2023 (8) TMI 992 - AT - Central Excise

Applicability of exemption notification - bagasse based plain and pre-laminated boards manufactured and cleared by the respondent falling under Chapter 44109090 and 44101190 of Central Excise Tariff Act, 1985 - liable for payment of excise duty @8% adv. as provided under Notification No. 4/2006-CE dated 01.03.2006 (Sr. 87) or eligible for full exemption under notification No. 6/2006-CE dated 01.03.2006 (Sr.No.82)? HELD THAT - The department have chosen Notification No. 4/2006-C.E. only on the ground that the description of the impugned product is matching with the entry in the said notification. However, it is noted that there is no dispute that the appellant is manufacturing bagasse board which is covered by Sl. No. 82 of Notification No. 6/2006. No evidence and reason has been produced by the department regarding the dispute that as to why the product manufactured by the respondent cannot be called as bagasse board - it is found that the impugned goods are eligible to get exemption without any condition under these two notifications. The respondent cannot be compelled to opt for a notification which has higher duty liability. The Hon ble Supreme Court in various decisions held that the assessee can claim a notification which is more beneficial to them. Reference can be made to Supreme Court decision in M/S. ARVIND LIMITED. AND M/S. ARVIND POLYCOT LIMITED VERSUS CCE. - AHMEDABAD-III 2014 (6) TMI 271 - CESTAT AHMEDABAD where it was held that when two exemption notifications, one granting absolute unconditional exemption to excisable goods and the other granting unconditional partial exemption to the said goods, are operative simultaneously, it is the choice of the appellant to opt for that notification which is more beneficial to him. In the present facts and circumstances of these appeals, provisions of Section 5A(1A) of the Central Excise Act, 1944 are not applicable. On the identical issue a matter came before the Hon ble High Court of Gujarat in the case of DARSHAN BOARDLAM LTD. VERSUS UNION OF INDIA 2013 (4) TMI 326 - GUJARAT HIGH COURT wherein the Hon ble High Court held that pre laminated bagasse board is entitled for exemption under Notification No. 6/2006-CE (Sr. 82) dated 01.03.2006. Thus, merely because the revenue's appeal is pending in the Hon ble Supreme Court, Hon ble high court judgments do not loose its binding nature in view of the judicial discipline. Therefore, following the above judgments, it is held that respondent is entitled for exemption notification No. 6/2006-CE (Sr.No.82) dated 01.03.2006. The impugned order is upheld. The Revenue s appeal is dismissed.

Summary

Issues:
The issues involved in the judgment are the correct interpretation and application of Notification No. 6/2006-CE dated 01.03.2006 and Notification No. 4/2006-CE dated 01.03.2006 regarding the exemption from payment of Central Excise Duty for the manufacture of Plain Bagasse Board and Prelam Bagasse Board.

Issue 1:
The first issue in this case pertains to the eligibility of the respondent to avail the benefit of Notification No. 6/2006-CE dated 01.03.2006 for exemption from Central Excise Duty, as opposed to the contention of the revenue that the correct notification applicable should be Notification No. 4/2006-CE dated 01.03.2006.

The respondent, engaged in the manufacture of Plain Bagasse Board and Prelam Bagasse Board, claimed exemption under Notification No. 6/2006-CE dated 01.03.2006, while the revenue argued that the correct notification should be Notification No. 4/2006-CE dated 01.03.2006. The dispute arose from the nature of the products and the applicability of the respective notifications based on the manufacturing process and materials used.

Issue 2:
The second issue revolves around the conflicting interpretations of the two notifications, specifically whether the products manufactured by the respondent fall under the purview of Notification No. 4/2006-CE dated 01.03.2006 or Notification No. 6/2006-CE dated 01.03.2006, leading to a dispute over the applicable rate of excise duty.

The revenue contended that the products should be taxed at 8% adv. as per Notification No. 4/2006-CE dated 01.03.2006, while the respondent argued for full exemption under Notification No. 6/2006-CE dated 01.03.2006. The crux of the issue lay in determining the correct classification of the products and the corresponding rate of excise duty applicable to them.

Judgment Summary:
The Appellate Tribunal CESTAT AHMEDABAD upheld the impugned order in favor of the respondent, dismissing the revenue's appeal and disposing of the cross objection. The Tribunal ruled that the respondent was entitled to exemption under Notification No. 6/2006-CE dated 01.03.2006 for the manufacture of Plain Bagasse Board and Prelam Bagasse Board.

The Tribunal found that the respondent's products fell under the scope of Notification No. 6/2006-CE dated 01.03.2006, entitling them to full exemption without any condition. The Tribunal emphasized the principle that an assessee can claim the notification that is more beneficial to them, citing various Supreme Court and Tribunal decisions in support of this interpretation.

Furthermore, the Tribunal referenced a similar ruling by the Hon'ble High Court of Gujarat in a related case, affirming that pre-laminated bagasse board qualifies for exemption under Notification No. 6/2006-CE. The Tribunal held that the pending appeal of the revenue in the Supreme Court did not diminish the binding nature of the High Court judgments, and therefore, the respondent was rightfully granted exemption under the applicable notification.

The judgment was pronounced in the open court on 21.08.2023 by the members of the Appellate Tribunal CESTAT AHMEDABAD, namely MR. RAMESH NAIR, MEMBER (JUDICIAL) and MR. C L MAHAR, MEMBER (TECHNICAL).