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2010 (2) TMI 954 - AT - Central ExciseDemand of duty cenvat credit Held that - Respondent stated that the Respondent did not avail any credit on the common inputs used in or in relation to the manufacture of the Naphtha. In some of the cases where such credit was taken, was disallowed by the order passed by the various Adjudication Authorities and in some of the cases where the credit was availed, it was reversed suo motu - Adjudicating Authority has dropped the demand on the ground that as Naphtha was cleared at nil rate of duty under Chapter X Procedure, the same is not to be treated as clearance at nil rate of duty - Naphtha is being cleared at nil rate of duty under various exemption notifications for use in or in relation to the manufacture of fertilizer, therefore the impugned order is not sustainable - matter is remanded to the Adjudicating Authority for de novo adjudication
Issues:
- Interpretation of exemption under Chapter X Procedure - Liability to pay 8% of price of goods cleared at nil rate of duty - Applicability of Rule 57CC/57AD of Central Excise Rules and Rule 6 of CENVAT Credit Rules - Consideration of time-bar plea in duty demand Interpretation of Exemption under Chapter X Procedure: The Revenue appealed against an Adjudication Order by the Commissioner of Central Excise, Patna, arguing that the clearance of goods under Chapter X Procedure should not be treated as clearance under exemption Notification or at nil rate of duty. The Revenue contended that Naphtha cleared at nil rate of duty under exemption notifications should incur a liability of 8% of the price of the goods under Rule 57CC/57AD of Central Excise Rules and Rule 6 of CENVAT Credit Rules. The Adjudicating Authority had dropped the demand, stating that the clearance under Chapter X Procedure was not equivalent to clearance under an exemption Notification. However, the Tribunal found that the Naphtha was indeed cleared at nil rate of duty under various exemption notifications for use in manufacturing fertilizer, leading to the setting aside of the impugned order for reconsideration by the Adjudicating Authority. Liability to Pay 8% of Price of Goods Cleared at Nil Rate of Duty: The Revenue's contention was based on the argument that the Respondent, by availing input credit for common inputs used in manufacturing Naphtha cleared at nil rate of duty, should pay 8% of the price of the Naphtha under relevant rules. The Respondent, on the other hand, denied availing such credit or claimed that any credit taken was either disallowed or reversed. The Tribunal noted the Revenue's reliance on the definition of exemption under Rule 57AD of Central Excise Rules and a previous High Court decision. Ultimately, the Tribunal found in favor of the Respondent, emphasizing that the clearance of Naphtha at nil rate of duty under exemption notifications did not warrant the imposition of the 8% liability. Applicability of Rule 57CC/57AD of Central Excise Rules and Rule 6 of CENVAT Credit Rules: The Revenue argued that Rule 57CC/57AD of Central Excise Rules and Rule 6 of CENVAT Credit Rules mandated the Respondent to pay 8% of the price of goods cleared at nil rate of duty due to availing input credit. However, the Tribunal disagreed, highlighting that the specific circumstances of clearance under Chapter X Procedure for Naphtha under exemption notifications did not align with the Revenue's interpretation, leading to the remand of the matter for fresh adjudication. Consideration of Time-Bar Plea in Duty Demand: The Respondent raised the issue of time-bar, asserting that the duty demand invoking the extended period of limitation due to Naphtha clearance at nil rate of duty under Chapter X Procedure was unjustified. The Respondent argued that there was no intent to evade payment, as evidenced by previous instances where credit was either denied or reversed. The Tribunal acknowledged the Respondent's plea and directed the Adjudicating Authority to re-examine the matter comprehensively, allowing both parties to present relevant documents for a fair adjudication process.
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