2018 (5) TMI 379 - AT - Central Excise

Benefit of N/N. 56/2002-CE dated 14.11.2002 as amended - it was alleged that as the appellant paid duty on their own, they were not entitled to claim refund by way self-credit - difference of opinion - majority order. Whether the provisions of Section 5A(1A), which have primacy over notifications, were binding on the appellant and the benefit under Notification No.56/2002-CE dt. 14.11.2002 was not available because of statutory provisions? Whether in terms of Notification No.10/10-CE dt. 17.02.2010, the appellant is not required to pay duty and he has paid duty whether the provisions of Section 11A of Central Excise Act, 1944 are applicable or not? Held that - it is incorrect to say that what is being paid and what is being refunded does not have the character of duty - Section 11A of the Act will apply. The payment of duty on value added portion is a specific requirement to avail Notification 56/2002-CE. In other words, such payment is clearly for claiming the same back to the appellant. As already stated this is the mechanism evolved for applying the exemption. Having noted that both are exemption notifications issued under exemption 5A, I am in agreement with the findings recorded by Member (Judicial) based on the ratio of various decisions of the Hon ble Apex court regarding the choice available to the claimant when more than one exemption is available on the same goods - It is settled law that the statutory provisions have primacy over the delegated legislation as has been held by the Hon ble Supreme Court in the case of Corporation Bank Vs. Saraswati Abharansala 2008 (11) TMI 387 - SUPREME COURT OF INDIA . The views expressed by Member (Judicial) regarding availability of exemption under Notification 56/2002-CE to the appellant is sustainable - Since, the said issue has been settled in favour of the view expressed by Member (Judicial), the second question is not found relevant, since, the same is with reference to recovery of amount from the appellant on denying the exemption under Notification 56/2002-CE. Appellant is entitled to benefit of Notification No. 56/2002-CE dated 14.11.2002 - appeal allowed.

Summary

Issues Involved:

1. Whether the appellant can be forced to follow Notification No.10/10-CE dated 17.2.2010 when both Notification No.56/02-CE and Notification No.10/10-CE are in force.
2. Applicability of Section 11A of the Central Excise Act, 1944, when the appellant paid duty on exempted goods.

Issue-wise Detailed Analysis:

Issue No.1: Applicability of Notification No.56/02-CE vs. Notification No.10/10-CE

The appellant argued that they were entitled to choose the more beneficial Notification No.56/02-CE, which allowed self-credit of duty paid through PLA, despite Notification No.10/10-CE exempting the goods from duty. They cited the Supreme Court's rulings in *HCL Ltd. Vs. CC* and *Share Medical Care Vs. Union of India*, which state that when two exemption notifications are applicable, the assessee can choose the one more beneficial to them.

The Tribunal supported this view, referencing past cases like *Mangalam Alloys Ltd* and *Bharat Prelam Industries Ltd*, where it was established that the assessee can choose the more beneficial notification. Thus, it was concluded that the appellant rightly claimed the benefit of Notification No.56/02-CE, and the self-credit taken was permissible.

Issue No.2: Applicability of Section 11A of the Central Excise Act, 1944

The appellant contended that since the goods were exempted under Notification No.10/10-CE, they were not required to pay duty, and thus, the provisions of Section 11A, which deals with recovery of duty not levied or short-levied, were not applicable. The Tribunal agreed, stating that the amount paid by the appellant through PLA was not considered duty under Section 11A, making the show cause notice and the impugned order unsustainable.

Separate Judgment by Member (Technical):

The Member (Technical) disagreed, emphasizing the primacy of statutory provisions over delegated legislation. He cited Section 5A(1A) of the Central Excise Act, which mandates that if goods are unconditionally exempt, the manufacturer shall not pay duty. He argued that the appellant's payment of duty under Notification No.56/2002-CE, despite an absolute exemption under Notification No.10/2010-CE, was not permissible and thus recoverable under Section 11A.

Majority Decision:

The third Member (Technical) agreed with the Member (Judicial), emphasizing the appellant's right to choose the more beneficial notification. Consequently, the appeal was allowed, and the appellant was entitled to the benefit of Notification No.56/2002-CE with consequential relief.

Conclusion:

The majority decision held that the appellant was entitled to the benefit of Notification No.56/2002-CE, allowing self-credit of duty paid through PLA, and the provisions of Section 11A were not applicable. The appeal was allowed with consequential relief.