Whether benefit of notification no. 67/95-C.E. available for goods supplied against International Competitive Bidding ?

PJ /Case Law/2014-15/2129

Case:- BHARAT HEAVY ELECTRICALS LTD. VERSUS COMMISSIONER OF C.EX., TRICHY

Citation:-2014(299) E.L.T. 371(Tri.-Chennai)

Brief Facts:-The applicant is engaged in the manufacture of Boiler and parts falling under Chapter Heading 84 of the First Schedule to the Central Excise Tariff Ac, 1985. Prior to July, 2007, applicant had two units namely Seamless Steel Tube Plant (SSTP) and High Pressure Boiler Plant (HPBP). SSTP was clearing on payment of duty to HPBP, who was availing Cenvat credit . HPBP was utilizing input in the manufacture of dutiable and exempted goods in so far as, supply to International Competitive Bidding (ICB) Project was exempted from duty vide Notification No. 6/2006-C.E. dated 1-3-2006. The common input was used in the manufacture of dutiable and final products, but, in view of Clause (iv) of sub-rule (6) of Rule 6 of Cenvat credit Rule, 2004, the provisions of sub-rules (1), (2), (3) and (4) of the said Rule 6 shall not be applicable. No dispute was raised after July, 2007, both the units were merged and therefore no duty was paid on Steel Pipes captively used in the manufacture of dutiable and exempted final products in terms of Notification No. 67/95-C.E., dated 16-03-1995.

A show cause notice dated 25-4-2011 was issued proposing demand of duty on steel pipes used in the manufacture of exempted goods denying the benefit of Notification no. 67 /95 –C.E. (supra). Adjudicating authority confirmed demand of duty of Rs. 10,20,95,312/- along with interest and penalty for the period 1-4-2010 to 31-3-2011.

Appellant Contentions:- The ld. Advocate submit that on an identical issue, the Tribunal in earlier periods granted stay in their own case vide Stay Order No. 706/2011, dated 8-9-2011 [2012 (280) E.L.T. 460 (Tri.-Chennai) and in Stay Order No. 350/2012, dated 8-5-2012. He also drew the attention of the Bench the relevant portion of the Notification no. 67/95-C.E. (supra) and Notification No. 6/2006-C.E., dated1-3-2006.

Respondent Contentions:-The Ld. AR submits that while passing the earlier stay orders, the Tribunal has not considered that in this case the final product cleared without payment f duty vide Notification No. 6/2006-C.E, dated 1-3-2006, which is not covered by the exclusive Clause (i) to (vi) of the Notification No. 67/95 –C.E. (supra). It is submitted that the applicant availed the benefit of Notification No. 6/2006-C.E. and therefore Rule 6 of Cenvat Credit Rules would not apply and accordingly it is beyond the scope of exclusive clauses of Notification No. 67/95- CE. In this regard, he relies upon the decision of the Hon’ble Supreme Court in the case of U0I v. Brigadier P.S. Gill - 2012 (279) E.L.T. 321 (S.C.). He further submits that if there is a doubt in the said notification, it will come in favour of the Revenue as held by the Hon'ble Supreme Court in the case of Liberty Oil Mills Pvt. Ltd. V. CCE, Bombay- 1995 (75) E.L.T. 13 (S.C.).

Reasoning of Judgment:-After hearing both sides and on perusal of the records, we find that Notification 67/95-CE. granted exemption on the inputs from the whole of duty of excise, if it is used captive consumption. The proviso to the said notification provides that the benefit of the notification shall not apply to inputs used on exempted final products, other than those goods which are cleared as specified in Clauses (i) to (vi) of the said proviso. Clause (vi) of proviso to Notification No. 67/95-C.E. (supra) provides that the said notification shall apply on the goods cleared by a manufacturer of dutiable and exempted final products, after discharging the obligation prescribed in Rule 6 of the Cenvat Credit Rules, 2004. Clause (vii) of Rule 6(6) of Cenvat Credit Rules, 2004, provides all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975, when imported into India and or supplied to against International Competitive bidding, the provisions of the sub-rules (1), (2), (3) and (4) of the said Rule 6 shall not be applicable. We find that S. No. 91 of the table appended to the Notification No. 6/2006-C.E., dated 1-3-2006, provides 'nil' rate of duty on all goods supplied against International Competitive bidding. So, prima facie, we do not find force in the submissions of the ld. AR.

It is noticed that the Tribunal in the applicant's own case tide Stay Order No. 706/2011, dated 8-9-2011 (2012 (280) E.L.T. 460 (Tri.-Chennai)J, has taken a prima facie view as under :-

"Since the final products were manufactured and cleared without discharging the obligation prescribed under Rule 6 of Cenvat Credit Rules, 2001, the department was of the view that the benefit under the captive consumption notification was not available. However, we find that the assessees pram facie were not required to discharge the obligation prescribed under Rule 6 of Cenvat Credit Rules, 2001 as they were covered by Clause (vii) of Rule 6(6), which stipulates that the provisions relating to payment of 10% or 5% as the case may be were not required to be followed as the goods were supplied against I.C.R. in terms of Notification No. 6/2002 or 6/2006 and therefore, exempted from levy of duty of customs and additional duty as per Clause (vii) of Rule 6(6) of the Cenvat Credit Rules.'The assessees therefore, have made out a prima facie case on merits and we therefore dispense with pre-deposit of duty, interest and penalty and stay recovery thereof pending the appeal."

We find the submission of the ld. AR has already been considered by the Tribunal in the earlier stay orders. We agree with the findings of the earlier stay orders. In view of that, we waive pre-deposit of duty along with interest and penalty till disposal of the appeal.

In view of the above findings, the stay application is allowed.

Decision:-Stay granted.

Comment:-The gist this case is that the benefit of the notification no. 67/95-CE is available in cases where goods are being supplied for project covered by International Competitive Bidding (ICB). The provisions of Rule 6 are not applicable for goods supplied for ICB. According to the proviso of the notification 67/95, the benefit of the notification shall not apply to inputs used on exempted final products but the benefit of the notification shall apply on the goods cleared by a manufacturer of dutiable and exempted final products, after discharging the obligation prescribed in Rule 6 of the Cenvat Credit Rules, 2004. In present case, as there is no obligation under Rule 6 with respect to goods supplied against ICB, the inaction is sufficient compliance of Rule 6 and so the benefit of the notification no. 67/95 is admissible to the assessee.

Comments

PJ /Case Law/2014-15/2129

Post a Comment

Query