The Customs, Excises, Service Taxes Appellate Tribunal (CESTAT), Chandigarh Bench held that Rule 6 (3) of the CCR, 2004 can not be invoked when Goods supplied under the Served From India Scheme (SFIS) Scheme were dutiable and not exempted goods.
the appellant is engaged in the manufacture of DG sets and enclosures which are being sold by the appellant in the open market and to various customers against the Duty Credit Scrips issued to them by DGFT under SFIS in terms of Chapter 3 of the Foreign Trade Policy 2009-2014 (‘FTP’).
These scripts were issued under Notification No. 34/2006-CE dated June 14, 2006. The appellant cleared the goods during the period April 2012 to January 2016.
An audit was conducted and it was found that the appellant has cleared DG sets without payment of excise duty under the Status Holder Incentive Scheme by availing the benefit of Notification No. 33/2012-CE dated July 9, 2012 and under SFIS by availing the benefit of Notification dated 14.06.2006.
Further, in terms of CBEC Circular dated September 4, 2013, the provisions of Rule 6(3) of the CCR, 2004 are not applicable for the goods cleared by availing the benefit of Notification No. 33/2012-CE dated July 9, 2012.
The proceedings were initiated against the appellant for recoveries for the goods cleared by the appellant to the goods cleared to the buyers by availing the benefit of Notification No. 34/2006-CE dated June 14, 2006.
Two show cause notices were issued and adjudicated, demands were confirmed alongwith interest and an equivalent amount of penalty was imposed.
The Tribunal consisting of a Judicial Member, Ashok Jindal clarified that the Circular issued by the CBEC is binding on the Revenue, but not on the assessee. Moreover, the circular which has been relied on by the revenue has no mention of the notification in question and the Revenue has presumed that if the notification in question is not part of the Circular No. 973/07/2013-CX dated September 4, 2013, then the provisions of Rule 6 (3) is applicable.
The tribunal held that the goods supplied under Notification No. 34/2006-CE dated June 14, 2006, under SFIS Scheme are dutiable and not exempted goods, therefore, the provisions of Rule 6 (3) of the CCR, 2004 are not applicable to the facts of this case.
Therefore, the court said that as the provision of Rule 6 (3) of CCR, 2004 are not applicable to the facts of this case, therefore, the demand is not sustainable. Consequently, no demand for interest and penalty are sustainable.
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