2015 (11) TMI 210 - AT - Central Excise

Option to avail full exemption or partial exemption with CENVAT Credit - Manufacture of Paper and paperboard or articles - duty under Notification 4/2006 dated 1.3.2006 - Revenue s contention is that their goods are covered by serial No. 90 - Held that - serial No. 90 has two conditions. The first condition limits exemption for goods cleared for home consumption from a factory in any financial year upto first clearances of an aggregate quantity not exceeding 3500 MT. Further, there is another condition about non-availment of Notification 8/2003. In our view, in view of the above mentioned two conditions, it cannot be said that serial No. 90 provides absolute exemption to paper and paper board or articles made therefrom manufactured, starting from the stage of pulp, in a factory, and such pulp contains not less than 75% by weight of pulp made form materials other than bamboo, hard woods, soft woods, reeds (other than sarkanda) or rags. - appellant-assessees cannot be forced to pay duty as per serial No. 90 of Notification 4/2006 and they have option to pay the duty under other numbers, viz. 91 and 93. Since we have taken the view that the appellant cannot be forced to pay the duty under nil rate vide serial no. 90, the other aspects raised in all the show cause notices as also the Revenue s appeal fall flat. - Decided in favour of assessee.

Summary

Issues:
Interpretation of duty rates under Notification 4/2006 for manufacturers of paper and paperboard, applicability of conditions for duty exemptions, and the scope of Section 5A(1A) of the Central Excise Act in relation to absolute exemptions.

Analysis:
1. Interpretation of Duty Rates: The case involved manufacturers of paper paying duty under Notification 4/2006. The dispute arose regarding the applicable duty rates under different serial numbers of the Notification. The Revenue contended that the goods fell under serial No. 90, attracting a nil rate of duty for the initial clearance of 3500 MT. On the other hand, the appellants argued that they had the freedom to choose any entry in the Notification for duty payment.

2. Applicability of Conditions for Duty Exemptions: The Notification contained conditions for duty exemptions under various serial numbers. Serial No. 90 prescribed a nil rate of duty subject to specific conditions, including limits on the quantity cleared for home consumption and restrictions on availing certain other exemptions. The Tribunal analyzed these conditions to determine the extent of exemption granted under each serial number.

3. Scope of Section 5A(1A) of the Central Excise Act: The Tribunal examined the provisions of Section 5A(1A) of the Central Excise Act, which deal with the power to grant exemptions from duty. The section clarifies that where an exemption from duty has been granted absolutely, the manufacturer shall not pay the duty on such goods. The Tribunal considered whether the exemption under serial No. 90 of the Notification constituted an absolute exemption based on the conditions specified.

4. Judgment: After considering the arguments and provisions, the Tribunal held that the appellants could not be compelled to pay duty under serial No. 90 of Notification 4/2006. The Tribunal concluded that the appellants had the option to pay duty under other serial numbers, namely 91 and 93. As a result, the appeals of the appellants were allowed, and the Revenue's appeal was dismissed. The Tribunal's decision was based on the interpretation of the duty rates, conditions for exemptions, and the scope of absolute exemptions under the Central Excise Act.

This detailed analysis of the judgment highlights the key issues of duty rate interpretation, conditions for exemptions, and the legal implications of Section 5A(1A) in the context of the case before the Appellate Tribunal CESTAT MUMBAI.