2018 (8) TMI 1443 - AT - Central Excise

Benefit of N/N. 06/2006-CE dated 01.03.2006 as amended - CRCA sheets obtained without payment of duty - Held that - The condition attached in the Serial No. 31 of Notification is that procedures of Rules should be followed - the Lower Authorities were correct to hold that CRCA sheets, howsoever cut to size and used for manufacture of handset and coin operated phones, cannot be considered as parts, components and accessories of mobile handset including cellular phones - benefit rightly denied. The benefit of notification if it is not available at the first instant following the procedures laid down in the said Rules, will not entitle the appellant herein the exemption of the duty paid on CRCA sheets. Appeal dismissed - decided against appellant.

Summary

Issues:
- Interpretation of Notification No. 06/2006-CE regarding exemption eligibility for CRCA sheets used in manufacturing phones
- Compliance with Central Excise rules for availing duty exemption
- Validity of demand for duty and interest on CRCA sheets used in manufacturing phones

Analysis:

1. Interpretation of Notification No. 06/2006-CE:
The case involved a dispute regarding the eligibility of CRCA sheets used in manufacturing phones for duty exemption under Serial No. 31 of Notification No. 06/2006-CE. The appellant claimed that the CRCA sheets used for GSM pay phones should be considered eligible for exemption under the said notification. However, the Tribunal held that CRCA sheets used for manufacturing phones cannot be classified as parts, components, or accessories of mobile handsets, including cellular phones, as per the conditions of the notification. Therefore, the Tribunal upheld the findings of the Lower Authorities regarding the interpretation of the notification.

2. Compliance with Central Excise rules:
The appellant argued that they followed the procedures under Rule 3 of the Central Excise rules by obtaining the necessary certificates and using CRCA sheets only for the intended purpose of manufacturing phones. The appellant cited previous court decisions to support their claim. However, the Tribunal emphasized that merely following procedures under the rules does not automatically entitle the appellant to duty exemption if the goods do not meet the criteria specified in the notification. Therefore, compliance with procedural requirements alone does not guarantee exemption eligibility.

3. Validity of demand for duty and interest:
The Tribunal concluded that the impugned order of the First Appellate Authority, which set aside the penalty but upheld the demand for duty and interest on the CRCA sheets used in manufacturing phones, was legally sound and free from any defects. The Tribunal affirmed that the demand for duty and interest was justified based on the findings that the CRCA sheets did not qualify for exemption under the notification. Consequently, the appeal against the demand for duty and interest was rejected by the Tribunal.

In summary, the Tribunal upheld the decision of the Lower Authorities regarding the ineligibility of CRCA sheets for duty exemption under Notification No. 06/2006-CE, emphasized the importance of meeting the substantive criteria for exemption eligibility despite procedural compliance, and validated the demand for duty and interest on the CRCA sheets used in manufacturing phones.