2025 (1) TMI 418 - AT - Central Excise

Classification of Dumpers/Trippers - to be classified under tariff sub heading 87051090 as special type vehicles or as Dumpers/Trippers under sub-heading 87041010 and 87041090? - whether the appellant is entitled for the benefit of notification no. 6/2002-CE dated 01.03.2002 and notification no. 6/2006 CE dated 01.03.2006 or not? HELD THAT - The claim of the appellant is that during the course of investigation, they have already paid an amount equal to 29 lakhs whereas the Cenvat Credit involved is Rs. 13,78,470/- - as the appellant has already reversed the Cenvat Credit attributable to the goods cleared without payment of duty taking the benefit of notifications, the condition of notification has been fulfilled by the appellant. The contention of the Revenue in this case is that if it is not detected, the appellant would not have reversed the Cenvat Credit, therefore, they are not entitled for benefit of notifications. The said contention is not sustainable, as appellant has reverse the Cenvat Credit during investigation itself before issuance of the Show Cause Notice. Conclusion - The Cenvat Credit is attributable to the goods cleared by the appellant without payment of duty claiming the benefit of notification no. 6/2002 CE dated 01.03.2002 and notification no. 6/2006 CE dated 01.03.2006 reversed Cenvat Credit attributable to the other goods used in manufacture of those goods along with interest. The appellant is entitled for the benefit of notification no. 6/2002 CE dated 01.03.2002 and notification no. 6/2006 CE dated 01.03.2006. No penalty is imposable on the appellants. Appeal disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in the judgment are:

Whether the appellant is entitled to the benefit of Exemption Notification No. 6/2002-CE dated 01.03.2002 and Notification No. 6/2006-CE dated 01.03.2006.
Whether the appellant correctly classified their products under Tariff Sub-heading 87051090 as special type vehicles or should they be classified under 87041010 and 87041090 as contended by the Revenue.
Whether the appellant is entitled to the Small Scale Industry (SSI) exemption under Notification No. 8/2003 CE dated 01.03.2003.
Whether the extended period of limitation for issuing the Show Cause Notice is applicable in this case.
Whether penalties are imposable on the appellant.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Exemption Notifications No. 6/2002-CE and 6/2006-CE

Relevant Legal Framework and Precedents: The appellant sought exemption under these notifications, which required that no CENVAT Credit be taken on the chassis and inputs used in manufacturing the vehicles.
Court's Interpretation and Reasoning: The court found that the appellant had reversed the CENVAT Credit attributable to the goods cleared without payment of duty under the said notifications during the investigation, thus fulfilling the conditions of the notifications.
Key Evidence and Findings: The appellant reversed an amount of Rs. 29 lakhs, which was more than the CENVAT Credit involved (Rs. 13,78,470/-).
Application of Law to Facts: By reversing the CENVAT Credit, the appellant complied with the notification conditions, and thus the benefit could not be denied.
Treatment of Competing Arguments: The Revenue's argument that the appellant would not have reversed the credit if not detected was not accepted, as the reversal occurred before the issuance of the Show Cause Notice.
Conclusions: The appellant is entitled to the benefits of the exemption notifications as they complied with the necessary conditions.

Issue 2: Classification of Products

Relevant Legal Framework and Precedents: The classification dispute centered on whether the products should be classified under Tariff Sub-heading 87051090 or under 87041010 and 87041090.
Court's Interpretation and Reasoning: The court did not explicitly resolve the classification issue as the entitlement to the exemption was the primary focus.
Key Evidence and Findings: The appellant classified the products as special type vehicles, while the Revenue contended for a different classification.
Application of Law to Facts: The classification under 87051090 was not contested as it did not affect the outcome regarding the exemption benefits.
Treatment of Competing Arguments: The court focused on the exemption entitlement rather than the classification dispute.
Conclusions: The classification issue was not determinative in the decision regarding exemption entitlement.

Issue 3: Entitlement to SSI Exemption under Notification No. 8/2003 CE

Relevant Legal Framework and Precedents: The appellant conceded the issue regarding SSI exemption and agreed to pay the demanded amount.
Court's Interpretation and Reasoning: The court confirmed the demand of Rs. 2,41,879/- as the appellant conceded the issue.
Key Evidence and Findings: The appellant's concession on the issue led to the confirmation of the demand.
Application of Law to Facts: The appellant's agreement to pay the amount resolved the issue.
Treatment of Competing Arguments: No competing arguments were considered as the appellant conceded the issue.
Conclusions: The appellant is liable to pay the amount of Rs. 2,41,879/- along with interest.

Issue 4: Applicability of Extended Period of Limitation

Relevant Legal Framework and Precedents: The extended period of limitation is applicable in cases of suppression or misrepresentation.
Court's Interpretation and Reasoning: The court did not find the extended period applicable as the appellant had reversed the credit during the investigation.
Key Evidence and Findings: The reversal of credit before the issuance of the Show Cause Notice indicated no suppression.
Application of Law to Facts: The appellant's actions during the investigation negated the applicability of the extended period.
Treatment of Competing Arguments: The Revenue's contention for the extended period was not upheld.
Conclusions: The extended period of limitation is not applicable.

Issue 5: Imposition of Penalties

Relevant Legal Framework and Precedents: Penalties are imposed for non-compliance or fraudulent actions.
Court's Interpretation and Reasoning: Given the reversal of credit and compliance with notification conditions, no penalties were deemed necessary.
Key Evidence and Findings: The appellant's compliance during the investigation mitigated the need for penalties.
Application of Law to Facts: The appellant's proactive reversal of credit influenced the decision against imposing penalties.
Treatment of Competing Arguments: The court did not find grounds for penalties based on the facts presented.
Conclusions: No penalties are imposable on the appellant.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "As the appellant has already reversed the Cenvat Credit attributable to the goods cleared without payment of duty taking the benefit of notifications, the condition of notification has been fulfilled by the appellant."
Core principles established: The reversal of CENVAT Credit before the issuance of a Show Cause Notice satisfies the conditions for claiming exemption benefits under the relevant notifications.
Final determinations on each issue:
- The appellant is entitled to the benefits of Exemption Notification No. 6/2002-CE and Notification No. 6/2006-CE.
- The appellant is not entitled to the SSI exemption under Notification No. 8/2003 CE and must pay Rs. 2,41,879/- along with interest.
- No penalties are to be imposed on the appellant.