2024 (7) TMI 995 - AT - Central Excise

Denial of CENVAT Credit - supplies made against International Competitive Bidding - goods manufactured in Maneja - Sub-Rule (6) of the Rule 6 of CCR, 2004 - HELD THAT - It is clear from exception from Rule 6 of CCR, 2004 that where the goods are obtained for a contract which is obtained under International Competitive Bidding, and where the imports of such goods are totally exempted from basic and Additional Customs Duty, the Cenvat Credit availed also need not be reversed in terms of Rule 6(6) of the Cenvat Credit Rules, 2004. The adjudicating authority has raised doubts about the use of all the goods supplied by the Maneja plant to the Savli plant being in the nature of the goods supplied in connection with the contract with DMRC. From the perusal of the appeal memorandum and synopsis submitted by the appellant, it is seen that this ground has not been contested. No specific evidence has been produced to establish that all the goods supplied by the appellant to their plant at Savli related solely to supplies with respect to DMRC contract. The questions have not been answered in the appeal memorandum or in the synopsis, it is required to remand the matter back to the original adjudicating authority to give an opportunity to appellant to clarify this aspect. The appellant are liberty to submit all the evidences in support of the claim that the all goods supplied by them were indeed in the nature of supplies made for the fulfilment of the contract obtained from DMRC under International Competitive Bidding from their other factory. If such evidence is produced, the benefit of Rule 6 (6) of the CCR will be extended to the appellant. Appeal allowed by way of remand for fresh adjudication.

Summary

Issues:
Denial of Cenvat Credit availed by the appellant for supplies made under International Competitive Bidding.

Analysis:
The appellant, a sub-contractor manufacturing electric locomotive parts and Metro Railway coaches, appealed against the denial of Cenvat Credit. They were awarded a contract by Delhi Metro Rail Corporation Ltd. for supply of Metro Railway coaches and parts, exempted by the Ministry of Finance. The appellant claimed exemption under Notification No. 6/2006-CE at Sr. No. 90 and 91 for supplies made under International Competitive Bidding. The appellant argued that benefits under both categories should apply independently. They cited various precedents supporting their view and contended that the extended period of limitation should not be invoked due to their genuine belief in entitlement to the exemption.

The appellant further argued that when goods were cleared to DMRC under a Duty Exemption Certificate, the benefit of Rule 6 of CCR, 2004 read with Notification 6/2006-CE should not be denied. They relied on court decisions and emphasized that failure in one category of exemption should not render them ineligible for another. The issue was deemed to be an interpretation of the law, warranting leniency on the extended period of limitation due to the appellant's genuine belief in their entitlement to the credit.

The adjudicating authority raised doubts regarding the nature of goods supplied by the appellant from one plant to another in connection with the DMRC contract obtained through International Competitive Bidding. While the authority accepted the principle that Cenvat Credit need not be reversed for goods supplied under such contracts, they sought clarification on whether all goods supplied were exclusively related to the DMRC contract. As the appellant did not provide sufficient evidence to establish this connection, the matter was remanded for fresh adjudication. The appellant was given the opportunity to clarify and provide evidence supporting their claim that all goods supplied were indeed for fulfilling the DMRC contract obtained through International Competitive Bidding.

In conclusion, the appeal was allowed by way of remand for further clarification and adjudication on the nature of goods supplied in connection with the DMRC contract obtained through International Competitive Bidding.