Karnataka High Court
Commissioner Of Central Excise vs M/S Mahindra Reva Electric Vehicle Pvt. ... on 18 July, 2018
Bench: Vineet Kothari, S.Sujatha
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF JULY, 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON'BLE MRS.JUSTICE S.SUJATHA
CEA.Nos.49/2016 & 61- 62/2016
C/w. CEA.Nos.3/2016 & 52 - 54/2016
CEA Nos.49/2016 & 61-62/2016:
Between:
Commissioner of Central Excise,
Customs and Service Tax,
Bangalore-1 Commissionerate,
P.B.No.5400, Queens Road,
Bangalore-560 001.
Presently at the above address. ...Appellant
(By Mrs. Vanita K.R. Advocate)
And:
M/s. Mahindra Reva Electric
Vehicle Pvt. Ltd.,
(Formerly known as
M/s. Reva Electric Car Co. Pvt. Ltd.,)
No.122, Bommasandra Industrial Estate,
Bangalore-560099. ...Respondent
(By Sri. K.S. Ravishankar, Advocate)
These Appeals are filed under Section 35G of the
Central Excise Act, arising out of order dated:08.10.2015
passed in Final Order No.22028-22030/2015 by the
CESTAT, praying to set aside the CESTAT Final Order
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016
C/w. CEA.Nos.3 & 52-54/2016
Commissioner of Central Excise and Anr. Vs.
M/s. Mahindra Reva Electric Vehicle Pvt. Ltd.,
2/38
No.22028-22030/2015 dated:08.10.2015 and decide the
question of law framed in the above appeal by allowing the
appeal.
CEA.Nos.3/2016 & 52 - 54/2016
Between:
Principal Commissioner of Central Excise,
Bangalore-I, Commissionerate,
P.B.No.5400, Queens Road,
Bangalore-560 001. ...Appellant
(By Mrs. Vanita K.R. Advocate)
And:
M/s. Mahindra Reva Electric
Vehicle Pvt. Ltd.,
(Formerly known as
M/s. Reva Electric Car Co. Pvt. Ltd.,)
No.122, Bommasandra Industrial Estate,
Bangalore-560099. ...Respondent
(By Sri. K.S. Ravishankar, Advocate)
These Appeals are filed under Section 35G of the
Central Excise Act, arising out of order
dated:26.06.2015/08.07.2015 passed in Final Order
No.21504-21507/2015 by the Hon'ble CESTAT Bengaluru
praying to allow the appeal of the appellant and decide the
substantial question of law as framed above and set aside
the Final Order No.21504-21507/2015
dated:26.06.2015/08.07.2015 passed by the Hon'ble
CESTAT, Bengaluru.
These Appeals are coming on for Admission this day,
Dr.Vineet Kothari, J., delivered the following:
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016
C/w. CEA.Nos.3 & 52-54/2016
Commissioner of Central Excise and Anr. Vs.
M/s. Mahindra Reva Electric Vehicle Pvt. Ltd.,
3/38
JUDGMENT
Mrs.Vanita K.R., Adv. for Appellant-Revenue. Mr.K.S.Ravishankar, Adv. for Respondent-Assessee.
The Revenue has filed these two appeals against the orders passed by the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, in Final Order Nos.21504-21507/2015, dated 26.6.2015/8.7.2015 (in CEA.Nos.3 & 52-54/2016) and in Final Order Nos.22028-22030/2015, dated 8.10.2015 (in CEA.Nos.49 & 61-62/2016). Since common question of law is involved in both these cases, we propose to dispose of both the appeals by common judgment as the issues involved are also common.
