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TMI Blog2015 (4) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... up their units in the areas specified under Notification No. 56/02-CE on or after 06/2/10, have option either to avail Notification No. 56/02-CE or avail the Notification No. 1/2010-CE dated 06/2/10 and in case they opt for Notification No. 56/02-CE, the benefit available to them would not be restricted by Notification No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08. If the appellant, however, opt for the Notification No. 1/2010-CE, the question of determination of special rate of value addition by the Commissioner would come. This rate has to be calculated on the basis of the formula prescribed in the Explanation to para 5 of the notification. In this regard, we do not find any mistake in para 17 of the order-in-original dated 31/5/12 passed by the Commissioner as the value addition has been determined as the difference between the sale value excluding excise, sales tax and other indirect taxes during 2011-12 (Rs. 1,05,11,690/-) and cost of raw material and packing material consumed (Rs. 32,30,184/-) - appellant s plea that the cost of raw material and packing material consumed is nil is not correct and the Commissioner has correctly determined the value addition for 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and such new investment is directly attributable to the generation of additional regular employment of not less than 25% over and above the base employment limit subject to certain conditions mentioned in the notification. The exemption under this notification would apply to the eligible units for period not exceeding 10 years from the date of publication of this exemption notification in the official gazette or from the date of commencement of commercial production, whichever is later. In this notification, there is no sun set provision. As per the conditions of this notification, a manufacturer eligible for this exemption notification who has opted for the same, is required to pay duty payable for a particular month, first by utilising to the extent possible the Cenvat credit available to him at the end of the month and only after payment of duty to the extent possible through Cenvat credit, if any duty is still to be paid, the same is to be paid through PLA, and it is this duty paid through PLA which is exempt under this notification. The exemption under this notification is granted by the way of refund and accordingly the assessee initially pays the duty required to be paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication and apply to the Jurisdictional Commissioner of Central Excise for a higher value addition if he proves that his actual value addition is at least 115% of the rate specified in the notification. The actual value addition was to be calculated in terms of explanation to Clause 2.1 of the amended notification. 1.3 The above-mentioned amendments made to Notification No. 56/02-CE by Notifications No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08, which restricted the benefit available to an assessee availing of Notification No. 56/02-CE were challenged by a manufacturer M/s Reckitt Benckiser by filing a writ-petition before Hon ble Jammu Kashmir High Court and Hon ble High Court vide order dated 23/12/10 quashed the Notifications No. 19/08-CE dated 27/3/08 and Notification No. 34/08-CE dated 10/6/08 in this regard the last para of the judgement is reproduced below :- In view of the above detailed discussion, I need not enter into this arena as the writ petitions are being disposed of without addressing this controversy. For the reasons mentioned above, these petitions are allowed. Impugned Notifications bearing Nos. 19/2008-CE dated 27th of March 2008 and 34/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition was to be calculated in terms of explanation to para 5 of the exemption notification. Under this notification also a manufacturer availing of this exemption was required to pay the duty to the extent possible through Cenvat credit available at the end of the month and only the duty payable through PLA was refundable subject to the cap of the duty payable on the value addition at the rate specified in this exemption notification or, as the case may be, at the special rate of value addition fixed by the Commissioner on the application of the manufacturer or the duty paid through PLA, whichever is less. Exemption Notification dated 06/2/10 was also available to a unit opting for this exemption for a period of 10 years from the date of publication of the notification or from the date of commercial production, whichever is later. 1.5 In this case, as stated above, the appellant had commenced commercial production in March, 2012. The appellant on 30th March, 2012 addressed a letter to the Commissioner for exemption of 100% of the duty paid through PLA under Notification No. 1/2010-CE and requested the Commissioner to fix a special rate of value addition for 2012-13. Thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of exemption Notification No. 56/02-CE only to the duty paid on the value addition at the rate specified in this notification or as the case may be, at the special rate fixed by the Commissioner, or the duty paid through PLA after utilising the Cenvat credit available at the end of the month to the extent possible for payment of duty, whichever is lower, Hon ble Jammu Kashmir High Court in respect of writ-petition filed by M/s Reckitt Benckiser vs. Union of India vide its judgment dated 23/12/2010 reported in 2011 (269) E.L.T. 194 (J K) has quashed the amending Notification No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08, that in view of this, an assessee manufacturing the goods covered by Notification No. 56/02-CE in the factory located in the areas specified in this notification, is eligible for exemption of 100% of the duty paid through PLA in the manner specified in this notification and the benefit is not restricted to the duty on the value addition at the rate specified in this notification or at the special rate fixed by the Commissioner, that since after the judgment of Hon ble Jammu Kashmir High Court in the case of M/s Reckitt Benckiser vs. