2016 (8) TMI 788 - AT - Central Excise

Captive consumption - whether transfer of the moulds to appellant s other unit violate the condition in the Notification No. 67/95-CE dated 16.03.1995 to the effect that the moulds enjoy the exemption as long as they are used within the factory of manufacture - Held that - the condition specified in the notification is not violated inasmuch as the factory itself has moved to Noida and since the mould in question continues to be used within the factory it cannot be said that the moulds have been cleared out of the factory. The fact also remains that in case duty is paid on the moulds on its transfer to Noida, such duty will be available as cenvat credit to the recipient factory inasmuch as the original and the destination factory belong to the same manufacturer and in fact since the former merged with the later, the whole exercise will lead to the revenue neutral situation and no useful purpose will be served while charging duty for such clearances. - Decided in favour of appellant

Summary

Issues:
Dispute over excise duty on moulds transferred between appellant's units; Eligibility for exemption under Notification No. 67/95-CE; Interpretation of condition for exemption regarding use within the factory; Cenvat credit availability on duty paid transfers; Revenue neutrality in case of transfers between units of the same manufacturer.

Analysis:
The case involved an appeal against a duty demand on moulds transferred between the appellant's units. The appellant, a manufacturer of various parts, claimed exemption under Notification No. 67/95-CE for moulds used within the factory premises. The dispute arose when excise officers noted that the appellant issued invoices for moulds to a customer without paying duty. The original authority demanded duty upon transfer of moulds to another unit, stating the exemption was not applicable once the moulds left the factory. The appellate authority upheld the duty demand, leading to the appeal before the Tribunal.

During the appeal, the appellant argued that the moulds were transferred to their Noida unit due to the closure of the original unit, ensuring the capital goods remained within their control. They contended that paying duty at the Delhi unit and transferring the moulds to Noida would allow cenvat credit at the recipient unit, maintaining revenue neutrality. The appellant cited relevant case laws to support their position, emphasizing the continuous use of the moulds within their manufacturing process.

After hearing both parties, the Tribunal analyzed the situation. They noted that the appellant's factory was shifted to Noida, and the moulds were still being used for production. The Tribunal interpreted the exemption condition as requiring the moulds to be used within the factory of manufacture, which they deemed satisfied despite the physical transfer. Additionally, they highlighted the revenue-neutral aspect of paying duty on transfers between units of the same manufacturer, emphasizing the lack of purpose in imposing duty in such cases.

Based on the arguments and analysis, the Tribunal set aside the duty demand, allowing the appeal in favor of the appellant. The decision focused on the continuous use of moulds within the manufacturing process, the interpretation of exemption conditions, and the concept of revenue neutrality in duty payments on transfers between units of the same manufacturer.