2008 (5) TMI 172 - AT - Central Excise

Common inputs used in dutiable & exempted final goods separate record not maintained - goods cleared to projects, which were funded by Asian Development Bank (international organization covered under Not. no. 108/95) since goods are supplied to projects funded by international organization, exemption in terms of Notification No. 108/95-C.E. is available - Hence appellant is not required to pay 10% of value of goods cleared in terms of Rule 6(3) of CCR

Summary

Issues:
Interpretation of Rule 6(3) of the Cenvat Credit Rules, 2004 regarding the maintenance of separate records for exempted and dutiable goods. Determination of whether the Asian Development Bank qualifies as an international organization for the purpose of availing exemption under Notification No. 108/95-C.E.

Analysis:
1. Interpretation of Rule 6(3) of the Cenvat Credit Rules, 2004:
The Tribunal examined the provisions of Rule 6(3) which require an assessee to maintain separate records for inputs used in the manufacture of exempted and dutiable goods or pay 10% of the clearance value of exempted goods. However, an exception under sub-rule (iv) exempts goods supplied to international organizations or projects funded by them from this requirement. The Tribunal clarified that this exception applies to goods supplied to an international organization for official use or projects funded by them under Notification No. 108/95-C.E. In this case, the goods were supplied to a project funded by the Asian Development Bank, qualifying for the exemption under the Notification. Therefore, the requirement to maintain separate records or reverse 10% credit did not apply.

2. Qualification of Asian Development Bank as an International Organization:
The Tribunal delved into whether the Asian Development Bank meets the definition of an international organization as per the Notification. The Notification exempts goods supplied to international organizations declared as such by the Central Government under the United Nations (Privileges and Immunities) Act, 1947. The Tribunal analyzed various pieces of evidence, including the Schedule to the Act and notifications from the Ministry of External Affairs, which extended provisions to the Asian Development Bank as an international organization. Despite the Adjudicating Authority's reliance on outdated information, the Tribunal concluded that the Asian Development Bank qualifies as an international organization under the Notification. The Tribunal emphasized that the Asian Development Bank's inclusion in the main preamble of the Notification as an international organization was sufficient, making the demand of duty against the appellants unsustainable.

3. Decision and Relief Granted:
Based on the above analysis, the Tribunal set aside the impugned order and allowed the appeals, providing consequential relief to the appellants. The Tribunal's decision rested on the understanding that the Asian Development Bank qualifies as an international organization under the Notification, thereby exempting the appellants from the obligations under Rule 6(3) of the Cenvat Credit Rules, 2004. The judgment highlights the importance of interpreting legal provisions in line with the specific definitions and exemptions outlined in the relevant notifications and Acts to determine the applicability of duties and obligations in such cases.