2012 (3) TMI 352 - AT - Central Excise

Benefit of Notification No. 108/95-C.E. - project was financed by World Bank only with effect from 1-3-2000 - whether the said exemption could be extended to goods cleared prior to that date - Held that - It stands explained by the Appellants that initially the goods were imported without payment of duty availing the exemption for goods imported for supply to a project financed by World Bank and when the issue that they might not be eligible for such exemption for the period prior to 1-3-2000 was pointed out to them they paid the duty subsequently. In the facts of the case duty paid on raw materials should have been taken into account while the duty liability - exemption under Notification No. 108/95-C.E. cannot be denied for the reason that part of the project was met by the beneficiary of the loan from the World Bank. The fact that the expenditure up to a particular time frame was met by the beneficiary of the loan is not substantially different from the said position - Decided in favour of assessee.

Summary

Issues:
1. Whether exemption under Notification No. 108/95-C.E. can be extended to goods cleared prior to the date when the project was financed by the World Bank.
2. Whether the Appellants are eligible for Cenvat credit on customs duty paid on inputs.
3. Whether the duty demand is barred by limitation.
4. Whether the Appellants are entitled to a set-off for countervailing duty paid by PGCIL on raw materials.
5. Whether the Appellants are eligible for a refund of duty already paid.

Issue 1 - Exemption under Notification No. 108/95-C.E.:
The Appellants manufactured transmission towers for a project financed by the World Bank. The project was certified by PGCIL to be covered under the World Bank loan. The Appellants claimed exemption under Notification No. 108/95-C.E. for goods cleared before the World Bank financing commenced. The Tribunal noted that the Appellants produced necessary certificates for claiming the exemption at the time of clearance, and there was no evidence of misrepresentation or fraudulent certificates. The Tribunal held that the exemption cannot be denied based on the timing of financing, citing the case law precedent of Nestor Pharmaceuticals Ltd. The Appellants succeeded on merits, and the duty demand was set aside.

Issue 2 - Cenvat Credit Eligibility:
The Appellants argued for Cenvat credit on customs duty paid on inputs used. The Tribunal found that the duty paid on raw materials should have been considered while determining the duty liability. The Appellants' claim for Cenvat credit was intertwined with the duty liability issue and was allowed as part of the overall decision on duty demand.

Issue 3 - Limitation of Duty Demand:
The Appellants contended that the duty demand was barred by limitation due to no suppression of facts on their part. The Tribunal noted that the Appellants paid excise duty promptly when the issue was raised and found no intent to evade payment. The duty demand was set aside, considering the absence of misrepresentation or suppression.

Issue 4 - Set-off for Countervailing Duty:
The Appellants sought a set-off for countervailing duty paid by PGCIL on raw materials. The Tribunal observed that the duty paid by PGCIL on imported raw materials should have been accounted for in determining the duty liability. However, the Tribunal directed that the consideration of the set-off should be done in separate proceedings, distinct from the duty demand adjudication.

Issue 5 - Refund of Duty Already Paid:
The Appellants raised the issue of eligibility for a refund of duty already paid. The Tribunal determined that this matter should be addressed in a separate proceeding, specifically a refund application under Section 11B. The Tribunal highlighted the need to examine issues like the time limit for the claim and the passing on of the duty incidence to buyers. The Tribunal did not pass any orders on the refund claim in the context of the duty demand proceedings.

Conclusion:
The Tribunal allowed the appeal, setting aside the duty demand, interest, and penalty imposed. The Appellants were successful in establishing their entitlement to the exemption under Notification No. 108/95-C.E. The Tribunal clarified that the issue of refund of duty already paid should be addressed separately in accordance with the applicable legal provisions. The judgment emphasized the importance of considering all relevant factors, such as financing timelines and duty payments, in determining excise duty liabilities and entitlements.