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2017 (12) TMI 888 - AT - Central ExciseN/N. 10/10-CE dated 17.2.2010 - appellant has paid duty on their own and took self-credit - Whether in case N/N. 56/02-CE dated 14.11.2002 and N/N. 10/10-CE dated 17.2.2010 are in force during the relevant period whether the appellant can be forced to follow N/N. 10/10-CE dated 17.2.2010? - Whether in terms of N/N. 10/10-CE dated 17.2.2010 the appellant is not required to pay duty and he has paid duty whether the provisions of section 11A of CEA 1944 are applicable or not? - Difference of opinion. Held that - In view of the difference of opinion the matter be placed before the Hon ble President to refer the matter to the third member to resolve the aforesaid issues - matter on remand.
Issues Involved:
1. Applicability of Notification No.56/02-CE dated 14.11.2002 vs. Notification No.10/10-CE dated 17.02.2010. 2. Applicability of Section 11A of the Central Excise Act, 1944. Issue-wise Detailed Analysis: Issue No.1: Applicability of Notification No.56/02-CE dated 14.11.2002 vs. Notification No.10/10-CE dated 17.02.2010 The primary issue is whether the appellant can choose between two applicable exemption notifications, namely Notification No.56/02-CE dated 14.11.2002 and Notification No.10/10-CE dated 17.02.2010, and whether they can be forced to follow Notification No.10/10-CE. The appellant argued that they were entitled to choose the more beneficial notification, as held by the Hon'ble Apex Court in HCL Ltd. Vs. CC-2001 (130) ELT 405 (SC), which states that when two exemption notifications are available, the assessee can choose the one that offers greater relief. This position was further supported by the Hon'ble Apex Court in Share Medical Care Vs. Union of India - 2007 (209) ELT 321 (SC), which reinforced the principle that an applicant can claim the more beneficial exemption if conditions are met. The Tribunal found that both Notification No.56/02-CE and Notification No.10/10-CE were available to the appellant. Therefore, they were entitled to choose the more beneficial one. The Tribunal concluded that the appellant had rightly claimed the benefit of Notification No.56/02-CE by paying duty through PLA and taking self-credit, which is permissible. Thus, the issue was resolved in favor of the appellant. Issue No.2: Applicability of Section 11A of the Central Excise Act, 1944 The second issue was whether the provisions of Section 11A of the Central Excise Act, 1944, are applicable when the appellant paid duty, even though the goods were exempt under Notification No.10/10-CE. The appellant contended that since the goods were exempt, they were not required to pay duty, and therefore, the amount paid through PLA was not "duty" within the meaning of Section 11A. Consequently, the provisions of Section 11A, which apply to short-paid, unpaid, or erroneously refunded duty, were not applicable. The Tribunal examined the show cause notice and the impugned order, noting that the appellant was not required to pay duty on the goods. Therefore, the amount paid was not considered duty under Section 11A. The Tribunal held that the show cause notice violated the provisions of Section 11A and was not sustainable. Thus, the issue was resolved in favor of the appellant. Separate Judgment by Member (Technical): Member (Technical) Devender Singh recorded a separate order addressing two issues: Issue No.1: Devender Singh emphasized the primacy of statutory provisions over delegated legislation. He highlighted Section 5A(1A) of the Central Excise Act, which mandates that if goods are exempted absolutely, the manufacturer shall not pay duty. He concluded that the appellant's contention of choosing between notifications was untenable, as the statutory provision of Section 5A(1A) prevailed, requiring the appellant not to pay duty on absolutely exempted goods. Issue No.2: Devender Singh argued that the payments made under Notification No.56/2002-CE were in the nature of duty, and the recovery of erroneous self-credit was governed by Section 11A. He upheld the demand for duty and interest but set aside the penalty, considering the interpretational nature of the issue. Points of Difference: Due to the contrary views, the matter was referred to the Hon'ble President to resolve the following points of difference: (a) Whether the appellant is entitled to the benefit of Notification No.56/02-CE or required to comply with Section 5A(1A) and follow Notification No.10/10-CE. (b) Whether the inadmissible re-credit under Notification No.56/2002-CE is recoverable under Section 11A or if Section 11A is not applicable due to the exemption under Notification No.10/10-CE. Conclusion: The Tribunal set aside the impugned order, allowing the appeal with consequential relief, while the separate judgment by Member (Technical) upheld the demand for duty and interest but set aside the penalty. The matter was referred to the Hon'ble President to resolve the points of difference.
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