2006 (11) TMI 14 - AT - Central Excise

Exemption Assessee can clear the unconditionally exempted goods by payment of duties and thereafter claim for credit of duty It is an option to assesse either he pay duty or not - Later clarification is made in this regard.

Summary

Issues:
Appeal against Order-in-Original dated 7-3-2005 regarding payment of duty on unconditionally exempted goods.

Analysis:
The appellant, a manufacturer of Anesthetic Products, paid duty on goods fully exempted from payment during the relevant period. They claimed benefit of credit on raw materials by paying duty on exempted goods and passing on the duty burden to customers. The appellant argued that the exemption notification cannot be forced upon them, citing contradicting judgments on the issue.

The Commissioner's order noted conflicting views on the issue, referencing the case of Narayan Polyplast v. Commissioner of C. EX., Ahmedabad. The Tribunal in that case observed that an unconditional notification exempts goods from duty without an option for the assessee to choose to pay duty at the statutory rate. The Supreme Court's stance on exemption notifications as part of the statute with the force of law was highlighted.

The appellant also referred to a 2005 amendment clarifying that when goods are unconditionally exempted, the manufacturer shall not pay duty. The amendment was deemed clarificatory and not altering the fundamental principle that exemption notifications are mandatory and not subject to the choice of the assessee.

Ultimately, the Tribunal found no grounds to interfere with the Commissioner's order, upholding the view that manufacturers have no option to pay duty on unconditionally exempted goods. The appeal was rejected, and the judgment was pronounced on 6-11-2006.