Exemption from duty to intermediate products not deniable when reversal done as per Rule 6.

PJ/Case Laws/2012-13/1447

Case:-M/s HEMATIC MOTORS LTDV/S M/s COMMISSIONER OF CENTRAL EXCISE, PUNE-II

Citation:- 2013-TIOL-232-CESTAT-MUM

Brief Facts: - The appellants filed the instant appeal against the impugned order passed by the Commissioner of Central Excise (Appeals), Pune. The appellants are engaged in the manufacture of excisable goods i.e. stators and rotors. For the manufacture of final product, the appellants are manufacturing electrical laminations which are captively consumed by availing the benefit of exemption Notification No. 67/95 dated 16.3.95. During the period April to May, 2001 the appellants cleared certain quantity of stators & rotors against CT 2 certificate without payment of duty. Show-cause notice was issued denying the benefit of Notification No. 67/95 in respect of electrical laminations which are used in the manufacture of stators and rotors cleared at Nil rate of duty against CT 2 certificate on the ground that as no duty has been paid on stators & rotors therefore, they are not entitled to the benefit of exemption notification no. 67/95. The adjudicating authority confirmed the demand and imposed penalty. The Commissioner (Appeals) dismissed the appeal filed by the appellants. Thus, they are in appeal before the Tribunal.

Appellant’s Contention: - The appellant contended that at the time of clearance of stators & rotors they reversed the credit equal to 8% of the price of stators & rotors cleared against CT 2 certificate as per the provisions of Rule 57D of the Central Excise Rules, therefore the demand in respect of electrical lamination is not sustainable.

Respondent’s Contention: - The respondent relied upon the findings of the lower authority and submitted that as the electrical laminations were captively consumed in the manufacture of final product within the factory which were cleared at Nil rate of duty therefore, the benefit of Notification no. 67/95 is correctly denied.

Reasoning of Judgment: - The Hon’ble Tribunal held that it is an admitted position that the appellants reversed the credit equal to the amount of stators & rotors cleared against CT 2 certificate at nil rate of duty. As per the provisions of Rule 57AD of the Central Excise Rules, in case where the manufacturer is taking credit in respect of the common inputs used in or in relation to the manufacture of dutiable as well as exempted goods and not maintaining separate records, the manufacturer is required to pay 8% of the price of the exempted goods, therefore the appellants have fulfilled the conditions of Rule 57AD of the Rules. In these circumstances, the demand in respect of intermediate product, i.e., electrical lamination is not sustainable.

Decision: - Appeal allowed with consequential refund.

Comment:-The analogy drawn from this case is that when reversal of 8% of exempted value of goods is done by the appellant in terms of provisions of Rule 6 of CCR, 2004, denial of benefit of exemption notification no. 67/95 is not justifiable.

Comments

PJ/Case Laws/2012-13/1447

Post a Comment

Query