2024 (1) TMI 629 - AT - Central Excise

Area Based exemption - exemption on substantial expansion - appellants were paying duty on the cement manufactured by them but were availing exemption for the intermediate product, Clinker - HELD THAT - The Hon ble Apex Court in AMBUJA CEMENT LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH 2015 (11) TMI 1413 - SUPREME COURT has put to rest a long ongoing dispute, that the cement companies i.e. M/s Ambuja Cements, M/s ACC and the appellants, had with the Department - Hon ble Apex Court held that The basis adopted by the CESTAT that the 'same final product' should be partly dutiable and partly exempt, is neither a requirement of clause (vi) nor a requirement of Rule 6. The issue is no longer res integra having been settled by the Hon ble Apex Court - there is no infirmity in the availment of Notification No.67/1995 on clinker manufactured and captively consumed, while availing Notification No.50/2003 on the cement manufactured by the appellants - the impugned order cannot be sustained and therefore, set aside. The appeal is allowed.

Summary

Issues:
The issues involved in the judgment are the availment of exemption under Notification No.50/2003-CE and Notification No.67/1995-CE, liability to pay Central Excise Duty, and the interpretation of Rule 6 of the CENVAT Credit Rules, 2004.

Availment of Exemption under Notifications:
The appeal was against the Order-in-Original passed by the Commissioner of Central Excise, Chandigarh-I. The appellant, engaged in cement manufacturing, had availed exemptions under Notification No.50/2003-CE and Notification No.67/1995-CE. The dispute arose when the appellant cleared a quantity of cement without payment of duty, leading to a demand for Central Excise Duty. The appellant argued that the exemption under Notification No.50/2003-CE should continue to be available on clinker as per the proviso to Notification No.67/1995-CE.

Liability to Pay Central Excise Duty:
The audit revealed that the appellant had cleared a balance of cement without payment of duty, resulting in a demand for Central Excise Duty. The show-cause notices issued sought to recover the duty amount, which was confirmed in the impugned order dated 03.09.2014. The appellant contended that they had discharged the obligation prescribed in Rule 6 of the CENVAT Credit Rules, 2004, and cited a Supreme Court judgment in support of their position.

Interpretation of Rule 6 of CENVAT Credit Rules, 2004:
The Hon'ble Apex Court's judgment clarified the application of Rule 6 in cases where both dutiable and exempt final products are manufactured. The Court emphasized that the exemption would apply if the manufacturer discharges the obligation prescribed in Rule 6. The Court found that the appellant had indeed fulfilled this obligation, and the Customs, Excise and Service Tax Appellate Tribunal's disallowance of the exemption on clinker was incorrect. The Court highlighted that Rule 6 does not require the same final product to be partly dutiable and partly exempted, and the manufacturer can produce different final products.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal based on the settled interpretation provided by the Hon'ble Apex Court. The Tribunal found no infirmity in the availment of exemptions on clinker and cement, as per Notification No.67/1995-CE and Notification No.50/2003-CE respectively.