2016 (12) TMI 1267 - AT - Central Excise

Denial of benefit of N/N. 67/95-CE - manufacture and captive consumption of packing boxes for toys - denial on the ground that since the final product is exempted from payment of excise duty and the appellants have not discharged their obligation under Rule 6 of CCR, 2000 - Held that - though the exemption is not available to the intermediate goods used in the exempted goods but exception was provided that even if the final product is exempted and the assessee discharge the obligation prescribed in Rule 6 of CCR, 2001 then in spite of the final product is exempted, the exemption on the intermediate goods is available in terms of the notification - as per Sub-Rule (1) of Rule 6, the asseessee is not required to avail the Cenvat Credit in respect of the inputs used in the manufacture of exempted goods. The appellant has not availed the Cenvat Credit in respect of any of the inputs used either in the final product or in the intermediate product i.e. packing boxes. Therefore the condition of Sub-Rule (1) of Rule 6 stands complied with - appeal allowed - benefit of notification allowed - decided in favor of assessee.

Summary

Issues:
- Denial of exemption under Notification No. 67/95-CE for packing boxes used in the manufacture of exempted goods.
- Fulfillment of obligations under Rule 6 of Cenvat Credit Rules, 2000 for availing the exemption.

Analysis:
1. Denial of Exemption under Notification No. 67/95-CE:
The appellants were engaged in manufacturing toys and games, availing excise duty exemption under Notification No. 10/2003-CE for certain products. The issue arose concerning the denial of exemption under Notification No. 67/95-CE for packing boxes used in the manufacture of exempted goods. The Revenue contended that the appellants did not fulfill Rule 6 obligations, leading to the denial of the exemption. However, the appellant argued that they had not availed Cenvat Credit for any inputs used in the manufacture of final or intermediate products, thereby meeting the requirements of Rule 6(1) of the Cenvat Credit Rules.

2. Fulfillment of Obligations under Rule 6 of Cenvat Credit Rules:
The Tribunal analyzed Rule 6 of the Cenvat Credit Rules, which outlines the obligations of manufacturers of both dutiable and exempted goods. It was observed that as per Rule 6(1), Cenvat Credit should not be availed for inputs used in the manufacture of exempted goods. Since the appellants had not availed any Cenvat Credit for inputs in either final or intermediate products, they were deemed to have fulfilled the obligations under Rule 6(1). The Tribunal emphasized that Rule 6(2) applies when Cenvat Credit is availed and specific conditions are met, which was not the case here. Therefore, the Tribunal concluded that the appellants had legally fulfilled the obligations under Rule 6(1) and were entitled to the exemption under Notification No. 67/95-CE for their packing boxes.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellants, emphasizing that they had met the requirements under Rule 6(1) of the Cenvat Credit Rules, 2000. The judgment highlighted the importance of complying with specific rules and obligations to avail exemptions under relevant notifications in excise duty matters.