Case Law Details
Commissioner of Central Excise Vs Welspun Corporation Ltd. (Punjab and Haryana HC)
In the given case M/s Welspun Project Ltd. (for short, ‘WPL’) is engaged in manufacture of M.S. Pipes, it received order of supply of pipes from GMADA on 5.3.2012. As per the condition of purchase order, the pipes were to be supplied subject to exemption under Notification No. 12/2012-CE dated 17.3.2012 and if the GMADA failed to get exemption certificate under the said notification, in that case duty was to be paid on the pipes. M/s Welspun Corporation Ltd. (for short, ‘WCL’) acquired a unit in July, 2012 and started manufacturing of pipes. WPL placed the order on 20.7.2012 to WCL for the pipes which were to be supplied by it to GMADA. On 20.8.2012, GMADA obtained an exemption certificate. On 5.11.2012, WPL placed another order to WCL for supply of pipes and on the supply duty was leviable. It would be worth taking note at this stage that both the orders were for supply of HSAW pipes 2250 mm D 12 mm wall thickness. The period in dispute is from September, 2012 to June, 2013 in which it was claimed by assessee that exempted dutiable goods were manufactured and supplied. The department on the basis of information that the respondents were claiming cenvat credit on the raw material used for manufacture of exempted goods, issued show cause notices.
Replies were filed denying the allegation and stating that the goods manufactured were cleared on payment of duty and also after availing exemption under notification dated 17.3.2012 by reversing the amount @ 6% as stipulated in Rule 6(3)(1) of the CENVAT Credit Rules, 2004 (for short, ‘the Rules’). The premises were visited by the preventive staff. Order dated 30.9.2014 was passed by the Commissioner of Central Excise holding that cenvat credit on inputs was wrongly availed and that the purchase order dated 5.11.2012 was only to facilitate availing of cenvat credit. Thereafter, appeals were preferred before the Tribunal which allowed the appeals vide order dated 10.8.2016, hence the present appeals.
The contentions raised by learned counsel for the appellant are not well founded. Rule 6(2) provides no minimum ratio for the manufacture of exempted and dutiable goods. It deals with manufacturing of exempted and duty chargeable goods and in case of non-maintaining of separate accounts, then Rule 6(3) comes into operation and as per first option the manufacturer is liable to pay 6% of the value of exempted goods.
The submission that from September to 4.11.2012, WCL was only manufacturing exempted goods is merely on presumptions and the argument falls flat in view of the finding recorded by the Tribunal that on 5.11.2012 the goods were cleared on payment of duty. Without there being any manufacturing of dutiable goods prior to 4.11.2012, the goods could not have been cleared on 5.11.2012 on payment of duty. More-so, when clearance and supply of dutiable goods is accepted and there is no denial to the fact that a purchase order existed for supply of dutiable goods, on mere assumptions the intention cannot be determined or it can be concluded that the conduct was fraudulent. The authorities have also not appreciated the difference in manufacture and clearance of goods.
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