Case Law Details
Alstom T & D India Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
Introduction: In the case of Alstom T & D India Ltd. vs. Commissioner of GST & Central Excise, CESTAT Chennai, a crucial issue regarding the exemption from excise duty on goods used for captive consumption was addressed.
Detailed Analysis: The appellant, Alstom T & D India Ltd., is involved in the manufacturing of Relays and Control Panels categorized under Chapter 85 of the Central Excise Tariff Act, 1985. They used these relays for captive consumption in the production of control panels and sought exemption under Notification No. 67/95-CE dated 16.03.1995, as amended.
The contention arose when the department questioned the eligibility of the appellant for exemption under Notification No. 67/95-CE for goods that were captively consumed. They issued two show cause notices demanding duties for specific periods, along with interest and penalties. The original authority and the Commissioner (Appeals) both upheld the duty demand.
The crux of the matter revolved around the interpretation of the term “discharge the obligation” under Rule 6 of Cenvat Credit Rules, 2004, as mentioned in the notification. The appellant argued that they had complied with the provisions of Rule 6, and the requirement to pay 10% was not applicable due to certain exceptions specified in Rule 6.
Crucially, the appellant cited a precedent in their favor – a decision in their own case reported in 2019-TIOL-1265-CESTAT-MAD. This decision followed the precedent set in the case of Areva T & D India Ltd. vs. CCE & ST, LTU Chennai – 2017-VIL-983-CESTAT-CHE-CE. The argument was that they had fulfilled the necessary conditions for exemption under Notification No. 67/95-CE.
Conclusion: The CESTAT Chennai, in its order pronounced on 24.08.2023, relied on the appellant’s own case precedent and the decision in Areva T & D India Ltd. to rule in favor of Alstom T & D India Ltd. The demand for duties was set aside, and the appeals were allowed.
This ruling emphasizes the importance of understanding the intricacies of excise duty exemptions and the interpretation of relevant rules. It reaffirms that when a manufacturer complies with the prescribed rules and conditions, they are entitled to claim exemptions even for goods used for captive consumption.
In summary, the case of Alstom T & D India Ltd. vs. Commissioner of GST & Central Excise (CESTAT Chennai) highlights the significance of meticulous compliance with excise regulations and serves as a precedent for similar cases in the future.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that 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. Hence these appeals.
2. Learned counsel Ms. S. Akshaya appeared and argued for the appellant. The Notification No.67/95-CE dt. 16.03.1995 was adverted to by the learned counsel to argue 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 plain reading of the above notification would show 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 manufacturers 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. The moot question therefore to be decided is as to the meaning of interpretation of the term ‘discharge the obligation’ under Rule 6 of CCR 2004’ as used in the notification.
3. Learned counsel 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. Therefore, the fact as to whether the person pays 10% or not is irrelevant or immaterial since Rule 6 specifically provides for certain exceptions to payment of an amount of 10% subject to fulfilment of certain conditions. It is submitted that the confirmation of demand by the Department is fallacious. The issue stands covered in the appellant’s own case as reported in 2019-TIOL-1265-CESTAT-MAD. The Tribunal in the said case followed the decision in the case of Areva T &D India Ltd. Vs CCE & ST, LTU Chennai – 2017-VIL-983-CESTAT-CHE-CE. Ld. Counsel prayed that the appeal may be allowed.
4. A.R Sri N. Sathya Narayanan supported the findings in the impugned order.
5. Heard both sides.
6. We find that the issue stands covered by the decision of the Tribunal in the appellant’s own case as reported in 2019-TIOL-1265 CESTAT-MAD. The relevant part reads as under :
“2. Brief facts are that the appellants are engaged in manufacture of various types of relays falling under CETA 85364900 which are cleared for home consumption as well as for export under Letter of Undertaking. They also clear relays for captive consumption for manufacture of control panels falling under Chapter Heading 85371000 of CETA, 1985 without payment of duty under Notification 67/95-CE dated 16.3.1995. The control panels in turn are cleared for home consumption on payment of duty to export markets under LUT as well as under exemption Notification 6/2006-CE dated 1.3.2006 (Sl. No. 91) as amended, without payment of duty. These control panels are cleared to Mega Power Projects which are exempt under Notification 6/2002 and 6/2006. The department was of the view that they are not eligible for the benefit of Notification 67/95 as they have not complied with the conditions stipulated therein. The issue stands covered by the decision cited above. The relevant portion is extracted as under:-
“5.1 The facts of the case are not in dispute. The appellant-assessee cleared the control panels availing exemption to Mega Power Projects. For such exemption, the appellant-assessees have complied with the provisions of Rule 6 of Cenvat Credit Rules, 2004. They are falling under the category of clause (vii) of Rule 6 (6) (vii). It is apparent that the provisions of Rule 6 with reference to reversal of credit or payment on a fixed percentage amount on the value of the exempted goods have no application to the facts of the present case. The appellant-assessee is covered by clause (vii) of the said Rules. This, which has been admitted in the original order dated 26.12.2008. In fact, the original authority categorically recorded that the Rule prescribing the obligation is not applicable to the clearances now under dispute. However, he proceeded to confirm the demand on the ground that the appellant did not discharge the obligation of the said Rule. We find that the conclusion of the original authority is self-contradictory.
5.2 On careful consideration of the facts of the case and submissions of the appellants, we note 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. We find that the ratio and findings of the lower authorities are not legally sustainable. In this connection, we have also referred to the decision of the Tribunal in the case of Bharat Aluminium Co. Ltd. Vs. CCE, Raipur -2017 (345) ELT 685 (Tri.-Del.), wherein similar dispute was decided.
6. In view of the above discussion and analysis, we find that the impugned order is not legally sustainable. Accordingly, the same is set aside. The appeal by the appellant-assessee is allowed and the appeal by the Revenue is dismissed.”
3. Following the said decision, we are of the considered opinion that the demand cannot sustain. The impugned orders are set aside and the appeals are allowed with consequential relief, if any.”
7. Following the same, we are of the view that the demand cannot sustain and requires to be set aside which we hereby do. The appeals are allowed with consequential relief, if any.
(Pronounced in court on 24.08.2023)
