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2018 (5) TMI 665 - AT - Central ExciseSSI exemption - migration from concessional rate of duty with Cenvat Credit to fill exemption - subsequent rescinding of the notification - allowing benefit of Notification No.8/03-CE (as against 9/03) - it was alleged that with the rescinding of Notification No.9/03-CE, concessional rate of duty was not available and they should have paid full rate of duty - contention of the appellant is that they continued to avail notification in question under mistaken belief and inadvertently that the said notification was holding the field during the relevant period. As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon ble President to appoint the Third Member for resolve - Whether in view of Revenue neutral situation, the benefit of Notification No.8/03-CE should be extended to the assessee and the appeal be allowed, as held by the Member (Judicial)? - Difference of opinion - majority order. Held that - Whatever credit was availed stand utilized by them for payment of 60% of duty. However, if any balance credit is available the same stands reversed by the appellant which leads to a situation where the entire credit so availed by the appellant stand either utilized for payment of 40% tariff rate or stands reversed and is not available with the appellant. It can be concluded that no credit stands availed by them so as to benefit them at any point of time. It will amount to Revenue neutral situation as credit availed by the appellant would become nil and as such the condition of the Notification No.8/03-CE, stands fulfilled by the assessee. Instead of raising differential duty, at full rate of duty, the Revenue should have extended the benefit of Notification No..8/03-CE to the assessee N/N. 9/03-CE dated 1.3.2003 has prescribed effective rate of duty at the rate of 60% of tariff rate. It is settled position of law that if the duty is paid under mistake of law it should be compensated towards recovery of cenvat credit. In view of the said settled position of law, I agree with the view expressed by Member (J). In view of the majority order, the impugned order is set aside and the appeal is allowed with consequential relief.
Issues Involved:
1. Applicability of Notification No. 8/03-CE and Notification No. 9/03-CE. 2. Entitlement to concessional rate of duty. 3. Fulfillment of conditions for exemption under Notification No. 8/03-CE. 4. Revenue neutrality and the impact on duty and interest. 5. Imposition of penalty. Issue-Wise Detailed Analysis: 1. Applicability of Notification No. 8/03-CE and Notification No. 9/03-CE: The appellant, a manufacturer of pesticides, was availing concessional rate of duty under Notification No. 9/03-CE, which allowed them to pay duty at 60% of the tariff rate while availing credit. This notification was rescinded on 6.4.2005, but the appellant continued to avail this benefit until July 2006, under a mistaken belief that the notification was still in effect. Subsequently, a show cause notice was issued, raising a demand for differential duty for the period from 1.4.2005 to July 2006. 2. Entitlement to Concessional Rate of Duty: The appellant argued that if the benefit of Notification No. 9/03-CE was not available, they were entitled to the benefit of Notification No. 8/03-CE, which provided a nil rate of duty, provided no credit was availed. The lower authorities did not consider the applicability of Notification No. 8/03-CE and confirmed the demand, interest, and penalty. 3. Fulfillment of Conditions for Exemption under Notification No. 8/03-CE: Notification No. 8/03-CE allowed a nil rate of duty for small scale industries, provided they did not avail credit. The Revenue argued that since the appellant had availed credit, they violated the conditions of Notification No. 8/03-CE and could not claim its benefit. The appellant contended that the credit availed was used for paying the duty, and thus, it led to a revenue-neutral situation. 4. Revenue Neutrality and the Impact on Duty and Interest: The Tribunal found that the appellant's situation was revenue-neutral as the credit availed was either utilized for paying duty or reversed, leading to no net benefit. It was concluded that in the absence of Notification No. 9/03-CE, the appellant should have been allowed the benefit of Notification No. 8/03-CE, and the demand for differential duty was not justified. Consequently, the confirmation of duty, interest, and penalty was set aside. 5. Imposition of Penalty: While one member of the Tribunal upheld the demand and interest, they set aside the penalty, considering it a bona fide mistake. The majority opinion, however, concluded that the benefit of Notification No. 8/03-CE should be extended to the appellant, setting aside the entire impugned order, including the penalty. Final Judgment: In view of the majority decision, the impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal concluded that the appellant's situation was revenue-neutral and that they should be extended the benefit of Notification No. 8/03-CE, thus nullifying the demand for differential duty, interest, and penalty.
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