9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (9) TMI 403 - HC - Central ExciseCenvat Credit - export of tractors - duty was paid on captive consumption of parts where the parts were exempted unconditionally - revenue contended that appellants were not required to pay duty on the aggregate parts and are therefore, not entitled to take credit of the duty so paid? - Sr. No. 92 of Notification No. 6/2006-C.E. - Scope of Section 5A(1A) of Central Excise Act, 1944 - Held that - Though the aggregates are exempted from duty, the assessees are paying duty on the aggregates used for manufacture of tractors cleared for export. They are paying this duty and, then, claiming drawback though the duty is not chargeable at all on the aggregates. There is substance in the contention that when the Column No. 3 describes in clear terms that all goods except road tractors for semi-trailers of engine capacity more than 1800 CC and Sr. No. 92 clarifies for parts, used within the factory of production for manufacture of goods of Heading 8701 shall carry Nil rate of duty but both Sr. Nos. 40 and 92 in the subject Notification do not refer to any condition, then, it is not possible to accept the arguments of Mr. Sridharan that the exemption is not absolute but conditional. Once we have taken the above view, then, it is not necessary to refer to other judgments relied upon by Mr. Sridharan with regard to interpretation of exemption notifications. It is only when the exemption claimed is conditional or that two views are possible on a reading of the exemption notification that these judgments can have any application. These judgments also, therefore, do not assist the assessees-appellants. Writ petitions failed - That bifurcation made by the Tribunal is in clear terms traceable to the above Rules. Hence, the Tribunal s order confirming the demand partially does not require any interference. The grounds which have been taken in these Writ Petitions and the Central Excise Appeals are based on the option to pay duty on the tractor parts consumed within the factory of production for manufacture of tractors exported under bond. However, that option itself is not available in view of the language of Section 5A(1A) and the Cenvat Credit Rules. In these circumstances, we do not find any fault in the orders passed by the Central Government and that of the Tribunal. - Decided against the assessee.
Issues Involved:
1. Justification of the Appellate Tribunal in confirming a demand of Rs. 15,40,95,593. 2. Applicability of unconditional exemption under Sr. No. 92 of Notification No. 6/2006-C.E. 3. Eligibility of Cenvat credit on inputs used in the manufacture of exempted goods. 4. Interpretation of Section 5A(1A) of the Central Excise Act, 1944. 5. Legality of demands and penalties imposed by the Commissioner of Central Excise. 6. Validity of the procedure adopted by the appellants for availing Cenvat credit. 7. Applicability of Rule 6 of the Cenvat Credit Rules, 2004. 8. Entitlement to drawback claims. Detailed Analysis: 1. Justification of the Appellate Tribunal in confirming a demand of Rs. 15,40,95,593: The Tribunal confirmed the demand on the grounds that parts of tractors captively used in the manufacture of tractors are unconditionally exempt from Excise duty under Sr. No. 92 of Notification No. 6/2006-C.E. The appellants were not required to pay duty on these parts and, therefore, not entitled to take credit of the duty so paid. 2. Applicability of unconditional exemption under Sr. No. 92 of Notification No. 6/2006-C.E.: The Notification exempts parts used within the factory of production for the manufacture of tractors under Heading 8701 from duty. The Tribunal held that this exemption is unconditional for the purposes of Section 5A(1A) of the Central Excise Act, 1944. Therefore, the appellants could not pay duty on these exempted parts and claim Cenvat credit. 3. Eligibility of Cenvat credit on inputs used in the manufacture of exempted goods: The Tribunal and the Commissioner held that Cenvat credit is not available on inputs used exclusively in the manufacture of exempted goods. Rule 6(1) of the Cenvat Credit Rules, 2004 prohibits availing credit on such inputs. The appellants' practice of paying duty on exempted parts and claiming credit was found to be contrary to this rule. 4. Interpretation of Section 5A(1A) of the Central Excise Act, 1944: Section 5A(1A) clarifies that where an exemption from the whole of the duty of Excise has been granted absolutely, the manufacturer shall not pay the duty of Excise on such goods. The Tribunal concluded that the exemption under Sr. No. 92 is absolute, and therefore, the appellants could not pay duty and claim credit. 5. Legality of demands and penalties imposed by the Commissioner of Central Excise: The Commissioner confirmed demands and imposed penalties for wrong availment of Cenvat credit on aggregates used in the manufacture of tractors exported under bond. The Tribunal upheld these demands and penalties, finding that the appellants' actions were contrary to the provisions of the Central Excise Act and Cenvat Credit Rules. 6. Validity of the procedure adopted by the appellants for availing Cenvat credit: The appellants claimed they paid duty on aggregates used for exports and availed Cenvat credit. However, the Tribunal found this procedure invalid under the Cenvat Credit Rules, 2004, as the parts were exempted from duty. The appellants' method of availing credit was not permissible. 7. Applicability of Rule 6 of the Cenvat Credit Rules, 2004: The Tribunal noted that Rule 6(1) prohibits Cenvat credit on inputs used in the manufacture of exempted goods. Rule 6(6)(v) allows an exception for goods cleared for export under bond, but this did not apply to the appellants' case as the goods were exempted. The Tribunal concluded that the appellants could not claim credit under these rules. 8. Entitlement to drawback claims: The Tribunal and the Commissioner rejected the appellants' drawback claims, finding that the duty paid on exempted parts could not be considered for fixing the drawback rate. The appellants' claim for refund or reversal of duty paid on inputs used in the manufacture of parts for export was also denied. Conclusion: The High Court upheld the Tribunal's findings, confirming the demands and penalties imposed by the Commissioner. The Court found no merit in the appellants' claims and dismissed the appeals and writ petitions. The exemption under Sr. No. 92 was deemed unconditional, and the appellants were not entitled to pay duty on exempted parts and claim Cenvat credit. The procedure adopted by the appellants was found to be contrary to the provisions of the Central Excise Act and Cenvat Credit Rules.
|
