2018 (5) TMI 389 - AT - Central Excise

CENVAT credit - inputs/input services have been commonly used in the manufacture of Gabapentine, which was cleared in DTA on payment of duty and also by availing full exemption - non-maintenance of separate records - Held that - The impugned goods Gabapentine are dutiable and cannot be said to be unconditionally exempted products. They are allowed to be cleared to DTA without payment of duty only as per Notification No. 23/2003. The goods are leviable to nil rate of duty on application of Notification No. 23/2003. In view of the clarification by circular dated 16.09.2016, the contentions put forth by the Revenue in the grounds of appeal will no longer have any relevance. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of Notifications regarding duty exemptions for goods cleared in DTA.
2. Eligibility for exemption on inputs utilized for manufacturing finished goods.

Analysis:

Issue 1:
The case involved appeals regarding the clearance of goods in the Domestic Tariff Area (DTA) by a manufacturer holding Advance Authorization. The Department contended that duty was payable on exempted clearances, leading to demand notices issued against the respondent. However, the adjudicating authority dropped the proceedings. The Revenue filed appeals challenging this decision. The key question was whether the goods cleared in DTA to the Advance Authorization holder without duty payment fell under the conditions of specific Notifications, given that the imported like goods attracted nil duty. The Tribunal analyzed the relevant provisions, Circulars, and case law. The Circular dated 16.09.2016 clarified that duty exemption applied in cases of supply to Advance Authorization holders. Consequently, the Tribunal dismissed the Revenue's appeals, citing the Circular's clarification as resolving the issue conclusively.

Issue 2:
Another aspect of the case concerned the eligibility for exemption on inputs used to manufacture finished goods. The Department argued that the finished goods, if imported, attracted nil duty, thus the exemption for inputs did not apply. The Tribunal considered the arguments, including references to relevant Notifications and Circulars. The Circular dated 16.09.2016 clarified that the second proviso to para 6 of Notification No. 22/2003-CE and the proviso to para 3 of Notification No. 52/2003-Cus did not apply in cases of supply to Advance Authorization holders without duty payment. Based on this clarification, the Tribunal found no merit in the Revenue's appeals and dismissed them.

In conclusion, the Tribunal analyzed the issues comprehensively, considering the legal provisions, Circulars, and case law to determine the applicability of duty exemptions and eligibility for exemptions on inputs. The clarifications provided in Circulars were pivotal in resolving the disputes, leading to the dismissal of the Revenue's appeals.