granted subject to the condition of not availing Cenvat credit. The interpretation of Rule 3(7) was crucial in determining the applicability of the exemption notification and the denial of credit on all inputs, including chassis, as per the conditions specified.

Entitlement to take credit in respect of duty paid on chassis:
The appellant's argument relied on previous Tribunal decisions, such as the case of HMM Coaches Ltd., where it was established that the appellant, as a body building unit, had not availed the benefits of Notification No. 6/2002. The Tribunal's analysis emphasized that the appellant had paid duty on the entire value of the vehicle, inclusive of the chassis, and was not obligated to avail the partial exemption granted by the notification.

Bar on taking credit on chassis as per the notification:
The notification specifically barred the credit of duty paid only on chassis, leading to a detailed analysis of the provisions of Rule 3(7) and the implications of denying credit on all inputs as per the conditions specified in the notification. The Tribunal's decision highlighted the necessity to apply Rule 3(7) only in cases where the exemption notification mandated the absence of input credit on any inputs.

Settlement of the issue by previous Tribunal decisions:
The appellant referenced previous Tribunal decisions, including the case of Sita Singh and Sons Pvt. Ltd., to support their contention that the issue at hand had already been settled in favor of the assessee. The Tribunal concurred with the applicability of these decisions to the present case, ultimately setting aside the impugned order and allowing the appeal without delving into the issue of limitation.

Application of Section 5A(1A) and its implications:
The Tribunal's analysis also touched upon Section 5A(1A) and its declaration regarding the grant of exemptions on excisable goods. The interpretation of this section in conjunction with the exemption notification played a pivotal role in determining the appellant's obligation to avail the notification and the implications of not fulfilling the conditions for availing the exemption.