2018 (2) TMI 209 - AT - Central Excise

Benefit of N/N. 67/95-CE dated 16.03.1995 - intermediate goods (captive consumption) - electrical relays used in further manufacture of control panels - Revenue held a view that since the final product did not suffer duty, the exemption for captive consumption shall not apply - Held that - the eligibility of the appellant-assessee for exemption under N/N. 67/1995 cannot be disputed. They have followed the provisions and complied with the provisions of Rule 6 and all the connected requirements of the N/N. 67/1995 - similar issue decided in the case of Bharat Aluminium Co. Ltd. Vs. CCE, Raipur 2017 (4) TMI 276 - CESTAT NEW DELHI , where it was held that the exclusion made under sub-clause (vii) of sub-rule (6) of Rule 6 of CCR, 2004 read with proviso to N/N. 67/95 makes it clear that the exemption for captive consumption of intermediate products has been correctly claimed by the appellant - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues involved:
Interpretation of Notification No.67/1995-CE regarding exemption for captive consumption; Compliance with Rule 6 of Cenvat Credit Rules, 2004; Discharge of duty obligation for availing exemption; Legal sustainability of lower authorities' findings.

Detailed Analysis:

1. Interpretation of Notification No.67/1995-CE: The case involved a dispute regarding the exemption under Notification No.67/1995-CE for captive consumption of electrical relays in the manufacture of control panels. The Revenue contended that since the final product did not suffer duty, the exemption for captive consumption should not apply. However, the appellant argued that they fell under the excluded category listed in the same notification by complying with the provisions of Rule 6 of Cenvat Credit Rules, 2004.

2. Compliance with Rule 6 of Cenvat Credit Rules, 2004: The appellant asserted that they had complied with the conditions of Notification No.67/1995-CE and were covered by the exclusion clause (vi) of the notification, which applies when the assessee complies with Rule 6 of Cenvat Credit Rules. The appellant contended that compliance did not necessarily mean payment of an amount, and the lower authorities erred in holding against them.

3. Discharge of duty obligation for availing exemption: The Revenue appealed against the dropping of demand for the extended period by the lower authorities. They argued that the exclusion clause under Notification No.67/1995 would only be fulfilled upon discharging duty as per Rule 6. Since the appellant did not pay any duty, the lower authorities' decision was considered correct on merits.

4. Legal sustainability of lower authorities' findings: The appellate tribunal analyzed the facts and submissions from both sides. It noted that the appellant had availed exemption for Mega Power Projects by complying with Rule 6 of Cenvat Credit Rules, falling under clause (vii) of the rule. The tribunal found that the lower authorities' conclusions were not legally sustainable and referred to a previous tribunal decision in a similar dispute. Consequently, the impugned order was deemed legally unsustainable, and the appeal by the appellant was allowed while the appeal by the Revenue was dismissed.