2024 (2) TMI 1417 - AT - Customs

Entitlement for benefit of exemption N/N 01/2011-CE or 02/2011-CE for the fertilizer - import of Muriate of Potash - HELD THAT - It is true that any exemption notification must be strictly construed against the assessee who is claiming the benefit of the same. In this case, the only point of dispute is whether or not the CENVAT credit has been availed for the goods in question. It is not in dispute that the goods have been imported and therefore were manufactured outside India. The CENVAT Credit Rules, 2004 or CENVAT Credit Rules, 2002 are framed under the Central Excise Act, 1944. This Act applies to the whole of India but not beyond. When the Central Excise Act itself does not extend outside India, neither will the CENVAT Credit Rules. Therefore, it is impossible for anyone outside India to avail the benefit of CENVAT credit. Therefore, in respect of imports, it is impossible that the condition of CENVAT credit not being availed is not fulfilled. The appellant is entitled to the benefit of the exemption notifications 01/2011 02/2011- CE in respect of their imports - the impugned orders are set aside - appeals are allowed.

Summary

Issues:
- Entitlement to benefit of exemption notification 01/2011-CE or 02/2011-CE for imported fertilizer (Muriate of Potash).

Analysis:
The Appellate Tribunal CESTAT Hyderabad considered the issue of whether the appellant is entitled to the benefit of exemption notifications 01/2011-CE or 02/2011-CE for the imported fertilizer, Muriate of Potash. The appellant claimed Central Excise exemption notifications, which were conditional in nature, requiring no CENVAT credit to be availed in the manufacture of the goods. The revenue contended that since the appellant imported the goods, it was impossible to verify if any CENVAT credit had been availed, thus denying them the exemption. The appellant argued that as the manufacturer was located outside India, it was impossible for them to avail CENVAT credit. The Tribunal noted that exemption notifications must be strictly construed against the claimant, but in the case of imports, it is impossible for anyone outside India to avail CENVAT credit. Referring to a Supreme Court judgment in the case of SRF Ltd., the Tribunal held that the appellant is entitled to the benefit of the exemption notifications for their imports.

The appellant relied on a Supreme Court judgment in the case of Enterprises International Ltd., which held that the condition related to non-availment of CENVAT credit does not bar the benefit of Central Excise exemption notifications for calculating additional duty of customs on imports. The revenue, represented by the Authorized Representative, argued that unless it could be shown that the conditions were fulfilled, the appellant should not be entitled to the benefit of the conditional exemption notification. The burden of proving the fulfillment of conditions rested on the appellant, which they had not discharged. However, the Tribunal found that in the case of imports, it is impossible for those outside India to avail the benefit of CENVAT credit. Therefore, the Tribunal allowed the appeals, setting aside the impugned orders and granting the appellant the benefit of the exemption notifications 01/2011-CE and 02/2011-CE for their imports.

In conclusion, the Appellate Tribunal CESTAT Hyderabad ruled in favor of the appellant, holding that they are entitled to the benefit of the exemption notifications 01/2011-CE and 02/2011-CE for the imported fertilizer, Muriate of Potash. The Tribunal emphasized that in cases of imports, where the manufacturer is located outside India, it is impossible for them to avail CENVAT credit, thereby fulfilling the conditions of the exemption notifications. The judgment set aside the impugned orders and allowed the appeals, following the precedent set by the Supreme Court in similar cases.