2015 (11) TMI 43 - AT - Central Excise

Duty demand u/s 11D - Denial of Cenvat Credit - activity of repacking from bulk to retail pack of refined edible oil - payment of duty in terms of the notification no. 37/03-CE dated 30.04.2003 - Held that - Notification gives option of either paying duty of ₹ 1/- per kg. or claiming exemption of nil rate of duty on the goods which are refined edible oils and if they are packed into unit containers. It is also seen that Entry Nos. 244(B) and (C) do not have any condition and are also not mutually exclusive. It is a settled law that when there are two views possible on a Notification, the view which is more beneficial to the assessee has to be applied. In this case, the appellant felt that payment/discharge of duty of ₹ 1/- per kg. on the unit containers of refined edible oil manufactured by them would be more advantageous to him and has chosen to do so. When the Notification itself gives two options, the choice of the appellant to choose an option which is beneficial to him cannot be faulted with. - as it is seen that entry no. 244 (B) & (C) do not have any condition and are also not mutually exclusive. It is settled law that when there are two views possible on notification, the view which is more beneficial to the assessee is to be applied. In this case appellant feels that payment at discharge of duty at ₹ 1 per kg of unit container of refined edible oil manufactured by them would be more advantageous to them and has chosen to pay them. With notification itself give 2 options. Choice of the appellant to chose an option which is more beneficial to them cannot be faulted with. Entry at SI. No. 244 (C) of the notification is not applicable. Therefore, in the light of above cited decisions in the case of Sariba Agro Ltd. (2009 (2) TMI 297 - CESTAT, BANGALORE) we hold that appellant has rightly claimed entry 244 (B) of the notification no. 37/03-CE dated 30.04.2003 and chose to pay duty at the rate of ₹ 1 per Kg. In these circumstances, Cenvat Credit cannot be denaied to the appellant and appellant is availing Cenvat Credit and Paying duty on their final product. Therefore, provisions of section 11D are not applicable to the facts of this case. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
- Denial of Cenvat Credit on inputs and duty demand under section 11D of the Central Excise Act 1994.

Analysis:
1. The appellant appealed against the order denying Cenvat Credit on inputs and demanding duty under section 11D of the Central Excise Act 1994. The appellant procured refined edible soya oil and repacked it in smaller quantities, clearing it on payment of duty. The Revenue contended that the appellant's final product, exempted under a notification, did not require duty payment, hence no entitlement to Cenvat Credit. A show cause notice was issued for denial of Cenvat Credit, duty recovery under section 11D, and penalty imposition. Lower authorities upheld the denial and confirmed the duty, interest, and penalty. The appellant challenged this decision.

2. The appellant's representative argued that the appellant's repacking activity did not involve the processes specified in the exemption notification, making the clause exempting refined edible oil inapplicable. Referring to Chapter note 4 of the Central Excise Tariff Act 1985, the repacking activity was considered manufacturing, thus liable for duty payment. Citing a Tribunal decision in Sariba Agro Ltd. Vs. CCE Guntur-2009, the representative contended that the more beneficial entry in the notification should apply, as per legal precedent.

3. The Revenue supported the impugned order, leading to a detailed hearing where both sides presented their arguments. The Tribunal analyzed the case, noting that the appellant's repacking constituted manufacturing and the key issue was whether the final product was exempted or liable for duty under the notification. Referring to a previous case, the Tribunal examined the notification's provisions, highlighting that the appellant had chosen to pay duty at Rs. 1 per kg, a beneficial option under the notification. The Tribunal emphasized that when two interpretations of a notification are possible, the one favorable to the assessee should apply, as established in legal precedents.

4. The Tribunal concluded that as the appellant did not engage in the specified processes for exemption under the notification, the clause exempting refined edible oil was not applicable. Therefore, the appellant rightly chose to pay duty at Rs. 1 per kg, availing Cenvat Credit and paying duty on the final product. Consequently, the provisions of section 11D were deemed inapplicable, leading to the setting aside of the impugned order and allowing the appeal with any consequent relief.

This detailed analysis of the judgment showcases the legal arguments, interpretation of notifications, and application of legal principles in resolving the issues raised in the case.