2017 (1) TMI 1771 - AT - Central Excise

Refund claim - exempt goods - goods cleared to research institute under exemption Notification 10/97, dated 1-3-1997 - appellant paid an amount equal to 10% of the value of the said exempted goods - applicability of Rule 6(3)(a) of Cenvat Credit Rules - HELD THAT - The ground of refund of the appellant is only that the same goods are cleared on payment of duty and under exemption to the research institute. The contention of the appellant cannot be agreed upon. The Rule 6(3) applies when the excisable goods are cleared on payment of duty and under exemption and if the common inputs are used in both goods Rule 6(3)(a) is clearly applicable. Therefore, the payment of 10% of the value of the exempted goods made by the appellant is in conformation to Rule 6(3)(a) which does not require any interference. Appeal dismissed.

Summary

Issues: Refund of amount paid on exempted goods under Cenvat Credit Rules

Analysis:
1. The appellant, engaged in manufacturing excisable goods, paid 10% of the value of goods cleared to a research institute under exemption Notification 10/97. The appellant sought a refund, arguing that Rule 6(3)(a) of Cenvat Credit Rules applies only when different types of goods are manufactured, one cleared on payment of duty and the other under exemption.

2. The revenue authority contended that Rule 6(2) applies when the same goods are cleared on payment of duty and under exemption, based on the nature of clearance. They argued that Rule 6(3) does not necessitate two different types of goods for its application, asserting that the appellant correctly paid 10% under Rule 6(3)(a).

3. The tribunal held that Rule 6(3) is triggered when excisable goods are cleared both on payment of duty and under exemption, with common inputs used in both scenarios. As the goods in question were cleared on payment of duty and under exemption to the research institute, Rule 6(3)(a) is applicable. The tribunal found the appellant's payment of 10% in accordance with the rule and upheld the decision to deny the refund. Consequently, the appeal was dismissed, affirming the impugned order.

This detailed analysis highlights the key arguments presented by both parties and the tribunal's reasoning in arriving at the decision to dismiss the appeal and uphold the denial of the refund under the Cenvat Credit Rules.