2009 (2) TMI 297 - AT - Central Excise

Exemption under Notification No. 6/2002 dated 1-3-2002 applicability of amendment to Section 5A of the Central Excise Act which was made by insertion of sub-section (1A) - appellants are procuring duty paid refined edible oil in bulk form by availing Cenvat credit and repacking the same into unit containers and discharging appropriate duty of Rs. 1/- per kg - Said Notification gives option of either paying duty of Rs. 1/- per kg. or claiming exemption of nil rate of duty on the goods which are refined edible oils and if they are packed into unit containers. It is also seen that Entry Nos. 244(B) and (C) do not have any condition and are also not mutually exclusive. It is a settled law that when there are two views possible on a Notification the view which is more beneficial to the assessee has to be applied. In this case the appellant felt that payment/discharge of duty of Rs. 1/- per kg. on the unit containers of refined edible oil manufactured by them would be more advantageous to him and has chosen to do so. When the Notification itself gives two options the choice of the appellant to choose an option which is beneficial to him cannot be faulted with. - Sub-section 1A of Section 5A making it mandatory to avail nil rate exemption not applicable as came into effect in May 2005 while the period involved is 1-5-2003 to 27-2-2005 - appeal is allowed

Summary

Issues:
Interpretation of Notification No. 6/2002-C.E. regarding levy of central excise duty on refined edible oils and the classification under Sl. No. 244(B) and 244(C) - Applicability of specific duty rate of Rs. 1/- per kg. and 'nil' rate of duty - Correctness of lower authorities' decision to deny credit and impose penalties.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Bangalore pertains to two appeals filed against Orders-in-Appeal No. 29/2008 (G) C.E., dated 12-3-2008 & No. 47/2008 (G) C.E., dated 4-7-2008, concerning the levy of central excise duty on refined edible oils under Notification No. 6/2002-C.E. The issue revolved around the interpretation of Sl. No. 244(B) and 244(C) of the Notification, which prescribed different rates of duty. The appellant, a manufacturer of packed refined edible oil, was procuring duty paid refined edible oil in bulk form, repacking it into unit containers, and paying duty of Rs. 1/- per kg. under Sl. No. 244(B). The lower authorities contended that the appellant should fall under Sl. No. 244(C) attracting 'nil' rate of duty as the products were manufactured out of duty paid refined edible oils. Consequently, notices were issued proposing various actions, including denial of credit and imposition of penalties.

The appellant argued that they had the option to choose between paying duty under Sl. No. 244(B) or availing 'nil' rate of duty under Sl. No. 244(C) as per the Notification. The revenue contended that since the appellant repacked duty paid refined edible oil, they should be classified under Sl. No. 244(C). Both lower authorities upheld this view. However, the Tribunal analyzed the Notification and noted that the appellant had the discretion to choose the duty payment option beneficial to them. The Tribunal highlighted that Sl. No. 244(B) and 244(C) did not have any conditions and were not mutually exclusive. Therefore, the appellant's decision to pay duty under Sl. No. 244(B) was deemed valid based on the Notification's provisions.

Additionally, the Tribunal considered the applicability of an amendment to Section 5A of the Central Excise Act, inserted by the Finance Act, 2005. The amendment stated that if an exemption under sub-section (1) granted absolute duty exemption, the manufacturer should not pay excise duty. However, this provision came into effect after the period in question, and thus, could not be used to deny the appellant the benefit of Sl. No. 244(B) of the Notification. Consequently, the Tribunal concluded that the lower authorities' decisions were incorrect and illegal. Both appeals were allowed, and any consequential relief was granted to the appellant.

In conclusion, the judgment clarified the interpretation of Notification No. 6/2002-C.E. regarding the levy of central excise duty on refined edible oils, emphasizing the appellant's right to choose the duty payment option advantageous to them under the Notification's provisions. The Tribunal set aside the lower authorities' decisions and provided relief to the appellant based on the correct application of the Notification's provisions and relevant legal amendments.