2. The facts are illustratively taken from CEA Nos.49 & 61-62/2016. The controversy revolves around the claim of refund by the assessee under CENVAT Credit Rules, 2004, for the period July 2008 to June 2009 (in CEA Nos.3 & 52-54/2016) and from Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 4/38 July 2009 to February 2010 (in CEA Nos.49 & 61- 62/2016). The assessee is manufacturer of Battery Operated Cars i.e., Electric vehicles falling under Chapter 87 of the First Schedule to the Central Excise Tariff Act, 1985. Prior to 1.3.2008, the manufacture of the said cars attract central excise duty, but with effect from 1.3.2008, the same came to be exempted from payment of excise duty under the Notification issued by the Central Government. For the aforesaid two periods involved in both these appeals, assessee claimed refund of the accumulated CENVAT credit in terms of Rule 5 of the CENVAT Credit Rules, 2004. The adjudicating authority, however, rejected the said claim of refund of the assessee, but, the Tribunal held in favour of the assessee that the assessee was entitled to refund of the said CENVAT credit for the aforesaid periods following the two High Court decisions in the case of Repro India Ltd., -vs- Union of India {2009 (235) ELT 614 (Bom.)} and Commissioner of Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 5/38 Central Excise -vs- Drish Shoes Ltd., {2010 (254) ELT 417(HP)}.
Aggrieved by the said order of Tribunal, the Revenue has preferred these two appeals before this Court.
3. The learned counsel for the Revenue Mrs.Vanita K.R. submitted that since the final product viz., Battery Operated Cars were exempted with effect from 1.3.2008, the assessee was not entitled to refund of the CENVAT credit as per Rule 5 of the CENVAT Credit Rules, 2004, which is quoted below for ready reference.
" Rule 5. Refund of CENVAT credit :-
Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 6/38 exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of,
i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or
ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, condition and limitations, as may be specified, by the Central Government, by notification:
Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed under the Customs and Central Excise Duties Drawback Rules, 1995, or claims rebate of duty under the Central Excise Rules, 2002, in respect of such duty; or claims rebate of service tax under the Export of Service Rules, 2005 in respect of such tax."
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 7/38
4. The learned counsel for the Revenue Mrs.Vanita K.R. also drew our attention towards the findings of the adjudicating authority who denied the said claim on the basis of Rule 11(3) of the aforesaid CENVAT Credit Rules, 2004, which provided for certain transitory provisions. The said Rule 11 of CENVAT Credit Rules, 2004, is also quoted below for ready reference.
" RULE 11. Transitional provision. -
(1) Any amount of credit earned by a manufacturer under the CENVAT Credit Rules, 2002, as they existed prior to the 10th day of September, 2004 or by a provider of output service under the Service Tax Credit Rules, 2002, as they existed prior to the 10th day of September, 2004, and remaining unutilized on that day shall be allowed as CENVAT credit to such manufacturer or provider of output service under these rules, and be allowed to be utilized in accordance with these rules.
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 8/38 (2) A manufacturer who opts for exemption from the whole of the duty of excise leviable on goods manufactured by him under a notification based on the value or quantity of clearances in a financial year, and who has been taking CENVAT credit on inputs or input services before such option is exercised, shall be required to pay an amount equivalent to the CENVAT credit, if any, allowed to him in respect of inputs lying in stock or in process or contained in final products lying in stock on the date when such option is exercised and after deducting the said amount from the balance, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export.
(3) A manufacturer or producer of a final product shall be required to pay an amount equivalent to the CENVAT credit, if any, taken by him in respect of inputs received for use in the manufacture of the said final product and Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 9/38 is lying in stock or in process or is contained in the final product lying in stock, if,-
(i) he opts for exemption from whole of the duty of excise leviable on the said final product manufactured or produced by him under a notification issued under Section 5A of the Act; or
(ii) the said final product has been exempted absolutely under Section 5A of the Act, and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any other final product whether cleared for home consumption or for export, or for payment of service tax on any output service, whether provided in India or exported.
(4) A provider of output service shall be required to pay an amount equivalent to the Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 10/38 CENVAT credit, if any, taken by him in respect of inputs received for providing the said service and is lying in stock or is contained in the taxable service pending to be provided, when he opts for exemption from payment of whole of the service tax leviable on such taxable service under a notification issued under Section 93 of the Finance Act, 1994 (32 of 1994) and after deducting the said amount from the balance of CENVAT credit, if any, lying in his credit, the balance, if any, still remaining shall lapse and shall not be allowed to be utilized for payment of duty on any excisable goods, whether cleared for home consumption or for export or for payment of service tax on any other output service, whether provided in India or exported."
