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2015 (4) TMI 852 - AT - Central ExciseArea based exemption in Jammu and Kashmir - application for fixation of special rate of value addition - alue addition of 36% specified in the exemption notification - Benefit of Notification No. 56/02-CE as amended by Notifications No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08 - Held that - Jammu & Kashmir High Court in its judgment in the case of M/s Reckitt Benckiser 2010 (12) TMI 237 - JAMMU AND KASHMIR HIGH COURT has quashed the amendments to the Notification No. 56/02-CE by Notification No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08 and the effect of the judgment would be that the provisions restricting the benefit introduced in the Notification No. 56/02-CE by these notifications are no longer there. Therefore, in our view, this judgment of Hon ble Jammu & Kashmir High Court would be applicable to those assessees also who had opted for this exemption even after the amendment to the Notification No. 56/02-CE by Notification No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08. Thus those assessees who have set up their units in the areas specified under Notification No. 56/02-CE on or after 06/2/10, have option either to avail Notification No. 56/02-CE or avail the Notification No. 1/2010-CE dated 06/2/10 and in case they opt for Notification No. 56/02-CE, the benefit available to them would not be restricted by Notification No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08. If the appellant, however, opt for the Notification No. 1/2010-CE, the question of determination of special rate of value addition by the Commissioner would come. This rate has to be calculated on the basis of the formula prescribed in the Explanation to para 5 of the notification. In this regard, we do not find any mistake in para 17 of the order-in-original dated 31/5/12 passed by the Commissioner as the value addition has been determined as the difference between the sale value excluding excise, sales tax and other indirect taxes during 2011-12 (Rs. 1,05,11,690/-) and cost of raw material and packing material consumed (Rs. 32,30,184/-) - appellant s plea that the cost of raw material and packing material consumed is nil is not correct and the Commissioner has correctly determined the value addition for 2012-13 as 69.27%. If for 2013-14 the appellant opt for Notification 1/2010-CE and also opt for special rate of value addition, the same must be determined in terms of the above formula. - Matter remanded back - Decided in favour of assessee.
Issues Involved:
1. Applicability of exemption Notification No. 56/02-CE vs. Notification No. 1/2010-CE. 2. Validity of amendments to Notification No. 56/02-CE by Notifications No. 19/08-CE and 34/08-CE. 3. Determination of special rate of value addition by the Commissioner. 4. Eligibility for exemption under Notification No. 56/02-CE post the Jammu & Kashmir High Court judgment. Issue-wise Detailed Analysis: 1. Applicability of Exemption Notification No. 56/02-CE vs. Notification No. 1/2010-CE: The appellant's manufacturing unit, located in Jammu & Kashmir, commenced production in March 2012. Initially, the appellant applied for a special rate of value addition under Notification No. 1/2010-CE, but later claimed eligibility under Notification No. 56/02-CE, which was more beneficial. The Tribunal held that the appellant could opt for Notification No. 56/02-CE despite initially applying under Notification No. 1/2010-CE, referencing the Apex Court's judgment in Share Medical Care vs. Union of India, which allows an assessee to claim benefits under a more favorable notification at a later stage. 2. Validity of Amendments to Notification No. 56/02-CE by Notifications No. 19/08-CE and 34/08-CE: The amendments to Notification No. 56/02-CE by Notifications No. 19/08-CE and 34/08-CE, which restricted the exemption benefit, were quashed by the Jammu & Kashmir High Court in the case of M/s Reckitt Benckiser vs. Union of India. This judgment reinstated the original benefits under Notification No. 56/02-CE, allowing exemption of 100% of the duty paid through PLA without the cap introduced by the amendments. 3. Determination of Special Rate of Value Addition by the Commissioner: For the financial year 2012-13, the Commissioner fixed the value addition rate at 69.27%. The appellant contested this rate, arguing that the cost of raw materials and packing materials should be considered nil as no Cenvat credit was taken. The Tribunal upheld the Commissioner's calculation, stating that the cost of raw materials and packing materials consumed must be deducted regardless of whether Cenvat credit was availed. 4. Eligibility for Exemption Under Notification No. 56/02-CE Post the Jammu & Kashmir High Court Judgment: The Tribunal concluded that the Jammu & Kashmir High Court judgment in M/s Reckitt Benckiser vs. Union of India applies to all assessees who opted for Notification No. 56/02-CE, even after the amendments. Therefore, the appellant, whose unit is located in the specified area and who satisfies the conditions of Notification No. 56/02-CE, is eligible for the exemption benefits without the restrictions imposed by the amendments. Conclusion: The Tribunal set aside the impugned orders and remanded the matters to the Commissioner for a de novo decision. The Commissioner must verify if the appellant's unit meets the conditions of Notification No. 56/02-CE and extend the benefits accordingly. If the appellant opts for Notification No. 1/2010-CE, the special rate of value addition for 2012-13 is fixed at 69.27%, and the rate for 2013-14 should be determined similarly based on the provided data. Disposition: Both appeals were disposed of, and the matters were remanded for further examination and decision by the Commissioner.
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