2022 (5) TMI 1243 - AT - Central Excise

Payment of duty availing the benefit of Concessional rate of duty instead of full exemption - Reversal of Cenvat Credit - payment of Central Excise duty on the final product by the appellant during the disputed period was objected to by the Department on the ground that the appellant should have self-assessed at NIL rate of duty under Sl. No.90 of notification dated 01.03.2006, as amended - HELD THAT - Section 5A of the Central Excise Act, 1944 recognizes two categorizes of exemption notification. The first category being that of an absolute exemption, where there was no condition attached to the exemption entry and the other one is a conditional exemption, which was subject to fulfilment of the conditions attached to the exemption entry - In the present case, the exemption entry at Sl. No.90 of Notification No. 4/2006-Central Excise was attached with two conditions for availing of the benefit of duty exemption and therefore, it was a conditional exemption and not an absolute exemption, as contemplated by Section 5A(1A) ibid. Since, the appellant had opted for payment of duty on clearance of the finished products and availed cenvat credit of Central Excise duty, such option exercised by the appellant cannot be questioned by the department inasmuch as there was no stipulation contained in the subject notification that only condition No. 90 appended thereto had to be followed and not otherwise. The appellant had correctly assessed the duty liability as provided under Sl. No. 93 contained in notification dated 01.03.1998, as amended. Thus, there was no contravention of the Cenvat statute in availment and utilization of the Cenvat credit. Further, it is not the case of Revenue that the duty amount collected by the appellant was not deposited with the Government Exchequer. Hence, under such circumstances, the provisions of Section 11D ibid cannot be invoked for recovery of the duty amount in question. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of exemption notification conditions under Central Excise Tariff Act, 1985.

Analysis:
The case involved the appellant, engaged in manufacturing Paper and Paper Board, covered by three entries of exemption notification No. 4/2006-C.E. The amendments in 2008 changed the rates of duty, leading to a dispute regarding the duty payment by the appellant during the period 2008-09 to 2010-11. The Department contended that the appellant should have self-assessed at a 'NIL' rate of duty under Sl. No. 90 of the notification. Show cause proceedings were initiated, and the matter was adjudicated, confirming the proposals made by the Original Authority.

Feeling aggrieved, the appellant appealed before the Tribunal. Despite the absence of the appellant, the case was heard, and the Revenue's representative relied on previous Tribunal orders. The Tribunal analyzed Section 5A of the Central Excise Act, distinguishing between absolute and conditional exemptions. The exemption at Sl. No. 90 of Notification No. 4/2006 was deemed conditional due to attached conditions, allowing the appellant to exercise the option of paying duty on finished products and availing cenvat credit. The Tribunal concluded that the appellant correctly assessed the duty liability under Sl. No. 93, finding no contravention of the Cenvat statute.

The Tribunal referenced a previous order in a similar case, stating that the appellant could pay duty under other numbers besides serial No. 90. The Tribunal differentiated the present case from previous decisions where unconditional exemptions prohibited availing Modvat/Cenvat credit. As the subject notifications required compliance with specified conditions, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal.

In conclusion, the Tribunal's decision revolved around the correct interpretation of exemption notification conditions under the Central Excise Tariff Act, 1985. The appellant's right to choose the duty payment option under the relevant notifications, along with the compliance with specified conditions, played a crucial role in determining the outcome of the case.