2014 (2) TMI 1011 - AT - Central Excise

Duty demand - Revenue imposed duty since no excise duty is paid on final product, namely, cement, the applicant had to pay 10% of the value of cement, as per the provisions of Rule 6 of the CENVAT Credit Rules, 2004, especially because supplies to SEZ developer was not mentioned in the clause 6(6) of CENVAT Credit Rules 2004 at the relevant time - Held that - where the benefit was extended for clearances to 100% EOU or FTZ by amending Rule 57C, wherein, the Tribunal had held that said notification can have only prospective effect and not retrospective effect - benefit has to be extended for the earlier period also. Besides, the applicant has a very strong case on time bar also. Considering all these aspects, we order that the appeal may be admitted without any pre-deposit - Stay granted.

Summary

Issues:
1. Interpretation of Rule 6 of the CENVAT Credit Rules, 2004 regarding payment of 10% of the value of cement supplied to SEZ developers.
2. Applicability of the amendment to Rule 6(6) of the CENVAT Credit Rules, 2004.
3. Time-barred Show Cause Notice for demanding payment of 10% of the price of cement.

Analysis:

Issue 1: Interpretation of Rule 6 of the CENVAT Credit Rules, 2004
The case involved a manufacturer of cement supplying to SEZ developers, claiming it as export. The Revenue contended that since no excise duty was paid on the final product, the manufacturer should pay 10% of the value of cement under Rule 6 of the CENVAT Credit Rules, 2004. A Show Cause Notice was issued demanding payment for the period July '07 to Dec '08. The applicant argued that the supplies to SEZ developers were not mentioned in the relevant clause of Rule 6(6) at that time.

Issue 2: Applicability of the amendment to Rule 6(6)
The applicant argued that the subsequent amendment to Rule 6(6) to include clearance to SEZ developers was not applicable for the prior period. Citing a High Court ruling, the applicant contended that the amendment was corrective and did not require payment of 10% for the earlier period. The Revenue, however, insisted on payment based on the pre-amendment period.

Issue 3: Time-barred Show Cause Notice
The applicant highlighted that the Revenue was aware of the duty issue from the beginning, as evidenced by another Show Cause Notice for clinkers used in cement manufacture. The applicant argued that the present notice, issued on 30.12.2010 for the period July '07 to Dec '08, was time-barred due to invoking the extended period. The applicant emphasized the strong case based on time bar and requested admission of the appeal without pre-deposit.

The Tribunal considered the arguments, noting the debatable nature of whether the exported goods were exempted. Referring to the Chattisgarh High Court ruling and the time-bar issue, the Tribunal ruled in favor of the applicant, admitting the appeal without pre-deposit and ordering a stay on dues collection during the appeal's pendency.