Custom, Excise & Service Tax Tribunal
M/S.Castleton Tea Co. (P) Ltd vs Cce-Kol-Ii on 12 April, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.EA-998/11
(Arising out of Order-in-Appeal No.118/KOL-II/2011 dated 15.09.2011 passed by the Commissioner(Appeals) of Central Excise, Kolkata-II.)
FOR APPROVAL AND SIGNATURE
HONBLE SHRI H.K.THAKUR, MEMBER(TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
M/s.Castleton Tea Co. (P) Ltd.
Applicant (s)/Appellant (s)
Vs.
CCE-KOL-II
Respondent (s)
Appearance:
Shri N.K.Chowdhury, Advocate for the Appellant (s) Shri S.Mukhopadhyay, Supdt.(AR) for the Revenue CORAM:
Honble Shri H.K.Thakur, Member(Technical) Date of Hearing/Decision :- 12.04.2016 Date of Pronouncement :- 12.04.2016 ORDER NO.FO/A/75275/2016 Per Shri H.K.Thakur.
1. This Appeal has been filed by the Appellant with respect to Order-in-Appeal No.118/KOL-II/2011 dated 15.09.2011 passed by the Commissioner(Appeals) of Central Excise, Kolkata-II as First Appellate Authority. Under this Order-in-Appeal dated 15.09.2011 First Appellate Authority has dismissed the Appeal filed by the Appellant by upholding Order-in-Original dated 24.09.2008.
2. Shri N.K.Chowdhury (Advocate) appearing on behalf of the Appellant argued that Appellant is a manufacturer of excisable goods - Garden Rakes, Forks, Box Hinges falling under sub-heading 8201 of Central Excise Tariff Act, 1985. That during the period July, 2006 to September, 2006 Appellant paid duty on the above goods and exported the same under claim of rebate. That department did not take any objection to the payment of duty and claim of rebate by the Appellant. That subsequently it was observed by the department that the goods manufactured by the Appellant were fully exempted and chargeable to Nil rate of duty under Notification No.5/2006-CE dated 01.03.2006. The department demanded 10% amount under Rule 6(3) of the Cenvat Credit Rules, 2004 for using common inputs for manufacturing excisable goods and exempted goods. It is the case of the Appellant that once as well as cleared on payment of duty then the same cannot be considered as exempted goods under Rule 6(1) of Cenvat Credit Rules, 2004 and accordingly the provisions of Rule 6(3) of the Cenvat Credit Rules, 2004 will not be applicable. Ld.Advocate also argued that as per the provisions contained in Rule 6(6) of Cenvat Credit Rules, 2004, the provisions contained in sub-rule (1), (2), (3) and (4) of Rule 6 will not be applicable to the excisable goods removed without payment of duty for export. It is his case that exempted goods exported are also excisable goods therefore Cenvat Credit cannot be denied. The Ld.Advocate mainly relied upon the case of Bombay High Court in the case of Repro India Ltd. v. UOI [2009 (235) ELT 614(Bom.)]. Ld.Advocate further made the Bench go through para 10 of case law Commissioner of C.Ex., Ahmedabad-III v. Gujarat Ambuja Exports Ltd. [2014 (311) ELT 718(Tri.-Ahmd.)] where it is held that Cenvat Credit under Rule 6(6) of Cenvat Credit Rules, 2004 cannot be denied for the goods exported under bond.
3. Shri S.Mukhopadhyay, Supdt.(AR) appearing on behalf of the Revenue argued that the issue before Honble High Court of Bombay was only in respect of whether exempted goods for exports can be cleared at nil rate of duty by giving a bond under Rule 19 of the Central Excise Rules, 2002. That similarly in the case of Commissioner of C.Ex., Ahmedabad-III v. Gujarat Ambuja Exports Ltd.(supra) Cenvat Credit was held admissible for refund under Rule 5 of Cenvat Credit Rules, 2004, when the goods were exported under bond without payment of duty. It was his case that the relied upon case laws are thus not applicable to the facts of the present case. It was strongly argued by the Ld.AR that suo motu payment of duty does not make the goods dutiable and as per the provisions contained in Section 5A of the Central Excise Act, 1944 an assessee has no option but to avail of an exemption notification. The Ld.AR, therefore, strongly defended Order-in-Appeal dated 15.09.2011 passed by the First Appellate Authority.
4. Heard both sides and perused the case records. The issue involved in the present Appeal is whether the Appellant is required to pay 10% amount in view of Rule 6(3) of the Cenvat Credit Rules, 2004(CCR) when common inputs are used in the manufacture of finished goods which are exempted as well as dutiable. Appellant is manufacturing certain machinery which are fully exempted as per Notification No.5/2006-CE dated 01.03.2006 unconditionally. However, Appellant preferred to pay duty and claim rebate after export of the goods. Reliance placed by the Appellant on several case laws are mis-placed because in all the case laws relied upon by the Appellant, the export was made under bond and accordingly Cenvat Credit/rebate was held to be admissible. In the case of Repro India Ltd. vs. UOI (supra) relied upon by the Appellant it was observed by Bombay High Court that Appellant can export the goods under bond when the goods are exempted under Rule 19 of the Central Excise Rules, 2002. In the case of Commissioner of C.Ex., Ahmedabad-III v. Gujarat Ambuja Exports Ltd. (supra) also the issue involved was whether refund of accumulated credit was admissible when goods are exported under bond without payment of duty.
5. As per Rule 6(1) of the Cenvat Credit Rules, 2004 no credit shall be admissible in relation to manufacture of exempted goods. It has not been denied by the Appellant that the goods manufactured by them are not unconditionally exempted. Simply by paying duty on exempted goods does not make the goods dutiable. As per the provisions contained in Section 5A of Central Excise Act, 1944, when there is an unconditional exemption Notification then an assessee/manufacturer shall not pay duty of excise on such exempted goods. Further as per Rule 6(3) of the Cenvat Credit Rules, 2004 when any common inputs are used in the manufacture of dutiable and exempted goods then Appellant is required to pay an amount equivalent to 10% on the value of exempted goods as demanded by the Department. So far as the provisions contained in Rule 6(6) of Cenvat Credit Rules, 2004 are concerned, the case of the Appellant is that even exempted goods are excisable goods, therefore, amount under Rule 6(3) cannot be denied if the goods are cleared without payment of duty. However, it is observed that as per provisions of Rule 6(6)(v) of Cenvat Credit Rules, 2004, amount is not required to be paid under Rule 6(3) when goods are removed without payment of duty for export under bond in terms of provisions of Central Excise Rules, 2002. In the case of the Appellant, the goods were not exported under bond, but were cleared on payment of duty, therefore, First Appellate Authority was fully justified in dismissing the Appeal filed by the Appellant and this Bench does not find any justification in interfering with the same.
6. Appeal filed by the Appellant is dismissed.
(Operative part of the order was pronounced in the open court.) SD/ (H.K.THAKUR) MEMBER(TECHNICAL) sm 5 Appeal No.EA-998/11