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TMI Blog2020 (8) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... only in cases covered by the first limb of Section 5A (1) of the Act, i.e., when an exemption notification issued thereunder grants exemption absolutely without laying down any condition for the same to be satisfied. Such being not the case in case of Notification No. 65/95-CE, the provisions of Section 5A(1A) cannot have application in case of the said notification. Hence, the reason contained in the impugned order that since the appellant had a workshop in the factory, the goods were manufactured therein and were used for maintenance and repair of machinery in the said factory, the exemption granted under Notification No. 65/95-CE was absolute and not conditional in the case of the appellant, is erroneous and not supported from Section 5A of the Act. It is settled by decisions of Courts and the Tribunal that in case of a conditional notification, an assessee has the option of either availing or not availing the benefit under the subject notification - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS M/S FEDERAL MOGUL TPR INDIA LTD. [ 2015 (8) TMI 308 - KARNATAKA HIGH COURT] . In the premises, the finding in the impugned order that availment of Cenvat cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 22,59,31,333/- and ₹ 1,91,09,379/- amounting to a total of ₹ 24,50,40,712/- under Rule 15(2) of the Cenvat Credit Rules read with Section 11AC of the Act has also been imposed upon the appellant. 2. The facts in brief are that : (a) The appellant, a manufacturer of excisable goods (iron and steel) classifiable under different Chapters of the Central Excise Tariff in its factory at Jamshedpur, has a workshop within the said factory premises under its Spares Manufacturing Department; in the said workshop excisable goods are manufactured and these goods are used as spares for repair and maintenance of machinery installed at different places within the factory premises. The appellant availed Cenvat credit of the duty paid on capital goods, input materials and input services used in or in relation to the manufacture of the said excisable goods and paid duty of excise as payable thereon and cleared them for captive consumption in manufacture of dutiable final products. (b) Pursuant to an audit by the audit team of the Department [during which a statement of the appellant's officer, Arvind Kumar Gupta, Head (Indirect Taxes), was recorded on June 7, 2011 under Section 14 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has the option to either avail or not avail the benefit under the said notification. (iii) Notification No. 65/95 does not grant exemption unconditionally. There are three conditions laid down therein all of which have to be satisfied for an assessee to be eligible to exemption thereunder, which are: (a) existence of the workshop within the factory (b) the subject goods being required to be manufactured in the said workshop (c) there has to be user of such goods in repair or maintenance activity of the machinery installed in the factory. (iv) Hence Section 5A(1A) is inapplicable in case of Notification No. 65/95 and therefore the appellant had the option to avail or not to avail the exemption granted by the said notification. In the premises, CBEC Circular dated November 26, 2010 also has no application. In support of this contention, reliance has been placed upon the following decisions: (i) CCE Vs Federal Mogul TPR India Ltd., 2016 (334) ELT 476 (Kar) (ii) Incopac Parts Pvt Ltd Vs CCE 2018 (362) ELT 904 (T) (iii) Balkrishna Paper Mills Ltd. Vs. CCE 2015 (329) ELT 468 (T). (v) Further, even assuming no excise duty was payable on the final product, the appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, the demand pertaining to the period July 2006 to June 2010 is barred by limitation since in the facts and materials on record there can be no invocation of the extended period contained in the proviso to Section 11A (1) of the Act. 5. Shri A. Roy, learned Authorized Representative, reiterates the findings of the Commissioner in the impugned order. 6. The main issue involved in the instant case is whether Notification No. 65/95-CE is a notification which grants exemption "absolutely" as envisaged under Section 5A(1) of the Act and consequently sub-section (1A) of Section 5A is attracted and therefore the appellant was bound to avail exemption granted by the said notification and the Cenvat credit availed was irregular, being impermissible as per Rule 6(1) of the Cenvat Credit Rules. 7. Section 5A(1) and (1A) of the Act, as was in force during the material period, reads as follows: "Section 5A Power to grant exemption from duty of excise - (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette exempt generally either absolutely or subject to such conditions (to be fulfilled before or aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e eligible to exemption thereunder. 