2015 (7) TMI 227 - AT - Central Excise

Exemption under Notification No. 63/95-CE dated 16.03.1995 - Goods supplied to defence - Bar of limitation - Held that - Apart from Notification No. 63/95-CE, there were other two notifications being Notification No. 10/97-CE dated 01.03.1997 and 06/2006-CE dated 01.03.2006, which required the certificates to be produced by the proper officer. Notification No. 10/97-CE dated 01.03.1997 required a certificate to be produced duly signed by Deputy Secretary of the concerned Ministry, whereas the certificates produced by the appellants are issued by CSIO and Aeronautic Development Agency, and cannot be held to be proper certificate. Similarly in term of Notification No. 06/2006, he submits that the benefit is available only when the goods manufactured by the manufacturer is supplied to M/s. HAL for servicing, repair or maintenance and not for further use in the manufacture of their product. As M/s. HAL has used it for further manufacture, he submits, that inasmuch as the conditions of the said notification have not been fulfilled, the benefit cannot be extended to the appellant. As regards Notification No. 10/97-CE dated 01.03.1997 is concerned, the Revenue s objection is that the certificate produced by the assessee in terms of the said notifications are not duly signed by the proper officer. However we find that certificates handed over to the appellant duly signed by CSIO or aeronautic development agency and based on which the appellant availed the benefit of notification. Even if the fact that they were not signed by the proper officer is admitted, no suppression or misdeclaration can be attributed to the assessee so as to invoke the longer period of limitation. Apart from that we find, as is seen from the certificate, the person signing the same is holding the rank in pay scale higher than the Deputy Secretary to Government of India in which case even though the certificates were not signed by Deputy Secretary, the same should be accepted. - demand cannot be held sustainable on the point of limitation itself. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Applicability of notifications granting duty exemption to vendors supplying goods to defense.
2. Denial of Cenvat credit by the Commissioner.
3. Dispute regarding proper certification under different notifications.
4. Bona fide belief of the appellant regarding duty payment.
5. Limitation period for demanding duty payment.
6. Liability of the appellant for goods used by M/s. HAL.

Analysis:
1. The appellants were engaged in manufacturing excisable goods supplied to M/s. HAL for defense purposes under relevant notifications. A show-cause notice was issued demanding duty payment, contending that duty exemption was only for M/s. HAL, not vendors. The Commissioner confirmed duty payment on final products cleared to M/s. HAL, denying Cenvat credit due to alleged improper account maintenance by the appellant.

2. The appellant argued confusion regarding notification applicability to vendors, citing withdrawn clarifications and differing Tribunal decisions. They claimed entitlement to Cenvat credit for duty paid on inputs, supported by a letter confirming correct Cenvat credit account maintenance. The demand within the limitation was accepted, with a request for re-quantification treating the consideration as cum-duty price and penalty setting aside.

3. The Revenue objected to certificates issued by CSIO and Aeronautic Development Agency, not by Deputy Secretary as required under certain notifications. The Tribunal found the certificates acceptable, noting the signatories' higher rank than the Deputy Secretary. The demand was deemed unsustainable due to the limitation period and lack of misdeclaration by the appellant.

4. The Tribunal acknowledged the appellant's bona fide belief based on conflicting Tribunal decisions and Board's Circular. With no uniform opinion on the issue, the appellant's lack of malafide intent was recognized, justifying the limitation period for demanding duty payment.

5. The demand was remanded to the Commissioner for a fresh decision within the limitation period, considering Cenvat credit, proper certification, and cum-duty benefit. The penalty imposed on the appellant was set aside due to the absence of suppression. The order concluded by disposing of the stay petition and appeal accordingly.