Issue:- Whether duty payable on goods captively consumed in the manufacture of final goods cleared under international competitive bidding?

PJ/Case Law/2013-14/2106

Case:- AREVA T&D INDIA LTD Vs COMMISSIONER OF CENTRAL EXCISE, LTU CHENNAI

Citation:- 2014-TIOL-415-CESTAT-MAD

Brief facts:- The applicant is a manufacturer of electrical equipment like relays and control panels. Relays are used for further manufacture of control panels in their factory. They had supplied some control panels under notification 6/06-CE (S.No.91) which provides exemption for goods supplied under international competitive bidding to mega power projects. Applicant had not paid excise duty on the relays used captively in the manufacture of control panels. Revenue was of the view that applicant should have paid excise duty on relays which were used in the control panel because control panel was exempted. Based on such reasoning, a show cause notice was issued for goods cleared during the period Oct 08 to March 09 and a demand of Rs.9,98,670/- stands confirmed against the applicant along with interest and penalty.

Appellant’s contention:- Arguing for the applicant, learned advocate submits that as per notification No.67/95-CE, they are not required to pay excise duty in situations excluded in the second proviso to said notification. One of the exclusion clauses is in respect of goods for which obligation under rule 6 of Cenvat Credit Rules, 2004 is discharged, Rule 6 (6) (vii) of CCR 04 clearly says that there is no need for reversal of any credit in case of goods supplied under Notification 6/06-CE against International Competitive Bidding. It is argued that since no obligation is required to be fulfilled it can be concluded that they have discharged obligation under Rule 6 (6) (vii) of CCR 2004 and the applicant would be eligible for notification 67/95-CE. He also says that in similar matters for earlier period for the same assessee, stay petition was allowed.

Respondent’s contention:- Ld. AR for Revenue opposes the prayer that there is no direct exemption under notification 67/95-CE and the exemption is claimed through very circuitous route of reading the CCR, 2004 which is not warranted and notification 67/95- CE should be interpreted in strict terms.

Reasoning of judgment:- The bench followed the earlier order passed in this regard, for example, stay order No.50/12 dt. 27.1.2012 in applicants own case. Therefore, the bench granted waiver of pre-deposit of dues arising out of the impugned order for admission of appeal. Further there shall be stay on collection of such dues during pendency of appeal.

Decision:- Stay granted.

Comment:- The crux of this case is that the benefit of notification No.67/95-CE that provides that duty is not payable with respect to intermediate goods used in the manufacture of final products cleared on payment of duty is also available for intermediate goods that are used in final products cleared under international competitive bidding scheme. This is on the basis of logic that notification no. 67/95 covers certain situations wherein the benefit of the notification is admissible even if the final products are exempted. One such situation is in respect of goods for which obligation under rule 6 of Cenvat Credit Rules, 2004 is discharged. Rule 6 (6) (vii) of CCR 04 clearly says that there is no need for reversal of any credit in case of goods supplied under Notification 6/06-CE against International Competitive Bidding. As such, no obligation to reverse credit amounts to compliance of Rule 6 and so the assessee is indirectly eligible for the benefit of the above stated notification.

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PJ/Case Law/2013-14/2106

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