2013 (11) TMI 1414 - AT - Central Excise

Eligibility for concessional rate under Notification No.1/2011 PU foam cleared for captive consumption at concessional 1% rate of duty - Held that - Following SHIVALIK AGRO POLY PRODUCTS LTD. Versus COLLR. OF C. EX., CHANDIGARH 1999 (9) TMI 215 - CEGAT, NEW DELHI - If credit has been taken but the duty is debited subsequently, benefit of exemption under Notification containing condition regarding non-availment of credit cannot be denied - the appellants are entitled to the benefit of Notification 1/2011 Decided in favour of Assessee.

Summary

Issues:
1. Interpretation of Notification No. 1/2011-CE regarding duty imposition on final products without CENVAT credit availed on inputs.
2. Eligibility for concessional rate under Notification No. 1/2011-CE for paying 1% duty on finished products.
3. Consideration of inputs used in the manufacture of PU foam for determining admissibility of concessional rate on finished products.

Analysis:

1. The appellant, a manufacturer of rubberized coir mattresses and rubberized foam mattresses, faced a challenge post the imposition of 1% duty in the 2011 budget on final products without CENVAT credit availed on inputs, as per Notification No. 1/2011-CE. The issue arose when the appellant paid excise duty on PU foam cleared for captive consumption, leading to a demand for central excise duty of Rs. 1,63,81,138/- with interest and penalties under Rule 25 of Central Excise Rules 2002.

2. The crux of the matter revolved around the appellant's contention that paying duty on PU foam should make them eligible for the concessional rate of 1% under Notification No. 1/2011-CE, considering the exemption status of the finished products. The Commissioner's stance on the inputs used in PU foam manufacture and the relevance of duty payment on captively consumed PU foam for determining concessional rate eligibility was challenged by the appellant, citing precedents and legal interpretations.

3. The Tribunal analyzed the situation, emphasizing that the appellant rectified the duty payment omission promptly upon discovery during the audit. Referring to relevant case laws like Tata Chemicals Ltd. and Shivalik Agro Poly Products Ltd., the Tribunal found merit in the appellant's argument that the exemption for captively consumed PU foam should continue even after the introduction of Notification No. 1/2011-CE. The decisions of the Tribunal in similar cases supported the appellant's position, leading to the allowance of the appeal with consequential relief granted.

In conclusion, the judgment highlighted the importance of statutory compliance, interpretation of notifications, and the application of legal precedents in resolving excise duty disputes, ultimately favoring the appellant's position in this case.