2020 (11) TMI 11 - AT - Central Excise

Reversal of Cenvat Credit - Exemption under the under SFIS Scheme - appellant has cleared DG sets without payment of excise duty under the Status Holder Incentive Scheme by availing the benefit of Notification No. 33/2012-CE dated 09.07.2012 and under SFIS by availing the benefit of Notification dated 14.06.2006 - Whether the goods cleared under Notification No. 34/2006-CE dated 14.06.2006 under SFIS Scheme are exempted or not? - HELD THAT - It is a fact on record that the appellant is manufacturing DG sets and enclosures which are dutiable under Chapter 85 of CETA 1985. The appellant is also clearing goods to the buyers under SFIS Scheme duty free in terms of the Notification No. 34/2006-CE dated 14.06.2006 - It is an admitted position by both sides that the goods in question manufactured by the appellant are dutiable under Chapter 85 of the CETA, 1985. The similar issue came up before this Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS KIRLOSKAR CHILLERS PVT. LTD. 2017 (9) TMI 694 - CESTAT MUMBAI , this Tribunal has following the decision in the case of M/S VOLTAMP TRANSFORMERS LTD. VERSUS CCE VADODARA 2011 (9) TMI 648 - CESTAT, AHMEDABAD hold that the goods supplied under Notification No. 34/2006-CE dated 14.06.2006 is not exempted, therefore, the provisions of Rule 6 (3) (b) of CCR, 2004 are not applicable. These facts are found support from the decision relied upon by the Ld. AR as in the case of UOI AND ORS. VERSUS IND-SWIFT LABORATORIES LTD. 2011 (2) TMI 6 - SUPREME COURT wherein the Hon ble Apex Court is clarities that the taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in taxing statute so as to supply any assumed deficiency . It means that the dutiable goods cannot become exempted goods as per the convenience of the revenue - Moreover, the circular which has been relied by the revenue have no mention of notification in question and the Revenue has presumed that if the notification in question is not part of the Circular No. 973/07/2013-CX dated 04.09.2013 then the provisions of Rule 6 (3) is applicable. The said understanding of the revenue is against the mandate of law as it is based of assumption presumption. Therefore, it is a clear mis-interpretation of the Revenue by interpreting the CBEC Circular dated 04.09.2013 The goods supplied under Notification No. 34/2006-CE dated 14.06.2006 under SFIS Scheme are dutiable and not exempted goods, therefore, the provisions of Rule 6 (3) of the CCR, 2004 are not applicable to the facts of this case - as provision of Rule 6 (3) of CCR, 2004 are not applicable to the facts of this case, therefore, the demand is not sustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether Rule 6 (3) of CCR, 2004 is applicable to the case involving the clearance of goods under Notification No. 34/2006-CE dated 14.06.2006 under the SFIS Scheme?

Analysis:

Issue 1: Applicability of Rule 6 (3) of CCR, 2004
The appellant cleared DG sets under the SFIS Scheme using Duty Credit Scrips. The issue was whether Rule 6 (3) of CCR, 2004 applied to the clearance of goods under Notification No. 34/2006-CE dated 14.06.2006. The appellant argued that the provisions of Rule 6 (3) did not apply based on precedents such as the case of M/s Voltamp Transformers Ltd. The appellant contended that the debits made under SFIS did not amount to exemption from duty payment. The Tribunal referenced the case of Tanfac Industries Ltd. where it was held that debits under a similar scheme did not equate to duty payment. The Tribunal also noted that the decision in the case of Kirloskar Chillers Pvt. Ltd. supported the view that goods supplied under Notification No. 34/2006-CE were not exempted. The Tribunal emphasized that the taxing statute must be interpreted based on clear expressions and that circulars issued by CBEC were binding on Revenue, not on the assessee. The Tribunal concluded that the goods supplied under Notification No. 34/2006-CE were dutiable and not exempted, hence Rule 6 (3) of CCR, 2004 did not apply.

Issue 2: Interpretation of CBEC Circular and Legal Precedents
The appellant argued that the Circular No. 973/07/2013-CX did not mention the specific notification in question, and thus, the benefit of the circular should apply. The Tribunal rejected this argument, emphasizing that the Revenue's presumption that Rule 6 (3) applied due to the absence of the notification in the circular was based on assumption and against legal principles. The Tribunal referred to legal precedents, including the case of Ind-Swift Laboratories Ltd., to highlight that the Revenue's interpretation was flawed. The Tribunal held that the Revenue's misinterpretation of the circular contravened legal mandates and the decision of the Hon'ble Apex Court.

Conclusion
The Tribunal held that Rule 6 (3) of CCR, 2004 was not applicable to the case involving the clearance of goods under Notification No. 34/2006-CE dated 14.06.2006 under the SFIS Scheme. The Tribunal set aside the impugned order, ruling that the demand, interest, and penalty were not sustainable. The appeal was allowed with consequential relief, if any, based on the findings that the goods were dutiable and not exempted under the SFIS Scheme.