Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Central Excise vs Global Pharmatech Pvt. Ltd. on 23 June, 2008
Equivalent citations: 2008(229)ELT313(TRI-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. Revenue has filed this appeal against the Order-in-Appeal passed by the Commissioner (Appeals). M/s. Global Pharmatech (P) Ltd (Respondents), Hosur manufactured and cleared veterinary injections such as Miphocal, Calbim without payment of duty in terms of Notification No. 6/2002-CE dated 1.3.2002 during the period from 6/03 to 10/03. After due process of law, the original authority confirmed a demand of Rs. 36,343/-, demanded appropriate interest and imposed equal amount penalty. The amount was demanded in terms of Rule 6(1) of Cenvat Credit Rules, 2002 (CCR) which lays down that CENVAT credit is not allowed on inputs which are used in the manufacture of exempted goods. In the impugned order the Commissioner (Appeals) set aside the order of the original authority on the basis that the order was inconsistent with the provisions of Sub-rule 1, 2, 3, 4 and 5 of Rule 6 of CCR, 2002. Revenue has filed the present appeal against the impugned order. The grounds taken in the appeal are that the Commissioner (Appeals) has misinterpreted the provisions in passing the impugned order. Rule 19 did not apply when goods are exempted. It is submitted that Sub-rule (5) of Rule 6 of CCR is not applicable when the goods exported under bond are exempted. The Commissioner (Appeals) had wrongly followed the ratio of the decision of the Tribunal in Larsen and Toubro Ltd v. CCE, Mumbai 2003 (160) BLT 893 (Tri.Mum). Ld. SDR submits that the assessee had exported its final products under bond in terms of Rule 19 of the Central Excise Rules (CER), 2002. The said Rule provides for export of dutiable goods without payment of duty under bond. In the instant case, the assessee wrongly availed the benefit of this Rule as their finished goods were exempt from payment of duty. However, to a question from the Bench, ld. SDR submits that the procedure laid down under Rule 19 of the CER, 2002 is also applicable to exempted goods.
3. Nobody representing the respondents is present.
4. I have carefully considered the facts of the case and the submissions made by ld. SDR for the Revenue. The assessee, in the instant case, had received inputs for the manufacture of exempted final products and had taken credit. During the material period, the assessee exported in terms of Rule 19 of the CER, 2002, the said exempted products under Bond. As rightly submitted by ld. SDR, Rule 19 of CER, 2002 provides for export under bond of excisable goods from a factory of the manufacturer without payment of duty. There is nothing in the Rule which prohibits the manufacturer from exporting its goods in terms of Rule 19 of the CER, 2002.
5. As regards CENVAT credit relatable to the inputs contained in the exported final products Sub-rule 1 of Rule 6 regulates availment of credit of duty paid on inputs in respect of exempted final products. Rule 6 of the CCR, 2002 reads as follows:
RULE 6. Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services.-
(1) The CENVAT credit shall not be allowed on such quantity of input or input service which is used in the manufacture of [exempted goods or for provision of exempted services,] except in the circumstances mentioned in Sub-rule (2)."
Provided the cenvat credit on inputs shall not be denied to job worker referred in Rule 12B of the Central Excise Rules, 2002 on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule.
(2) Where a manufacturer avails of CENVAT credit in respect of any inputs, except inputs intended to be used as fuel, and manufactures such final products which are chargeable to duty as well as exempted goods, then, the manufacturer shall maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final products and the quantity of inputs meant for use in the manufacture of exempted goods and take CENVAT credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods.
(3) The manufacturer, opting not to maintain separate accounts shall follow either of the following conditions, as applicable to him, namely:
(a) if the exempted goods are:
...
...
(4) No CENVAT credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods, other than the final products which are exempt from the whole of the duty of excise leviable thereon under any notification where exemption is granted based upon the value or quantity of clearances made in a financial year. (5) The provisions of Sub-rule (1), Sub-rule (2), Sub-rule (3) and Sub-rule (4), shall not be applicable in case the exempted goods are either -
(i) cleared to a unit in a free trade zone; or
(ii) cleared to a unit in a special economic zone; or
(iii) cleared to a hundred percent export-oriented undertaking; or
(iv) ...
(v) ...
(vi) Cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002.
(vii) ...
Clause (vi) of Sub-rule 5 of Rule 6 of CCR, 2002 provides that the restrictions envisaged in Sub-rules 1 to 4 of Rule 6 shall not apply to exempted goods cleared for export under bond. Therefore, the statutory provisions allowed the assessee to take credit of duty paid on inputs contained in the exempted final products exported under bond in terms of Rule 6 of CCR, 2002. Thus, the impugned order has been passed in accordance with law. The appeal filed by the Revenue is devoid of merits and the same is dismissed.
(Dictated and pronounced in open court)