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2020 (2) TMI 1196 - AT - Central ExciseMethod of Valuation - Transaction Value u/s 4 or MRP based u/s 4A of CEA - manufacture of Butyl rubber inner tubes - Notification No. 2/2006-CE(NT), dated 01.03.2006 - HELD THAT - The N/N. 2/2006-CE(NT), dated 01.03.2006 was amended by N/N. 11/2006-CE(NT), dated 29.05.2006, by inserting a new entry at S.No. 97, which reads as parts, components and assemblies of automobiles . It is an admitted fact on record that the appellant is engaged in the manufacture of Butyl rubber inner tubes and such product by itself is separately identifiable and is a distinct Marketable product. It cannot be said that the product manufactured by the appellant is exclusively meant for the automobile industries for use as parts and components and are not capable for use in other purposes - Since the goods manufactured by the appellant are meant for use by other manufacturers also, such manufactured goods cannot be subjected to levy of central excise duty under Section 4A of the Central Excise Act, 1944. Reliance can be placed upon the decision of this Tribunal in the case of J.K. TYRE INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, INDORE 2018 (2) TMI 611 - CESTAT NEW DELHI , to state that no differential duty liability can be fastened on to the appellants in terms of Section 4A of Central Excise Act, 1944. Thus, the duty liability cannot be fastened under Section 4A of the Act - appeal allowed - decided in favor of appellant.
Issues:
- Interpretation of Notification No. 2/2006-CE(NT) and 11/2006-CE(NT) - Applicability of Section 4A of the Central Excise Act, 1944 - Differential central excise duty liability - Penalty imposition under Rule 25(1) of the Central Excise Rules, 2002 Interpretation of Notification No. 2/2006-CE(NT) and 11/2006-CE(NT): The case involved a dispute regarding the interpretation of Notification No. 2/2006-CE(NT) and its subsequent amendment by Notification No. 11/2006-CE(NT). The notifications specified goods to which the provisions of Section 4A of the Central Excise Act, 1944 would apply. The appellant, engaged in manufacturing Butyl rubber inner tubes, was subjected to show cause proceedings by the department based on these notifications. The Tribunal analyzed the notifications and concluded that the appellant's products were not exclusively meant for the automobile industry and were capable of use by other manufacturers as well. Therefore, the manufactured goods could not be subjected to central excise duty under Section 4A of the Act. Applicability of Section 4A of the Central Excise Act, 1944: The central issue revolved around the applicability of Section 4A of the Central Excise Act, 1944 to the appellant's manufactured goods. The department had initiated proceedings to levy central excise duty under this section based on MRP rates. The Tribunal, after examining the nature of the appellant's products and relevant legal precedents, held that the goods manufactured by the appellant, being marketable products usable by various manufacturers and not exclusively for automobiles, did not fall under the purview of Section 4A. The Tribunal emphasized the application of the common parlance theory to determine the classification of goods under specific entries or notifications. Differential central excise duty liability: The impugned order had confirmed a substantial differential central excise duty liability against the appellant, along with interest and a penalty under Rule 25(1) of the Central Excise Rules, 2002. However, the Tribunal, considering the arguments presented by the appellant's consultant and the legal precedents cited, found merit in the appellant's position. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, thereby relieving them of the duty liability imposed under Section 4A of the Act. Penalty imposition under Rule 25(1) of the Central Excise Rules, 2002: The penalty imposed under Rule 25(1) of the Central Excise Rules, 2002 was a consequential aspect of the differential central excise duty liability upheld in the impugned order. However, since the Tribunal ruled in favor of the appellant on the primary issue of duty liability under Section 4A, the penalty imposition was also set aside as part of allowing the appeal. The Tribunal's decision was based on the interpretation of relevant notifications, legal principles, and the nature of the appellant's manufactured goods as marketable products usable by various manufacturers.
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