2018 (5) TMI 1654 - AT - Central Excise

Benefit of exemption - scope of the term site - supply of PSC Slippers for Western Dedicated Freight Corridor (WDFC) Project - benefit of exemption applicable to goods manufactured at the site of construction - Benefit of N/N. 12/2012-CE dated 17.03.2012 - Interpretation of statute - Held that - CBEC vide Circular dated 06.07.2016 clarified the scope of word site appearing in the N/N. 12/2012-CE. It is revealed from the said Circular dated 06.07.2016 that the representation have been made from the trade regarding the difficulties being faced in availing of benefit of exemption applicable to goods manufactured at the site of construction, for use in construction work at such site, vide Serial No. 186 of N/N. 12/2012-CE - The Board Circular was issued particularly for Project, which runs long distance such as construction of road, laying of pipeline, laying of railway track etc. The Board has clarified that the expression site cannot be given a restrictive manner and the benefit of the exemption under Serial No. 186 of the said Notification would be allowed, subject to fulfillment of condition, as laid down in the said circular. It is apparent on the face of record that the department directed the appellant to take registration and to pay the duty and also refused to grant exemption benefit. In this event, the findings of the Commissioner that the appellant was entitled to avail the benefit of exemption is not tenable, as it is altogether against evidence. The Order made in conscious violation of pleadings and law is a perverse Order, which is exactly happened in the present case and thus, such order cannot be sustained in the eye of law. Reversal of CENVAT credit - manufacturing of exempted goods - contravention of Rule 6(1) and 6(4) of Rules 2004 - Held that - the issue was academic as the assessee was not seeking refund of duty and there was no need to reverse the credit of duty. Apart from that, the department once accepted the duty, it cannot deny the Cenvat Credit utilized for clearance of the said duty paid finished products. - When the department entertained the view during the relevant period that the appellant is not entitled to get the exemption benefit, Rule 6(1) and Rule 6 (4) of the Rules, 2004 cannot be invoked - Apart from that, the department once accepted the duty, it cannot deny the Cenvat Credit utilized for clearance of the said duty paid finished products. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for exemption benefit under Notification No. 12/2012-CE.
2. Denial of Cenvat Credit on exempted goods.
3. Interpretation of Rule 6(1) and Rule 6(4) of the Cenvat Credit Rules, 2004.

Eligibility for Exemption Benefit:
The appellant was engaged in manufacturing goods for a railway project and claimed exemption under Notification No. 12/2012-CE. The Assistant Commissioner initially denied the exemption, directing the appellant to pay duty. However, a subsequent circular clarified the interpretation of the term "site" in the notification, allowing the appellant to avail the exemption. The Commissioner issued a Show Cause Notice alleging wrongful Cenvat Credit utilization. The Tribunal found the Commissioner's findings to be perverse as the appellant followed department directions and was not entitled to exemption benefit initially.

Denial of Cenvat Credit on Exempted Goods:
The Commissioner contended that Cenvat Credit cannot be availed on exempted goods under Rule 6(1) of the Cenvat Credit Rules, 2004. However, the Tribunal observed that since the appellant paid duty as directed by the department, the denial of Cenvat Credit was unjustified. The Tribunal cited precedents to support the position that once duty is accepted by the department, Cenvat Credit cannot be denied.

Interpretation of Rule 6(1) and Rule 6(4) of the Cenvat Credit Rules, 2004:
The Tribunal analyzed Rule 6, which prohibits Cenvat Credit on inputs used in exempted goods. In this case, since the appellant paid duty and availed Cenvat Credit based on departmental directions, Rule 6(1) and Rule 6(4) could not be invoked. Precedents were cited to emphasize that once duty is accepted, Cenvat Credit cannot be reversed. The Tribunal found the Commissioner's order to be in violation of pleadings and law, terming it as a perverse order. Consequently, the Tribunal set aside the impugned order and allowed the appellant's appeal.

This detailed analysis highlights the legal intricacies surrounding the eligibility for exemption benefit, the denial of Cenvat Credit on exempted goods, and the interpretation of relevant rules in the context of the appellant's case before the Tribunal.