2022 (1) TMI 1326 - AT - Central Excise

Area Based Exemption - moulds and tools were used within the factory by the appellant for manufacture of excisable goods for General Motors (India) Private Limited. - exemption under N/N. 67/95-CE - extended period of limitation - HELD THAT - N/N. 67/95-CE exempts goods including capital goods used for manufacture of excisable food within the factory of production. Learned Authorized Representative has relied on the decisions in the case of Steel Authority of India Limited 2016 (2) TMI 759 - CESTAT NEW DELHI . In the said case, the goods, namely, Oxygen was cleared within the factory by the appellant to FSNL which in turn was using the same for non-excisable activity. Since the same was used for non-excisable activity, the benefit of 67/95-CE was denied. In that respect, the decision is not applicable to the present case as in the present case the appellants are manufacturing excisable goods within the factory of production. As regard, the goods cleared from the factory to the Pune Unit of the appellant, the plea of Revenue neutrality has been raised by the appellant in their appeal memorandum. No evidence found in support of the plea of Revenue neutrality. No data of the Pune Unit has been submitted and how and in what manner the goods have been used in Pune has not been stated. In view of that, there are no merit in the defence of the appellant, in so far as goods cleared from the factory of the appellant is concerned. The demand in respect of these goods cleared from factory to the Pune Unit is confirmed. Extended period of limitation - HELD THAT - Notification 67/95-CE is very straight forward and leave no scope for doubt. In these circumstances, the motive of avoiding duty cannot be denied. Thus, the extended period has been rightly invoked in respect of the goods cleared from the factory to the Pune Unit. The demand of duty and penalty on those goods is upheld - Appeal allowed in part.

Summary

Issues:
Appeal against demand of Central Excise duty, interest, and penalty - Exemption under Notification 67/95-CE for tools and moulds - Revenue neutrality defense for goods cleared to Pune Unit - Invocation of extended period for demand of duty and penalty.

Analysis:
The appeal was filed against the demand of Central Excise duty, interest, and penalty by Tennco Exhaust India Private Limited. The appellant did not appear for the hearings despite multiple notices, leading to the matter being decided ex-parte due to its age. The Revenue argued that the appellant claimed exemption under Notification 67/95-CE for tools and moulds used in manufacturing products for General Motors (India) Private Limited. The Revenue relied on precedents to assert that duty was required on deemed clearances of goods within the factory. Two invoices for tools and moulds cleared to the Pune factory were also contested by the Revenue, refuting the appellant's defense of revenue neutrality.

In the analysis, it was noted that Notification 67/95-CE exempts goods used for manufacturing excisable goods within the factory of production. The Tribunal distinguished previous cases cited by the Revenue, emphasizing that as long as goods are not physically cleared from the factory and used for manufacturing excisable goods, the benefit of the Notification cannot be denied. Therefore, duty on goods used within the factory for manufacturing excisable goods was set aside. However, for goods cleared to the Pune Unit, the defense of revenue neutrality was found unsupported, leading to the confirmation of demand.

Regarding the invocation of the extended period for duty and penalty, the Tribunal held that the law under Notification 67/95-CE was clear, leaving no doubt about the motive of duty avoidance. Consequently, the extended period was deemed rightly invoked for goods cleared to the Pune Unit, upholding the demand of duty and penalty. The appeal was partly allowed based on the above terms, with the judgment pronounced on 10.01.2023.