2012 (7) TMI 838 - AT - Central Excise

Denial of exemption from excise duty under S. No. 91 of Notification No. 6/2006-C.E. dated 1-3-2006 - Non production of certificate to show that the person to whom they were supplying the goods could have imported goods free of customs duty as per the provisions of Customs Notification No. 21/2002-Cus. at Sl. No. 217 - whether exemption can be denied for the reason that the necessary certificate has not been produced before clearance of the goods - Held that - there is a justifiable reason to hold so because there can be some doubt about the time of production of certificate for excisable goods because the condition comes through adaption of condition prescribed in a customs notification. This case involves a substantial right of the appellant to claim an exemption intended for import substitution at competitive prices we are of the view that the exemption cannot be denied for the reason that the certificate is produced later. We have not verified the certificates in detail. We are remitting the matter to the adjudicating authority to cause verification whether the certificates produced later meet the requirement of the notification. Exemption is available only in cases where necessary certificates to ensure its proper end-use is produced which has been done by the appellant only in the case of supplies to Reliance Industries Ltd. Oil India is refusing to give certificate that the goods were used for the specified purpose and the appellant has not made any effort to get such certificate from Jindal Power Ltd. So the inference is that the goods were not used for the purpose for which exemption is granted and the exemption is claimed for the sole reason that it fits into the description of goods as specified under S. No. 15 of list 12 of Customs Notification 21/2002-Cus. When exemption is claimed without satisfying the conditions of the notification we are of the view that the demand invoking extended period of time will be maintainable and appropriate penalty will be leviable - exemption is extended in cases where the appellant is able to produce the necessary certificate as prescribed in the notification and explained above. The appellant shall produce such certificates before adjudicating authority for verification within 30 days of receipt of the order. In other cases duty demand is confirmed along with interest and penalty with option to pay 25% of the duty amount as penalty within 30 days of receipt of the order - Following decision of CCE v. Harish Silk Mills Pvt. Ltd. 2010 (2) TMI 494 - GUJARAT HIGH COURT - CCE v. Dynaspede Integrated Systems Ltd. 2001 (8) TMI 231 - CEGAT CHENNAI - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Eligibility for Excise Duty Exemption
2. Requirement of Certificates for Exemption
3. Time-barred Demand
4. Suppression of Information and Penalty

Issue-wise Detailed Analysis:

1. Eligibility for Excise Duty Exemption:
The appellants claimed exemption from excise duty under S. No. 91 of Notification No. 6/2006-C.E., dated 1-3-2006, for industrial valves supplied to M/s. Reliance Industries Ltd., M/s. Oil India Ltd., and M/s. Jindal Power Ltd. This exemption was contingent upon the goods being exempted from customs duties under Notification No. 21/2002-Cus., subject to fulfilling the conditions therein. The Revenue contended that the appellants did not produce the necessary certificates at the time of clearance, thus not meeting the exemption criteria.

2. Requirement of Certificates for Exemption:
The appellants argued that the conditions specified in the customs notification were only applicable to imported goods and not for claiming excise duty exemption. They contended that the description of the goods matched the items listed in the notification, thereby qualifying for the exemption. The appellants later submitted the necessary documents for M/s. Reliance Industries Ltd. but failed to obtain similar certificates from M/s. Oil India Ltd. and did not pursue certification for M/s. Jindal Power Ltd. The Revenue argued that the conditions of the customs notification should be read mutatis mutandis for excise exemption and that the certificates should have been produced at the time of clearance.

3. Time-barred Demand:
The appellants contended that the show cause notice issued on 9-1-2009 for clearances made during April 2007 to November 2008 was time-barred. However, the Revenue maintained that the extended period for demand was correctly invoked due to the suppression of information by the appellants.

4. Suppression of Information and Penalty:
The Tribunal noted that the excise duty exemption was linked to the customs duty exemption conditions, which were not explicitly adapted for excise purposes. The Tribunal held that the exemption should be available if the goods were supplied to a contractor or sub-contractor for use in oil exploration, even if the certificates were produced after clearance. The Tribunal referenced previous cases where exemptions were granted despite late submission of certificates. However, the Tribunal upheld the demand for M/s. Oil India Ltd. and M/s. Jindal Power Ltd., where necessary certificates were not produced, and imposed penalties for non-compliance with the notification conditions.

Conclusion:
The Tribunal ruled that the excise duty exemption is available if the necessary certificates are produced, even if submitted post-clearance. The matter was remitted to the adjudicating authority for verification of the certificates. The demand for M/s. Oil India Ltd. and M/s. Jindal Power Ltd. was upheld, along with appropriate interest and penalties, with an option to pay 25% of the duty amount as a penalty within 30 days. The appeals were disposed of accordingly.