2016 (7) TMI 650 - AT - Central Excise

Supply of goods against ICB - Eligibility of exemption under Notification No. 6/2006-CE dated 01.03.2006 r/w amended Notification No. 46/2008-CE dated 14.08.2008 treating that the goods supplied are for setting up of ultra mega power project - need to Maintain separate accounts when common inputs are used in manufacture of both dutiable and exempted goods - Held that - On perusal of records it is seen that competant authority has issued certificate that the goods are exempt from duty as per Notification No.46/2008 dated 14.08.2008. This Notification says that the goods are exempted from duties of customs leviable under First Schedule of Customs Tariff Act, 1975 and additional duty leviable under Section 3 of the CTA when imported into India. When goods manufactured in India are supplied against ICB, such goods would be eligible for full duty exemption as per this notification. This point has been clarified by the Co-ordinate Bench of Tribunal in the case of Bharat Heavy Electricals Ltd., case (2015 (7) TMI 225 - CESTAT NEW DELHI). Commissioner (Appeals) has erred in holding that the provision of Rule 6(6)(vii) is applicable only w.e.f. 27.02.2010. Also see Areva T & D India Ltd. 2014 (3) TMI 703 - CESTAT CHENNAI - Decided in favour of assessee

Issues:
1. Availing CENVAT credit on inputs, capital goods & input services for manufacturing cement and clinker.
2. Supplying cement to certain projects under exemption notifications.
3. Requirement of maintaining separate accounts for dutiable and exempted goods.
4. Disputed demand, interest, and penalty imposed by the department.
5. Appeal before Commissioner (Appeals) against the original authority's decision.
6. Interpretation of Rule 6(6)(vii) of Cenvat Credit Rules, 2004.
7. Applicability of exemption under Notification No. 6/2006-CE dated 01.03.2006 r/w amended Notification No. 46/2008-CE dated 14.08.2008.
8. Comparison with relevant case laws - Areva T & D India Ltd. and Bharat Heavy Electricals Ltd.
9. Tribunal's decision on the appeal and consequential reliefs.

Analysis:

1. The appellants were involved in the manufacture and clearance of cement and clinker, availing CENVAT credit on various inputs, capital goods, and input services. They supplied cement to specific projects under an exemption notification during the disputed period. The department contended that separate accounts should be maintained for common inputs used in manufacturing both dutiable and exempted goods, leading to a show cause notice for recovery of demand, interest, and penalty.

2. The original authority confirmed a certain amount as demand along with interest and penalty. The appellant then appealed to the Commissioner (Appeals), who upheld the original order, prompting the appellants to approach the Tribunal for redressal.

3. The appellant argued before the Tribunal that they were eligible for full credit under Rule 6(6)(vii) of the Cenvat Credit Rules, 2004, as the goods were cleared to Mega Power Projects under International Competitive Bidding (ICB) with exemption under specific notifications.

4. The Tribunal examined Rule 6(6)(vii) which exempts excisable goods removed without duty payment in certain situations, including goods supplied against International Competitive Bidding as per relevant notifications. The Tribunal noted that the Commissioner (Appeals) erred in restricting the applicability of Rule 6(6)(vii) to a later date than supported by case law and clarified that goods supplied against ICB in India are eligible for full duty exemption under the relevant notification.

5. Relying on precedents like Areva T & D India Ltd. and Bharat Heavy Electricals Ltd., the Tribunal found the impugned order unsustainable and set it aside, allowing the appeal with consequential reliefs. The judgment emphasized the correct interpretation of Rule 6(6)(vii) and the applicability of duty exemption for goods supplied against ICB, ultimately ruling in favor of the appellant.

6. The Tribunal's decision, delivered on 06/05/2016, provided clarity on the disputed issues regarding CENVAT credit, exemption notifications, the necessity of separate accounts, and the correct application of Rule 6(6)(vii) in the context of supplying goods against International Competitive Bidding, ensuring a fair outcome for the appellant based on legal principles and precedents.

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