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TMI Blog2012 (12) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... tionally exempted vide Sr. No. 92 of Notification No. 6/2006-CE dated 1.3.2006 when captively used in the manufacture of tractors within the factory. By virtue of Section 5A, Central Government may, in public interest, exempt either absolutely or subject to any condition (to be fulfilled before or after removal) as may be specified in the Notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon - upheld the demand of duty and also Commissioner's order for recovery of interest on these demands confirmed by the Commissioner - these demands were raised invoking normal period of limitation - ingredients of Section 11AC are not present in this case and, therefore, penalty equal to duty imposed by the Commissioner needs reduction - penalties to reduced to Rs. 1.25 crores and Rs.1 crore in respect of Appeal respectively - appeal allowed partly. CENVAT Credit of advertisement services used in relation to manufacture of tractors cleared within the country - Held that:- Assessee is not entitled to take the CENVAT Credit on advertisement services used in relation to manufacture of tractors cleared within the country. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged in the manufacture of finished excisable goods namely Tractors falling under Heading 8701, IC engines and transmission assembly falling under Chapter Heading 8408 and 8483 and parts thereof falling under Chapter Heading 8409,8708 and 8483 of First Schedule to the Central Excise Tariff Act, 1985. 3.1 The assessee clears the tractors from its factory either for home consumption or for export out of India under Bond/Letter of Undertaking in Form UT-1. The tractors are exempted from payment of duty vide Sr. No. 40 of the Notification No.6/2006-CE dated 1.3.2006. 3.2 The assessee also clears IC engines and transmissions assembly and parts of tractor for captive consumption for manufacture of tractors and also clears the same for home consumption and for export. These finished excisable goods are called by the assessee as aggregates . The aggregates are fully exempted from payment of excise duty when they are captively used in the factory of production for manufacture of tractors vide Sr. No. 92 of Notification No. 6/2006-CE dated 1.3.2006. 3.3 During the relevant period, the assessee was working under the following manner:- (a) They were availing credit of duty pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever the tractors were cleared for home consumption, the appellant was paying the amount equal to 10% of sale price of the tractors in terms of Rule 6(3)(b) of Cenvat Credit Rules. However, appellant did not pay 10% of sale price of the tractors exported in view of the Rule 6(6)(v) of the Cenvat Credit Rules, 2004. 5.1 Learned senior Counsel further submitted that during the relevant period, the appellant followed the following procedure:- (a) Availed credit on all inputs used in the manufacture of aggregates namely IC engines, transmission assembly and parts thereof. (b) Paid duty on all aggregates either used within factory or cleared from the factory. (c) Did not avail credit of duty paid on aggregate and exclusive inputs used in the manufacture of tractors cleared for home consumption. (d) Did not pay amount equal to 10% of the sale price of exempted tractors cleared for home consumption. (e) Took credit of duty paid on aggregates and exclusive inputs used in the manufacture of tractors cleared for export under UT-1. (f) Took credit of service tax paid on input services as listed in Rule 6(5) and which have direct nexus with the tractors exported under bond. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of Rule 2(d) of the Cenvat Credit Rules, 2004. He also referred to the Tribunal's decision in the appellant's own case reported in 2007 (211) ELT 481 (T) in this regard. In his submission, exempted goods cannot be exported under Bond, hence the appellant are required to reverse the credit of duty/Service Tax paid on inputs/input services used in the manufacture of tractors exported under Bond or to pay 10% of the sale price of the exempted tractors cleared for export, as the case may be. 6.1 Shri Mondal also submitted that the tractor parts are unconditionally exempted vide Sr. No. 92 of Notification No. 6/2006 dated 1.3.2006 when the same are used in the manufacture or tractors within the factory. Drawing our attention to Section 5A(1A) of the Central Excise Act, 1944, he submitted that as per provisions of Section 5A(1A) the assessee should not have paid the duty on aggregate i.e. IC engines, transmission assembly, sheet metal components etc. used captively in the manufacture of exempted tractors cleared for export under Bond/UT-1 and should not have availed CENVAT Credit of the said duty. In his submission, this is a clear violation of the provisions of Section 5A( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Appeal No. E/1182/09-Mum. Consequently, we also set aside the order for recovery of interest on the dues. 9. In so far as the demands of Rs.8,28,20,311/- in Appeal No. E/675/09-Mum and Rs.7,12,75,282/- in Appeal No. E/1190/09-Mum are concerned, we find that these demands of CENVAT Credit have been raised on the ground of wrong availment of CENVAT Credit on aggregates (i.e. IC engines, transmission assembly and sheet metal components etc.) used captively in the manufacture of exempted tractors cleared for export. We find that parts of tractors are unconditionally exempted vide Sr. No. 92 of Notification No. 6/2006-CE dated 1.3.2006 when captively used in the manufacture of tractors within the factory. It is needless to say that this Notification has been issued by the Central government in exercise of its power under Section 5A of the Central Excise Act, 1944. By virtue of Section 5A, Central Government may, in public interest, exempt either absolutely or subject to any condition (to be fulfilled before or after removal) as may be specified in the Notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon. Sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory belonging to the importer where the manufacturing activity takes place. There is nothing in Section 3 of the Act and in particular the explanation appended to Sub-section (1) thereof mandating actual production or manufacture in the said factory itself. There cannot be any doubt whatsoever that if excise duty is not leviable on manufacture of goods, the question of the importer paying any additional duty for import of like goods would not arise. We, therefore find that facts of cited case are clearly distinguishable from the case before us. 12. Since we have upheld the demand of duty of Rs.8,28,20,311/- in Appeal No. E/675/09-Mum and Rs. 7,12,75,282/- in Appeal No. E/1190/09-Mum, we also uphold the Commissioner's order for recovery of interest on these demands confirmed by the Commissioner and upheld by us. We find that these demands were raised invoking normal period of limitation. We find that ingredients of Section 11AC are not present in this case and, therefore, penalty equal to duty imposed by the Commissioner needs reduction. Accordingly, we reduce the penalties to Rs. 1.25 crores and Rs.1 crore in respect of Appeal No. E/675/09 and E/1190/09 respectively. 13. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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