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and manufactured in the areas specified in this notification from the Central Excise duty leviable under Section 3 (1) of Central Excise Act, 1944 and the AED (GSI) and AED (T TA) leviable on the goods to the extent the duty on the goods cleared during a month is paid by the assessee through PLA after payment of duty to the extent possible through Cenvat credit available at the end of the month. Thus, the exemption benefit available to an assessee in terms of this exemption notification was total duty payable by the assessee in respect of the goods cleared during a month minus the total Cenvat credit available to him at the end of the month. Thus, in terms of this notification, higher is the duty payable by an assessee and lower is the Cenvat credit available to him, the more would be the benefit, which was being given to him by the way of refund sanctioned by the Assistant Commissioner or self-credit in the PLA which would be approved ex-post facto by the Jurisdictional Assistant Commissioner. Another feature of this exemption scheme is that while the assessee manufacturing the goods eligible for this exemption in the factory located in the areas specified in this notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that under Notification No. 56/02-CE applicable to the goods other than the goods specified in the negative list of Annexure I of the notification and manufactured and cleared from the industrial areas specified in Annexure II to the notification, the exemption from duty would be available extent the duty is paid in respect of the goods cleared during a month through PLA after utilising to the extent possible the Cenvat credit available at the end of the month for payment of duty, without the cap which had been specified under Notification No. 19/06-CE and 34/08-CE. The other exemption Notification No. 1/10-CE dated 06/2/10 applicable to the same goods but manufactured and cleared from any manufacturing unit in the State of Jammu Kashmir exempted the specified duties to the extent of payment of duty through PLA in the manner specified in this exemption subject to the cap of the quantum of exemption not being more than the duty payable on the value addition at the rate specified in the notification or as the case may be, at the special rate fixed by the Commissioner or payment of duty through PLA after payment of duty to the extent possible through Cenvat credit available at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tt Benckiser and this judgment would not be applicable to the appellant, as while M/s Reckitt Benckiser had set up their unit before 27/3/08 and, therefore, on the basis of the principle of promissory estoppels Hon ble High Court held that the benefit available to them at the time of setting up of the unit cannot be restricted by the later amendment, this principle is not applicable in the appellant s case who had commenced commercial production in March, 2012. 8.1 After considering the rival submission on this point, we find that Hon ble Jammu Kashmir High Court in its judgment dated 23/12/10 in the case of M/s Reckitt Benckiser has quashed the amendments to the Notification No. 56/02-CE by Notification No. 19/08-CE dated 27/3/08 and 34/08-CE dated 10/6/08 and the effect of the judgment would be that the provisions restricting the benefit introduced in the Notification No. 56/02-CE by these notifications are no longer there. Therefore, in our view, this judgment of Hon ble Jammu Kashmir High Court would be applicable to those assessees also who had opted for this exemption even after the amendment to the Notification No. 56/02-CE by Notification No. 19/08-CE dated 27/3/08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is - (a) cost of raw materials and packing materials consumed in the manufacture of said goods ; (b) cost of fuel consumed if eligible for input credit under Cenvat Credit Rules, 2004 ; and (c) Value of the finished goods available as inventory, in the unit, but not cleared, at the end of the financial year proceeding that under consideration. Here the cost/value of (b) and (c) is nil. In respect of (a), there is no condition that the cost of only these inputs and packing materials is to be deducted in respect of which Cenvat credit has been taken. Therefore, the appellant s plea that the cost of raw material and packing material consumed is nil is not correct and the Commissioner has correctly determined the value addition for 2012-13 as 69.27%. If for 2013-14 the appellant opt for Notification 1/2010-CE and also opt for special rate of value addition, the same must be determined in terms of the above formula. 11. In view of the above discussion, the impugned orders are set aside and the matters are remanded to the Commissioner for denovo decision. The Commissioner should examine as to whether the appellant s unit is located in the area specified under Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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