Exemption from Excise Duty allowable on compliance with Requirements under Excise Notification: CESTAT [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal(CESTAT) has held that exemption from excise duty allowable  as assesee complied with requirements under Excise Notification.

 M/s. Alstom T&D India Limited, the appellants are engaged in the manufacture of Relays, Control Panels etc. falling under Chapter 85 of Central Excise Tariff Act, 1985. They also consumed relays captively in the manufacture of control panels. They did not pay excise duty on goods which were captively consumed and claimed exemption under Notification No.67/95-CE dt. 16.03.1995 as amended.

 The control panels were cleared for home consumption on payment of duty and also were cleared without payment of duty by availing exemption under Notification No.6/2006-CE dt. 01.03.2006. The department was of the view that the appellants are not eligible for exemption under Notification No.67/95-CE on the intermediate goods captively consumed and have to pay excise duty on the relays/ control panels cleared for captive consumption.

Two show cause notices were issued to demand duties for the period October 2010 to March 2011 and for the period April 2011 to September 2011 along with interest and for imposing penalty. After due process of law, the original authority confirmed the duty along with interest and imposed penalty. On appeal, the Commissioner (Appeals) upheld the same.

Ms. S. Akshaya appeared and argued for the appellant stated that as per clause (vi) to proviso of notification the manufacturer of dutiable and exempted final products has to discharge obligation in accordance with Rule 6 of Cenvat Credit Rules, 2002/2004.

The Notification stated that when the final product is exempt from excise duty the notification would not apply. However, the said exclusion does not apply to certain specific transactions which are enumerated in the notification.

As per clause (vi) of the notification, where a person manufactures both excisable goods and exempt goods, the benefit of notification would apply only upon condition that the manufacturer ‘discharges the obligation’ under Rule 6 of Cenvat Credit Rules, 2004.

It was argued that the transaction in question relates to clearance of goods under Central Excise Notification No.6/2006 whereby the appellant had claimed exemption from payment of excise duty and has also not paid an amount 10% as provided for under Rule 6 (6) of CCR 2004. The meaning of the term ‘discharging the obligation’ is to subject a transaction in question to the provisions of Rule 6 of CCR 2004.

It was evident that the Tribunal in the appellant’s own case as reported in 2019-TIOL-1265 CESTAT-MAD. It was held that the eligibility of the appellant-assessee for exemption under Notification No. 67/1995 cannot be disputed. They have followed the provisions and complied with the provisions of Rule 6 and all the connected requirements of the Notification No. 67/1995.

A two member bench comprising of Ms Sulekha Beevi C S, Judicial Member and Mr Vasa Seshagiri Rao, Technical Member in light of the decision held that “the demand cannot sustain and requires to be set aside which we hereby do. The appeals are allowed with consequential relief, if any.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates