2017 (11) TMI 879 - HC - Central Excise

Benefit of N/N. 63/95-CE dated 16.03.1995 - Whether the Tribunal was correct in law in interpreting N/N. 63/95-CE dated 16.03.1995 and holding that the appellant is not entitled to claim exemption under N//N. 63/95-CE dated 16.03.1995 from Central Excise duty on the goods supplied to Bharat Earth Movers Ltd. (BEML) for further supplying to Ministry of Defence and is liable for payment of Central Excise duty amounting to ₹ 22,49,354/- such conclusion is legally sustainable in the eye of law? Held that - Taking into consideration the notification of 2006 which squarely covered the case of the appellant and in view of certificate issued by competent authority, the appellant is entitled for the benefit - both the units are covered under the said notification and goods are ultimately supplied for use by Ministry of Defence. Therefore, it is clarified that even if goods are cleared / sold by the first unit to the second unit, it is covered by the said notification since it is ultimately meant for supply for Ministry of Defence - the appellant will be entitled for the refund - appeal allowed - decided in favor of assessee.

Summary

Issues:
Interpretation of notification No.63/95-CE dated 16.03.1995 for exemption from Central Excise duty on goods supplied to Bharat Earth Movers Ltd. (BEML) for Ministry of Defence.

Analysis:

Issue 1: Interpretation of Notification No.63/95-CE
The appellant challenged the tribunal's decision denying exemption under notification No.63/95-CE for goods supplied to BEML for Ministry of Defence. The appellant argued that the goods were supplied for official purposes, meeting the conditions of the notification. The appellant relied on a certificate from the Ministry of Defence confirming the exemption. The tribunal held that the goods were not used in the manufacture of goods supplied to Defence, thus denying the exemption. The appellant cited circulars and judgments supporting their claim, emphasizing the conditions of the notification. The High Court considered a 2006 circular clarifying that goods supplied to another unit listed in the notification, ultimately meant for Ministry of Defence, are covered by the exemption. Relying on this, the High Court held in favor of the appellant, granting the refund of Central Excise duty amounting to ?22,49,354 towards CENVAT credit.

Conclusion:
The High Court interpreted notification No.63/95-CE to allow exemption for goods supplied to BEML for Ministry of Defence, based on the 2006 circular and the Ministry of Defence's certificate. The appellant's entitlement to the exemption was upheld, leading to the refund of Central Excise duty.