2019 (6) TMI 192 - AT - Central Excise

CENVAT Credit - clearance of Dissolved Acetylene Gas cleared by them from their factory under N/N. 82/84-CE, dated 31.03.1984 (as amended) without payment of duty - It is the case of the Revenue that since the appellant cleared these products without payment of duty, claiming exemption under notification No. 82/84-CE, they have to pay an amount as per Rule 6(6) of CCR 2004 - HELD THAT - In the present system, the Central Excise duty is leviable on all excisable goods which are manufactured or produced at the rates set out in the schedule to Section in Central Excise Tariff Act 1985 read with any exemption notification. The exemption notifications provide for either full exemption or partial exemption. Further, they can provide for either conditional exemption or unconditional exemption. If the exemption notification is an unconditional one, it applies to all persons and all clearances. If it is a conditional one, it applies to such persons and clearances as may meet the conditions. A person who is entitled to the exemption may chose not to fulfil the conditions and not to claim the exemption notification also. Further, it is also possible that the same person may clear the same goods, some claiming a conditional exemption and others without conditional exemption and paying duty. In the present case, the condition of the exemption notification 82/84-CE as amended is that the assessee has to get a certificate from the jurisdictional Asst. Commissioner or Dy. Commissioner and that they have to follow the procedure set out in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. To the extent the goods are cleared availing the benefit of this exemption, they are fully exempted and not otherwise. Where there is an exemption notification, exempting the goods from payment of Central Excise duty, the Hon ble High Court of Gujarat in the case of MICRO MELT (P) LTD. VERSUS CCE AND CUSTOMS 2011 (7) TMI 853 - GUJARAT HIGH COURT held that the question of remission does not arise. In the present case, anyway, the provisions for remission themselves do not exist. The appellant, having cleared the goods on claiming full exemption from payment of duty, are not entitled to CENVAT Credit to that extent and are required to reverse CENVAT Credit or pay an amount as per Rule 6 of CCR 2004 - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Applicability of Rule 6 of CENVAT Credit Rules, 2004.
2. Interpretation of exemption under Notification No. 82/84-CE.
3. Relevance of Chapter X procedure and remission of duty.
4. Precedential value of previous judgments and their applicability.

Detailed Analysis:

1. Applicability of Rule 6 of CENVAT Credit Rules, 2004:
The core issue revolves around whether the appellant needs to reverse CENVAT Credit or pay an amount under Rule 6 of CENVAT Credit Rules, 2004. The appellant argued that their final product, Dissolved Acetylene Gas, is neither chargeable to nil rate of duty nor exempted from payment of duty. They contended that goods cleared under Chapter X procedure are not fully exempted but are goods on which duty is remitted, thus not necessitating reversal of CENVAT Credit.

2. Interpretation of exemption under Notification No. 82/84-CE:
The appellant availed the benefit of Notification No. 82/84-CE for certain clearances. The Revenue argued that since the appellant claimed exemption under this notification, they must reverse CENVAT Credit as per Rule 6(6) of CCR 2004. The Tribunal clarified that the notification provides a conditional exemption, and such exemptions are considered as full exemptions for the purpose of CENVAT Credit rules. Hence, the appellant's claim that the goods are not fully exempted was rejected.

3. Relevance of Chapter X procedure and remission of duty:
The appellant and previous Tribunal orders referenced Chapter X procedures, which provided for remission of duty. However, the Tribunal noted that Chapter X procedures were replaced by the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, which do not provide for remission but only for exemption procedures. Therefore, references to Chapter X were deemed factually incorrect for the relevant period. The Tribunal emphasized that the concept of remission under Chapter X no longer exists and that current rules only deal with exemptions.

4. Precedential value of previous judgments and their applicability:
The appellant cited previous favorable orders from the Tribunal and other case laws to support their argument. However, the Revenue pointed out that these previous orders did not consider binding precedents from higher courts, such as the judgments in Atlas Automotive Components Pvt. Ltd. vs. Union of India and Micro Melt Pvt. Ltd. vs. CCE, which mandated the reversal of CENVAT Credit when goods are exempted. The Tribunal agreed with the Revenue, stating that the earlier decisions did not accurately reflect the current legal framework and were based on outdated rules.

Conclusion:
The Tribunal concluded that the appellant, having cleared goods by claiming full exemption from payment of duty, is required to reverse CENVAT Credit or pay an amount as per Rule 6 of CCR 2004. The Tribunal upheld the impugned order and rejected the appeal, emphasizing that the exemption notification, regardless of its conditions, constitutes a full exemption for the purposes of CENVAT Credit rules. The Tribunal also clarified that the previous orders were based on an incorrect understanding of the current legal provisions.