5. On the other hand, leaned counsel for the respondent-assessee drew our attention to Rule 6(6) of the aforesaid Rules viz., CENVAT Credit Rules, 2004, and submitted that the provisions of sub-rules (1), (2), (3) & (4) of Rule 6 shall not be applicable to the case of Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 11/38 the assessee, in case the excisable goods were removed without payment of duty, where such goods are cleared for export under a Bond in terms of the provisions of Central Excise Rules, 2002. The said Rule 6, including sub-rule (6) of CENVAT Credit Rules, 2004, are also quoted below for ready reference.
" 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 that the CENVAT credit on inputs shall not be denied to job worker referred to in Rule 12AA 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.
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 12/38 (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take CENVAT credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable.
(3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options, as applicable to him, namely:-
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 13/38
(i) the manufacturer of goods shall pay an amount equal to ten per cent of value of the exempted goods and the provider of output service shall pay an amount equal to eight per cent of value of the exempted services; or
(ii) the manufacturer of goods or the provider of output service shall pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of exempted goods or for provision of exempted services subject to the conditions and procedure specified in sub-rule (3A).
Explanation I. - If the
manufacturer of goods or the
provider of output service, avails any of the option under this sub-rule, he shall exercise such option for all exempted goods manufactured by him or, as the case may be, all exempted services provided by him, and such option shall not be Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 14/38 withdrawn during the remaining part of the financial year.
Explanation II. For removal of doubt, it is hereby clarified that the credit shall not be allowed on inputs and input services used exclusively for the manufacture of exempted goods or provision of exempted service.
(3A) For determination and payment of amount payable under clause (ii) of sub-rule (3), the manufacturer of goods or the provider of output service shall follow the following procedure and conditions, namely:-
(a) While exercising this option, the manufacturer of goods or the provider of output service shall intimate in writing to the Superintendent of Central Excise giving the following particulars, namely:-
(i) name, address and registration No. of the manufacturer of goods or provider of output service;
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 15/38
(ii) date for which the option under this clause is exercised or proposed to be exercised;
(iii) description of dutiable goods or taxable services;
(iv) description of exempted goods or exempted services;
(v) CENVAT credit of inputs and input services lying in balance as on the date of exercising the option under this condition;
(b) the manufacturer of goods or the provider of output service shall, determine and pay, provisionally, for every month,-
(i) the amount equivalent to CENVAT credit attributable to inputs used or in relation to manufacture of exempted goods, denoted as A;
(ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services (provisional)=(B/C) multiplied by D, where B denotes the total value of exempted services Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 16/38 provided during the preceding financial year, C denotes the total value of dutiable goods manufactured and removed plus the total value of taxable services provided plus the total value of exempted services provided, during the preceding financial year and D denotes total CENVAT credit taken on inputs during the month minus A;
(iii) the amount attributable to input
services used in or in relation to
manufacture of exempted goods or
provision of exempted services
(provisional) = (E/F) multiplied by G, where E denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the preceding financial year, F denotes total value of taxable and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the preceding financial year, and G denotes total CENVAT Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 17/38 credit taken on input services during the month;
(c) the manufacturer of goods or the provider of output service, shall determine finally the amount of CENVAT credit attributable to exempted goods and exempted services for the whole financial year in the following manner, namely:-
(i) the amount of CENVAT credit attributable to inputs used in or in relation to manufacture of exempted goods, on the basis of total quantity of inputs used in or in relation to manufacture of said exempted goods, denoted as H;
(ii) the amount of CENVAT credit attributable to inputs used for provision of exempted services =(J/K) multiplied by L, where J denotes the total value of exempted services provided during the financial year, K denotes the total value of dutiable goods manufactured and removed plus the total value of taxable Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 18/38 services provided plus the total value of exempted services provided, during the financial year and L denotes total CENVAT credit taken on inputs during the financial year minus H;
(iii) the amount attributable to input services used in or in relation to manufacture of exempted goods or provision of exempted services = (M/N) multiplied by P, where L denotes total value of exempted services provided plus the total value of exempted goods manufactured and removed during the financial year, M denotes total value of taxable and exempted services provided, and total value of dutiable and exempted goods manufactured and removed, during the financial year, and N denotes total CENVAT credit taken on input services during the financial year;
(d) the manufacturer of goods or the provider of output service, shall pay an amount equal to the difference between the aggregate amount determined as per Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 19/38 condition (c) and the aggregate amount determined and paid as per condition (b), on or before the 30th June of the succeeding financial year, where the amount determined as per condition (c) is more than the amount paid;
(e) the manufacturer of goods or the provider of output service, shall, in addition to the amount short paid, be liable to pay interest at the rate of twenty-four percent. Per annum from the due date, i.e., 30th June till the date of payment, where the amount short- paid is not paid within the said due date;
(f) Where the amount determined as per condition (c) is less than the amount determined and paid as per condition (b), the said manufacturer of goods are the provider of output service may adjust the excess amount on his own, by taking credit of such amount.
