2024 (3) TMI 1098 - AT - Central Excise

Benefit of Nil Rate of duty - CENVAT Credit - MS Pipes - common inputs used in manufacture of dutiable as well as exempted final products without maintaining the separate accounts - fulfilment of the requirements of N/N. 6/2002-CE as amended by N/N. 47/2002 - HELD THAT - The pipes are meant for intended use mentioned in Notification no. 47/2002/CE dated 06-09- 02 of Department of Revenue Ministry of Finance and Company Affairs, GOI, Issued under condition 47A of the above Notification. Thus, these certificates are found to specifically mention that the pipes are for being used for transferring water from source to the treatment plant and from there to the storage facility. The Certificates are issued by the Competent Government Authority. Hence, we do not find any reason to reject these certificates. Non-availability of these certificates at the time of clearance is nothing but a mere procedural lapse. Substantial benefit of Nil rate of duty arising out of a notification cannot be denied to the appellant on the said ground. The appellant has otherwise duly complied with the requirement/ condition of the notification. Hence, it is held that the appellant cannot be held liable for duty demand with respect to such clearances for which certificates have been produced on record. Adjudicating authorities are held to have misinterpreted the certificates. It is merely a difference of language and the difference in the format of those certificates. The gist of the certificates is about the same purpose as is mentioned in Notification No.6/2002 as amended vide Notification No.47/2002 to claim the Nil Duty benefit. Thus the appellant is held not liable to pay any excise duty. The order under challenge is not sustainable. The same is hereby set aside. Appeal stands allowed.

Summary

Issues:
The issues involved in the judgment are the wrongful confirmation of demand by the Adjudicating Authority, misinterpretation of certificates leading to denial of exemption benefits, and the procedural lapse regarding the availability of certificates during clearances.

Wrongful Confirmation of Demand:
The appellant, engaged in manufacturing MS Pipes, cleared goods at 'Nil' rate of duty under a specific notification but availed Cenvat Credit without maintaining separate accounts. The Department demanded recovery of Central Excise duty and penalties. Despite previous remand orders, the demand was confirmed. The appellant contended that the certificates contained sufficient details as required by the notification and cited settled cases under a dispute resolution scheme. The Department argued that the intended use of pipes in certificates differed from the notification's purpose. The Tribunal observed previous findings, including acceptance of no clandestine clearance and remand for denial of notification benefits.

Misinterpretation of Certificates:
The adjudicating authority held that the appellant did not have certificates during clearances, thus denying the benefit of the notification. However, available certificates indicated the pipes' use for water supply schemes, which aligned with the notification's requirements. The certificates specifically mentioned the use for transferring water from source to treatment plant and storage facility, as mandated by the notification. The Tribunal found no reason to reject these certificates, considering them a procedural lapse. The appellant had complied with the notification's conditions, and the misinterpretation by authorities was based on language differences rather than substantive issues.

Procedural Lapse and Exemption Benefits:
The Tribunal concluded that the appellant should not be held liable for duty demand on clearances where valid certificates were produced. The certificates' content aligned with the notification's purpose, entitling the appellant to the Nil rate of duty benefit. The order confirming the demand was set aside, and the appeal was allowed, directing adherence to previous findings on other demands.

The judgment highlights the importance of adherence to notification requirements, proper interpretation of certificates, and the impact of procedural lapses on exemption benefits.