2014 (2) TMI 1006 - AT - Central Excise

Waiver of pre deposit - Availment of CENVAT Credit on inputs - Captive consumption u/ntf 67/95 - Exemption vide Notification No. 6/2006-C.E., dated 1-3-2006 - availing exemption on Final Products as supply to International Competitive Bidding (ICB) Project - Held that - assessees prima facie were not required to discharge the obligation prescribed under Rule 6 of Cenvat Credit Rules, 2001 as they were covered by Clause (vii) of Rule 6(6), which stipulates that the provisions relating to payment of 10% or 5% as the case may be were not required to be followed as the goods were supplied against I.C.B. in terms of Notification No. 6/2002 or 6/2006 and therefore, exempted from levy of duty of customs and additional duty as per Clause (vii) of Rule 6(6) of the Cenvat Credit Rules. The assessees therefore, have made out a prima facie case on merits and we therefore dispense with pre-deposit of duty, interest and penalty and stay recovery thereof pending the appeal. - Following its earlier decision in 2012 (10) TMI 105 - CESTAT, CHENNAI - Stay granted.

Issues involved:
Demand of duty on steel pipes used in the manufacture of exempted goods; Interpretation of Notification No. 67/95-C.E.; Applicability of Rule 6 of Cenvat Credit Rules; Benefit of Notification No. 6/2006-C.E.; Pre-deposit of duty, interest, and penalty pending appeal.

Analysis:

1. Demand of duty on steel pipes used in the manufacture of exempted goods:
The applicant, engaged in manufacturing Boilers and parts, had two units prior to July 2007. Steel Pipes were cleared from one unit to another, with one unit availing Cenvat credit. After the units merged, no duty was paid on Steel Pipes used in the manufacture of final products. A show cause notice was issued proposing demand of duty on steel pipes used in the manufacture of exempted goods, denying the benefit of Notification No. 67/95-C.E. The adjudicating authority confirmed the demand of duty along with interest and penalty for a specific period.

2. Interpretation of Notification No. 67/95-C.E.:
The ld. Advocate referred to earlier Tribunal stay orders in similar cases and highlighted relevant portions of Notification No. 67/95-C.E. He argued that the benefit of the notification should apply, as the applicant availed the benefit of another notification, No. 6/2006-C.E. The ld. AR contended that the Tribunal had not considered that the final product was cleared without payment of duty under a specific notification, which is not covered by the exclusive clauses of Notification No. 67/95-C.E.

3. Applicability of Rule 6 of Cenvat Credit Rules:
The Tribunal analyzed the provisions of Rule 6 of Cenvat Credit Rules, noting that the benefit of Notification 67/95-C.E. does not apply to inputs used in exempted final products, except under specific clauses. The Tribunal observed that the applicant's case did not fall under the exclusive clauses of the notification, based on the utilization of the common input in the manufacture of final products.

4. Benefit of Notification No. 6/2006-C.E.:
The Tribunal examined the provisions of Notification No. 6/2006-C.E., which provided a nil rate of duty on goods supplied against International Competitive bidding. This led the Tribunal to conclude that the applicant's case did not support the denial of the benefit under the captive consumption notification.

5. Pre-deposit of duty, interest, and penalty pending appeal:
The Tribunal referred to earlier stay orders in the applicant's case, where it was held that the obligation prescribed under Rule 6 of Cenvat Credit Rules was not required to be followed due to specific clauses, exempting the goods from duty. Based on this precedent, the Tribunal waived the pre-deposit of duty, interest, and penalty pending the appeal.

In conclusion, the Tribunal allowed the stay application, linking the appeal with previous cases, and waived the pre-deposit of duty, interest, and penalty pending the appeal.

← Previous Next →