7.3. Section 5A (1) of the Act confers power upon the Central Government to exempt "either absolutely or subject to such condition" which are to be fulfilled "before or after removal". Notification No. 65/95-CE comes under the second limb of Section 5A, i.e., "subject to such condition" which are to be fulfilled "before" removal. 7.4. Section 5A(1A) applies only in cases covered by the first limb of Section 5A (1) of the Act, i.e., when an exemption notification issued thereunder grants exemption "absolutely" without laying down any condition for the same to be satisfied. Such being not the case in case of Notification No. 65/95-CE, the provisions of Section 5A(1A) cannot have application in case of the said notification. 7.5. Hence, the reason contained in the impugned order that since the appellant had a workshop in the factory, the goods were manufactured therein and were used for maintenance and repair of machinery in the said factory, the exemption granted under Notification No. 65/95-CE was absolute and not conditional in the case of the appellant, is erroneous and not supported from Section 5A of the Act. 7.6. It is settled by decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision specifically denotes that it is the mandatory requirement on the manufacturer of such excisable goods not to pay the duty of excise on such goods in respect of which an exemption under Section 5A(1A) has been granted absolutely. Such a mandatory requirement of "not to pay" the duty of excise on goods exempted under sub-section (1) of Section 5(a) is not found in Section 93 of the Service Tax Act. Section 83 of the Service Tax Act provides for application of certain provisions of Central Excise Act, 1944 in relation to service tax under Finance Act, 1994. Absence of Section 5A of Central Excise Act, in Section 83 of the Finance Act, 1994, indicates that the provisions of Section 5A of Central Excise Act, is not applicable to the Finance Act, 1994. 13. The contention urged on behalf of the Department that the FMGIL having wrongly paid service tax has consequently passed an inadmissible Cenvat credit amounting to ₹ 2,02,00,275/- to the principal manufacturer, i.e., FMTPR much against the exemption Notification No. 8 of 2005 is not worthy of acceptance. As we have already discussed, the Notification No. 8 of 2005 is a conditional notification and Section 5A(1A) of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001. The above clearly reveals that the exemption is conditional and is not absolute. In view of the above, it is to be concluded that provision of Section 5A(1A) as well as the Circular, dated 26-11-2010 are not applicable for procurement of goods under Notification No. 22/2003. Consequently, there is no infirmity in the availment of credit by the appellant on duty paid. Further, the appellant will also be entitled to refund under Rule 5 of the Cenvat Credit Rules subject to satisfaction of conditions for claim of such refund." 7.6.2. In this regard reference may also be made to the decision of the Tribunal in Balkrishna Paper Mills Ltd Vs CCE 2015 (329) ELT 468 (T). Interpreting Notification No. 4/2006 and Section 5A and 5A(1A) of the Act, it has been held therein as follows: "6. …………………………………………………………………………… It would be seen from the said Section 5A that the Central Government is empowered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since it paid duty on the goods manufactured without availing the exemption, the appellant was eligible to avail the Cenvat credit involved. 8. Section 11D(1) of the Act, as was in force during the material period, provided that every person "who is liable to pay duty" under the Act or the rules framed thereunder, "has collected any amount in excess of the duty assessed or determined and paid on any excisable goods", in any manner representing duty shall have to make payment of such amount forthwith to the credit of the Central Government. Similarly, Section 11D(1A) requires "every person, who has collected any amount in excess of the duty assessed or determined and paid on any excisable goods or has collected any amount as representing duty of excise on any excisable goods which are wholly exempt or are chargeable to nil rate of duty from any person in any manner, shall forthwith pay the amount so collected to the credit of the Central Government. 8.1. There is no material disclosed in the show cause notice to establish that the requirements laid down in either Section 11D(1) or Section 11D(1A) are satisfied in the instant case. There is no material to evidence that the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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