2017 (4) TMI 748 - AT - Central Excise

Whether the benefit of N/N. 23/2003-CE dated 31.03.2003 is available to the clearances of cotton yarns made by the respondents in the DTA? Held that - The denial is based on the fact that the respondents are not availing the cenvat credit facility on the inputs - the goods for which exemption is claimed when manufactured and cleared by unit other than EOU should not be wholly exempted from the excise duty or should not be chargeable to nil rate of duty. It is evident that the fact of the respondents not availing cenvat credit is not a relevant consideration in deciding the question whether they comply with N/N. 23/2003-CE - reliance placed in the case of HANIL ERA TEXTILES LTD. Versus COMMISSIONER OF CENTRAL EXCISE, RAIGAD 2013 (6) TMI 680 - CESTAT MUMBAI - appeal dismissed - decided against Revenue.

Summary

Issues:
Whether the benefit of Notification No.23/2003-CE dated 31.03.2003 is available to the clearances of cotton yarns made by the respondents in the DTA.

Analysis:
The case involved an appeal by the Revenue regarding the applicability of Notification No.23/2003-CE to the clearances of cotton yarns by the respondents in the Domestic Tariff Area (DTA). The Department contended that since the respondents did not avail Cenvat Credit on inputs, they did not fulfill condition (iii) of the Notification, thus attracting a higher duty rate. However, the Ld. Advocate for the respondent cited precedents in favor of the assessee, emphasizing that the issue had been decided in favor of the assessee in previous cases. The main issue revolved around whether the respondents were entitled to the benefit of the Notification despite not availing Cenvat Credit on inputs.

The Tribunal analyzed the conditions of Notification No.23/2003-CE and the relevant case law to determine the applicability of the Notification. The key condition in question was condition (iii), which stated that the goods should not be wholly exempt from excise duty or chargeable to nil rate of duty. The Tribunal agreed with the Commissioner (Appeals) that the fact of not availing Cenvat Credit was not a relevant consideration in deciding compliance with the Notification. The Tribunal highlighted that the goods were conditionally exempt under another Notification, indicating that the condition of not being wholly exempt from duty was met, allowing the respondents to clearances in DTA after paying duty at the prescribed rate.

Moreover, the Tribunal referred to a judgment in a similar case, emphasizing the importance of whether the goods were chargeable to nil rate or some other rate in determining the applicable condition of the Notification. The Tribunal concluded that the orders of the Commissioner (Appeals) were sound and upheld them, dismissing the appeals filed by the Revenue. The judgment highlighted the significance of the specific conditions and interpretations of the Notifications in determining the duty applicability in such cases.