2017 (3) TMI 1128 - AT - Central Excise

Benefit of N/N. 6/2002-CE dated 1st March 2002 - clearances of seamless steel tubes , hot finished seamless pipes and tubes of steel to M/s Balrampur Chini Mills Ltd which are utilised by the latter for manufacture of non-conventional energy devices - Held that - the duty liability was exempt, on the basis of certificate of eligibility as end user, to concessional rate of duty for the goods cleared by the appellant to M/s Balrampur Chini Mills Ltd. It was on the strength of the certification issued to user that the goods were removed without payment of duty - the person entitled to the exemption is permitted availment of the exemption while the manufacturer is held liable for duty. It is only by disallowance of the entitlement that the appellant can be held liable to duty on the goods cleared by them - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to order-in-appeal upholding demand, interest, and penalty for incorrect availment of notification. Interpretation of notification restricting parts used captively. Dispute over clearances of steel tubes and pipes for non-conventional energy devices. Liability for duty under Central Excise Rules. Validity of Annexure-I certification for duty exemption. Failure to demand duty from buyer as acceptance of exemption correctness. Duty liability exemption based on end user certification.

Analysis:
The judgment by the Appellate Tribunal CESTAT Mumbai involved various issues. Firstly, the challenge was against the order-in-appeal upholding the demand, interest, and penalty for incorrect availment of notification no. 6/2002-CE. The Tribunal concurred with the original authority's interpretation that serial no. 21 in the notification restricts parts used captively for manufacturing goods in the same list. The dispute centered around clearances of steel tubes and pipes for non-conventional energy devices to a specific entity. The argument presented was regarding the liability for duty under the Central Excise Rules, placing the duty obligation on the buyer who obtained necessary certification and furnished compliance undertakings.

A significant aspect of the case was the validity of Annexure-I certification for duty exemption. The appellant contended that Annexure-I, which granted exemption, had not been cancelled, questioning the legality of demanding duty and imposing penalties. The Tribunal referred to a previous judgment highlighting the necessity of following due procedure for cancelling such certifications before invoking duty liability. The failure to demand duty from the buyer was argued to signify Revenue's acceptance of the exemption's correctness, emphasizing that duty liability should only arise upon disallowance of entitlement to exemption.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that duty liability exemption was based on the end user certification, and the manufacturer could only be held liable for duty if the entitlement to exemption was disallowed. The judgment provided a detailed analysis of the issues involved, including the interpretation of the notification, duty liability under Central Excise Rules, and the significance of Annexure-I certification for duty exemption.