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TMI Blog2024 (12) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government has, in exercise of the powers conferred by sub-section (1) of Section 5A, being satisfied that it is necessary in the public interest so to do, exempted, inter-alia, capital goods as defined in Cenvat Credit Rules, 2002 manufactured in a factory and used within the factory of production by way of the notification No.67/95-CE dated 16-03-1995 as amended. It is the benefit of this notification to which the appellant has staked claim. Since the said notification providing for exemption from duty is a beneficial exemption that the Central Government has notified in public interest, we find that the claim for exemption made by the appellant in respect of the tools manufactured in the factory and used within the factory is tenable, given that admittedly there is no physical removal of the said tools from the factory. The appellant is entitled to the benefit of the notification No.67/95 dated 16-03-1995 as amended, as claimed and the demands of duty, appropriate interest and penalties imposed by the original authority as upheld by the learned appellate authority, are untenable. Having found that the appellant herein has succeeded on merits, there is no necessity to examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osal for penalty under rule 25 of the Central Excise Rules, 2002 was issued for the subsequent period from March 2014 to September 2014. 4. In reply to these demands, the appellant stated that the captive use of these tools within the factory of production is on availment of exemption under Notification No.67/1995 dated 16.03.1995 is available to them. Though the goods were sold to their customers and VAT was paid, it was submitted that excise duty is levied on manufacture and thus the said exemption is available to them. It was also submitted that change of ownership will not affect their entitlement to such an exemption. The appellant also stated that all records including sale invoices showing VAT were maintained by the appellants and therefore, there is no suppression. Original authority rejected these contentions and confirmed the demand with interest and imposed equal penalty in respect of the show cause notice as well as statement of demand through a common order. On appeal, the learned appellate authority rejected the appeal and upheld the order passed by the original authority. Hence this appeal. 5. The learned counsel Shri S. Murugappan appearing for the appellant submits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for use in job work. Once the tools have been sold to their customers it has to be held that there was a deemed removal of tools. 11. These nebulous findings of the learned appellate authority are unsustainable as they fail to appreciate the facts conceded in the show cause notice, namely, that the appellant retained the tools manufactured in the factory for the purpose of processing job work goods and that there was no physical removal of the goods. These findings also militate against the provisions of notification 67/95 CE, the benefit of which was claimed by the appellant, and further betrays a lack of appreciation of the statutory provisions in their proper perspective, as would become evident from the discussion below. 12. The allegation against the appellant, as distilled in para 5 of the SCN is that the appellant manufactured tools and sold them to M/s. Brakes India Ltd, Foundry Division and M/s. LAP Ross Engineering Limited by raising invoices and payment of appropriate VAT. The appellant retained the tools in the factory for the purpose of processing job work goods. The tools having been sold, there was transfer of ownership of the goods, though, there was no physical re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e one who has to pay the duty leviable, namely, the person who produces or manufactures any excisable goods or who stores such goods in a warehouse. However, the rate of duty or tariff value applicable thereon is determined as per Rule 4 of the Central Excise Rules ibid on the basis of the rate or value in force on the date when such goods are removed from the factory or a warehouse as the case may be and the payment of such duty is also to be made in the manner indicated in Rule 8 on the dates specified. It is thus clear that the collection of duty is postponed till the date of actual removal of the excisable goods and the rate of duty or tariff value applicable thereon is also determined as that in force on such date of removal. 18. However, the explanation appended to Rule 5 also stipulates that if any excisable goods are used within the factory, the date of removal of such goods shall mean the date on which the goods are issued for such use. 19. Therefore, in the instant case when the Appellant manufactured the tools, they attract the levy of excise duty. Be that as it may, since the tools are not removed and are used within the factory, in view of the aforementioned explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in earlier instances had addressed such availment of the benefit of notification No.65/95 ibid in similar situations and despite the appellant bringing the decisions in the case of Elcon Clipsal India Ltd v CCE, Ahmedabad and CCE Vadodara v Automotive Stamping Assemblies Ltd, cited supra to the notice of the learned appellate authority, he has not followed the same. The learned appellate authority has attempted to make a specious distinction that the decision of the Tribunal in BPL Electronics Ltd v CCE, Bangalore, reported in 1994(71) ELT 801 (Tri), that had been relied on in these subsequent decisions, was in the context of an earlier notification 220/86-CE dated 2-4-86 and therefore the subsequent decisions of the Tribunal on which reliance was placed by the appellant are not applicable to the appellant s case. 23. We find this attempt inane since the notification 220/86-CE dated 2-4-86 the benefit of which was claimed in the said decision also dealt with providing exemption to specified goods manufactured in a factory and intended for use in the factory in which they are manufactured from the whole of the duty of excisable leviable thereon. The tribunal had, after giving a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are exempted from payment of duty on its further utilization in the factory itself, then the question of collecting duty does not arise. The grant of benefit of exemption under notification in question is only on the criteria of the goods being manufactured in a factory and intended for use in the factory in which they are manufactured . Admittedly, the goods manufactured, were intended for use in the factory in which they were manufactured, thus the question of discharging duty on the basis of mere fact of raising an invoice in favour of B.P.L. Finance Ltd. does not create a liability for charging duty at all. So long as the goods have been manufactured in a factory and are intended for use in the factory in which they were manufactured, the exemption straight away applies. 4. The Appellants are thus eligible for the benefit of exemption under Notification No. 67/95-C.E.. Accordingly, the Appeal is allowed. 25. The appellant herein has also rightly relied on the decisions of this Tribunal in Thermax Surface Coatings Ltd. vs. Commr. of C. Ex., Chennai-III, reported in 2002 (148) E.L.T. 783 (Tri. Mumbai) and Commr. of Central Excise, Vadodara vs. Automotive Stamping Assemblies Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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