2015 (1) TMI 265 - AT - Central Excise

Exemption under Notifications 8/96, 4/97 and 5/98 - reversal of the value of 8% of the exempted goods cleared during the impugned period - Held that - In this case, the Revenue is not disputing that the respondent has cleared the exempted goods on payment of duty @ 15% and the Revenue is asking to reverse an amount equal to 8% of the value of the impugned goods. As duty has been discharged from the demand asked by the Revenue, therefore, as held by the Hon ble Bombay High Court in the case of CCE, Pune-III v. Ajinkya Enterprises reported in 2012 (7) TMI 141 - BOMBAY HIGH COURT , wherein it was held that if duty paid on the clearance of the goods which did not amount to manufacture, therefore the duty on inputs is not required to be reversed. Following the same analogy in this case, I also held that although the goods have been manufactured from the common inputs but they have been cleared on payment of duty, therefore the reversal of value of 8% of the goods is not required. Accordingly, I do not find any infirmity in the impugned order and the same is upheld - Decided against Revenue.

Summary

Issues:
- Appeal against adjudication order demanding 8% of the value of clearance of exempted goods.
- Interpretation of Notifications 8/96, 4/97, and 5/98.
- Application of Rule 57CC of the Central Excise Rules, 1944.
- Reversal of value of exempted goods cleared during the impugned period.

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI involved the Revenue challenging an order where the Commissioner (Appeals) set aside the adjudication order demanding 8% of the value of clearance of exempted goods. The case revolved around a demand of Rs. 16,07,955/- with interest and penalty confirmed against the respondent by the adjudicating authority. The goods in question were exempted from duty under Notifications 8/96, 4/97, and 5/98. Despite the exemption, the respondent paid duty on the goods at a rate of 15%. The adjudication order held that since the exempted goods were manufactured from common inputs with Cenvat credit, the respondent must reverse 8% of the value of the exempted goods cleared during the period in question.

The Revenue argued that since the goods were exempted under Section 5A(1) of the Central Excise Act, they were not required to pay duty on those goods, and as they were manufactured from common inputs, they should pay 8% of the value of the goods as per Rule 57CC of the Central Excise Rules, 1944. However, upon considering the submissions, the Tribunal noted that the respondent had indeed cleared the exempted goods by paying duty at 15%. The Tribunal referenced a judgment by the Hon'ble Bombay High Court in a similar case, where it was held that if duty was paid on goods that did not amount to manufacture, then the duty on inputs did not need to be reversed.

Based on this precedent, the Tribunal concluded that since the goods in question were manufactured from common inputs but cleared on payment of duty, the reversal of 8% of the goods' value was not necessary. Therefore, the impugned order was upheld, and the appeal filed by the Revenue was dismissed. The Tribunal's decision was based on the principle that duty paid on cleared goods did not require a reversal, aligning with the interpretation of relevant laws and previous judicial decisions.