2024 (7) TMI 863 - HC - Central Excise

Extended period of limitation - exemption under Entry No. 144 of N/N. 12/2012-CE dated 17.03.2012 as amended by N/N. 12/2016-CE dated 01.03.2016 - Manufacture of Ready Mix Concrete - addition of words of knowledge of the department previous audit etc. so as to discard the substantial authority with the department for invoking extended period for issuing demand notice in terms of Section 11A (1) of the Central Excise Act, 1944 - HELD THAT - On perusal of the finding of the Tribunal in relation to the Notification No. 12/2016-CE dated 1.3.2016, it only considers the applicability of such Notification; as to whether the exemption claimed by the respondent assessee on the RMC used at the construction site was liable for Nil rate of duty or not. In the facts of the case, the breach of any condition of the exemption Notification was not under consideration before the Tribunal. By the N/N. 12/2016-CE dated 1.3.2016, Explanation is inserted as to what the site means and the Tribunal has merely held that in the facts of the case, the interpretation which was canvassed on behalf of the appellant revenue that the entire goods manufactured at the site which are required to be used for the construction site only, is not provided in the Notification. Meaning thereby that the Tribunal has considered the applicability of the Notification to the exemption of excise duty on RMC used by the respondent assessee on the site is considered. The Tribunal has also held that the respondent assessee has paid the excise duty on the RMC which is cleared outside the construction site and sold to other third party. The Appeal is required to be filed before the Hon ble Supreme Court. The Registry to hand over the papers of this Appeal to the appellant as per Order VII Rule 10 of the Code of Civil Procedure, 1908 to be filed before the appropriate Court.

Issues Involved:
1. Whether the Tribunal was justified in allowing the appeal based on limitation.
2. Whether the demand for the period April 2017 to June 2017 was time-barred.
3. Whether the Tribunal ignored the Explanation in Entry No. 144 of Notification No. 12/2012-CE.
4. Whether the Tribunal correctly held that the respondent is eligible for exemption under Entry No. 144 of Notification No. 12/2012-CE.
5. Whether the word "solely" in the exemption notification was given due consideration.
6. Whether the Tribunal was correct in considering "knowledge of the department" and "previous audit" to discard the authority for invoking the extended period for issuing a demand notice.

Detailed Analysis:

1. Limitation in Allowing Appeal:
The Tribunal allowed the appeal filed by the respondent on the grounds of limitation, holding that the entire demand covering the period from April 2014 to September 2015 and April 2016 to June 2017 was under the extended period and therefore time-barred. The Tribunal emphasized that the show cause notice issued by the appellant – revenue was time-barred.

2. Demand for April 2017 to June 2017:
The Tribunal also held that the demand for the period April 2017 to June 2017 suffered from the vices of limitation and was therefore time-barred. This was in line with the finding that the show cause notice was issued beyond the permissible period.

3. Ignoring Explanation in Entry No. 144:
The Tribunal dismissed the appeal of the revenue by interpreting the Explanation added in Entry No. 144 of Notification No. 12/2012-CE dated 17.03.2012, as amended by Notification No. 12/2016-CE dated 01.03.2016. The Tribunal held that the respondent was entitled to claim exemption for the Ready Mix Concrete (RMC) used at the construction site, as there was no condition that the entire manufactured goods should be used within the premises of the manufacturer.

4. Eligibility for Exemption:
The Tribunal found that the respondent – assessee was eligible for exemption under Entry No. 144 of Notification No. 12/2012-CE dated 17.03.2012, amended by Notification No. 12/2016-CE dated 01.03.2016, for the RMC manufactured at the site and used in construction at such site. The Tribunal noted that the respondent had paid excise duty on the quantity of RMC cleared outside the factory and there was no condition in the notification that the entire manufactured goods should be used within the premises.

5. Consideration of the Word "Solely":
The Tribunal held that the revenue’s contention that the entire RMC manufactured at the site should be used at the site of construction was not supported by the notification. The Tribunal interpreted the word "solely" in the context of the goods used at the site, and not the entire manufactured quantity, thereby allowing the exemption for the RMC used at the construction site.

6. Knowledge of Department and Previous Audit:
The Tribunal considered the "knowledge of the department" and "previous audit" to discard the authority for invoking the extended period for issuing a demand notice under Section 11A (1) of the Central Excise Act, 1944. The Tribunal concluded that the department could not impose conditions not prescribed in the notification to deny the exemption.

Preliminary Objection on Maintainability:
The respondent raised a preliminary objection regarding the maintainability of the appeal, arguing that the appeal should lie before the Hon’ble Supreme Court as per Section 35L read with Section 35G of the Act. The High Court agreed, citing the Supreme Court’s decision in Navin Chemicals MFG & Trading Co. Ltd., which held that disputes relating to the rate of duty or value of goods for assessment purposes should be appealed to the Supreme Court.

Conclusion:
The High Court concluded that the appeal should be filed before the Hon’ble Supreme Court and directed the Registry to hand over the papers to the appellant for filing before the appropriate court.

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