2016 (12) TMI 532 - AT - Central Excise

Captive consumption - denial of benefit of N/N. 67/95 CE - intermediate products, armoured cable - whether the appellants are liable to pay the duty on intermediate product i.e. armoured cable, which has been used for manufacture of power cables which is ultimately cleared on payment of duty in the open market and to Mega Power Projects without payment of duty? - Held that - An identical issue came up before the Tribunal in the case of Thermo Cables Ltd. 2012 (12) TMI 942 - CESTAT BANGALORE wherein this Tribunal held that a conjoint reading of sub-rule (6) of Rule 6 of the CENVAT Credit Rules 2004 and clause (vi) under the proviso to N/N.67/95-CE ibid would show that the assessee s claim for exemption from payment of duty on copper wire under the Notification was not hit by the opening portion of the proviso to the Notification - assessee was not liable to pay CE duty on copper wire manufactured and captively used in the manufacture of insulated (power) cables in the factory during the material period. As facts of the case are not disputed that the appellant is manufacturing final products and clearing the same on payment of duty in the open market and to Mega Power Projects without payment of duty. In that circumstances, the appellant is entitled for benefit of N/N. 67/1995 ibid for intermediate product emerging during the course of manufacture of final product - appellant entitled to benefit of N/N. 67/95 CE - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Appeal against impugned orders denying benefit of Notification No. 67/95 CE.
- Liability to pay duty on intermediate product armoured cable used for manufacturing final goods.
- Interpretation of Notification No. 67/95 CE in light of manufacturing both dutiable and exempted final goods.

Analysis:
The appellants appealed against impugned orders denying the benefit of Notification No. 67/95 CE. The case involved a scenario where the appellants, engaged in manufacturing power cables, were clearing goods on payment of duty in the open market and to Mega Power Projects. The dispute arose regarding the liability to pay duty on intermediate products like armoured cables used captively by the appellants. The Revenue contended that since the final goods were cleared without payment of duty, the appellant should pay duty on intermediate products to avoid evasion. The appellants argued that as they were manufacturing both dutiable and exempted final goods, they were entitled to the benefit of the notification. The Tribunal examined a similar issue in a previous case and found that the appellant did not have any liability under certain rules due to the nature of their final product clearance against international competitive bidding.

The Tribunal analyzed the scope of Notification No. 67/95 CE and observed that the bar created in the proviso was not applicable to inputs used in the manufacture of exempted final products by a manufacturer of both exempted and dutiable final products. It was noted that the manufacturer, in such cases, was entitled to the exemption from duty on inputs used in the manufacture of exempted final products. The Tribunal emphasized that the manufacturer's right to exemption was not affected by certain obligations under the rules. In the present case, as the appellant was manufacturing final products cleared on payment of duty, they were deemed entitled to the benefit of the notification for intermediate products arising during manufacturing. Therefore, the impugned orders denying the benefit of the notification were set aside, and the appeals were allowed with consequential relief granted.

In conclusion, the judgment clarified the applicability of Notification No. 67/95 CE in cases where manufacturers produce both dutiable and exempted final goods. The decision underscored that manufacturers meeting specific criteria were entitled to exemption from duty on inputs used in the manufacture of exempted final products. The detailed analysis provided a clear interpretation of the legal provisions and upheld the appellant's entitlement to the benefit of the notification in the context of their manufacturing activities and final product clearance practices.