2024 (12) TMI 1131 - AT - Central Excise

Liability to pay excise duty on tools and fixtures manufactured and used captively for the manufacture of parts of motor vehicles - Applicability of exemption Notification No. 67/95-CE on tools and fixtures - Demand of excise duty on tools and fixtures cleared to the appellant's own unit at PuneRevenue neutrality - extended period of limitation. Liability to pay excise duty on tools and fixtures manufactured and used captively for the manufacture of parts of motor vehicles - Applicability of exemption Notification No. 67/95-CE on tools and fixtures - HELD THAT - The contention of the revenue is that since for these tools and fixtures sale invoices were raised by the appellant they are liable to pay excise duty. This contention of the revenue cannot be agreed upon for the reason that firstly the excise duty is payable only at the time of clearance of the goods secondly in the present case the tools and fixtures manufactured by the appellant is used within the factory as captive consumption for manufacture of other excisable goods that is parts of motor vehicle which are cleared on payment of duty to M/s. General Motors India Pvt Ltd. The said captive consumption is clearly covered by exemption Notification No. 67/95-CE dated 16.03.1995 therefore no excise duty is payable on tools and fixtures manufactured and captively used even though the sale invoice in favour of M/s. General Motors India Pvt Ltd were issued. Demand of excise duty on tools and fixtures cleared to the appellant's own unit at Pune - HELD THAT - As regard the demand of duty on tools and fixtures cleared by the appellant to their Pune unit, it is found that the Pune unit is also engaged in manufacture of parts of vehicle for General Motor India Pvt Ltd and the same is cleared on payment of duty, therefore they are eligible for Cenvat Credit of duty, if any payable by the appellant. Revenue neutrality - extended period of limitation - HELD THAT - Since the entire exercise of duty if any payable by the appellant which is available as Cenvat Credit to their Pune unit this amount to revenue neutrality accordingly, as per the settled law in case of the revenue neutrality malafide intention cannot be attributed to the appellant, consequently extended period is not invokable. Therefore, in the facts and circumstances in the present case and as per the settled legal position, the duty payable on the clearance of the tools and fixtures to the Pune unit is hit by limitation for the reason that the demand was raised after the normal period. The impugned order is set aside - The appeal is allowed.

Issues:
1. Liability to pay excise duty on tools and fixtures manufactured and used captively for the manufacture of parts of motor vehicles.
2. Applicability of exemption Notification No. 67/95-CE on tools and fixtures.
3. Demand of excise duty on tools and fixtures cleared to the appellant's own unit at Pune.
4. Revenue neutrality and limitation period in the case.

Detailed Analysis:

1. The issue in this case revolves around the liability to pay excise duty on tools and fixtures manufactured by the appellant and used captively for the manufacture of parts of motor vehicles. The department contended that excise duty was payable when the appellant issued sale invoices to M/s. General Motors India Pvt Ltd, even though the goods were retained in the factory for further manufacturing. The appellant argued that as per exemption Notification No. 67/95-CE, no excise duty is payable on tools and fixtures used captively within the factory for manufacturing excisable goods. The Tribunal disagreed with the revenue's contention and held that excise duty is payable only at the time of clearance of goods, and captive consumption is covered by the exemption notification.

2. The Tribunal relied on various judgments, including Elcon Clipsal India Ltd. Vs. Commissioner of C. Ex. Ahmedabad-I and Ashok Iron Works Ltd Vs. Commissioner of Central Excise, Belgaum, to support the appellant's argument regarding the applicability of the exemption notification. The appellant's counsel also highlighted that the tools and fixtures were used within the factory for captive consumption, and no excise duty should be levied based solely on the issuance of sale invoices. The Tribunal upheld the appellant's position based on the settled legal principles and exemption notification, thereby rejecting the department's demand for excise duty on the tools and fixtures.

3. Another issue addressed in the judgment pertains to the demand of excise duty on tools and fixtures cleared to the appellant's own unit at Pune. The appellant argued that since the Pune unit was eligible for Cenvat Credit and the duty paid by the appellant was available as credit to the Pune unit, the entire exercise was revenue neutral. The Tribunal agreed with the appellant's submission, emphasizing that revenue neutrality precludes any malafide intention on the part of the appellant. Therefore, the demand related to the clearance of tools and fixtures to the Pune unit was held to be hit by limitation due to revenue neutrality, as the demand was raised after the normal period.

4. In conclusion, the Tribunal set aside the impugned order, allowing the appeal and ruling in favor of the appellant. The judgment highlighted the importance of captive consumption, applicability of exemption notifications, revenue neutrality, and the timing of excise duty payment concerning the manufacture and clearance of goods.

← Previous Next →