(g) the manufacturer of goods or the provider of output service shall intimate to the jurisdictional Superintendent of Central Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 20/38 Excise, within a period of fifteen days from the date of payment or adjustment, as per condition (d) and (f) respectively, the following particulars, namely:-
(i) details of CENVAT credit attributable to exempted goods and exempted services, monthwise, for the whole financial year, determined provisionally as per condition (b),
(ii) CENVAT credit attributable to exempted goods and exempted services for the whole financial year, determined as per condition (c),
(iii) Amount short paid determined as per condition (d), alongwith the date of payment of the amount short-paid,
(iv) Interest payable and paid, if any, on the amount short-paid, determined as per condition (e), and
(v) Credit taken on account of excess payment, if any, determined as per condition (f);
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 21/38
(h) where the amount equivalent to CENVAT credit attributable to exempted goods or exempted services cannot be determined provisionally, as prescribed in condition(b), due to reasons that no dutiable goods were manufactured and no taxable service was provided in the preceding financial year, then the manufacturer of goods or the provider of output service is not required to determine and pay such amount provisionally for each month, but shall determine the CENVAT credit attributable to exempted goods or exempted services for the whole year as prescribed in condition (c) and pay the amount so calculated on or before 30th June of the succeeding financial year.
(i) where the amount determined under condition (h) is not paid within the said due date, i.e., the 30th June, the manufacturer of goods or the provider of output service shall, in addition to the said amount, be liable to pay interest at the rate of twenty Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 22/38 four percent. Per annum from the due date till the date of payment.
Explanation I. - "Value" for the purpose of sub-rules (3) and (3A) shall have the same meaning assigned to it under section 67 of the Finance Act, 1994 read with rules made thereunder or, as the case may be, the value determined under section 4 or 4A of the Central Excise Act, 1944 read with rules made thereunder.
Explanation II. The amount mentioned in sub-rules (3) and (3A), unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENVAT credit or ortherwise on or before the 5th day of the following month except for the month of March, when such payment shall be made on or before the 31st day of the month of March.
Explanation III. - If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rule (3) or as the case may be sub-rule (3A), it shall be Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 23/38 recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken.
(4) No CENVAT credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods or in providing exempted services, 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) Notwithstanding anything contained in sub-rules (1), (2) and (3), credit of the whole of service tax paid on taxable service as specified in sub-clause (g), (p), (q), (r), (v), (w), (za), (zm), (zp), (zy), (zzd), (zzg), (zzh), (zzi), (zzk), (zzq) and (zzr) of clause (105) of section 65 of the Finance Act shall be allowed unless such service is used exclusively in or in relation to the manufacture of exempted goods or providing exempted services.
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 24/38 (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either-
(i) cleared to a unit in a special
economic zone; or
(ii) cleared to a hundred percent.
Export-oriented undertaking; or
(iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology park; or
(iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No.108/95- Central Excise, dated the 28th August 1995, number G.S.R.602(E), dated the 28th August, 1995; or Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 25/38
(v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002; or
(vi) gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting; or
(vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under section 3 of the said customs Tariff Act when imported into India and supplied against International Competitive Bidding in terms of notification No.6/2002-Central Excise dated the 1st March, 2002 or Notification No.6/2006-Central Excise, dated the 1st March, 2006, as the case may be."
6. The learned counsel for the assessee submitted that merely by exemption of the excise duty on the Battery Operated Cars after 1.3.2008, their Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 26/38 character of being excisable goods is not lost and if excisable goods like Battery Operated Cars were removed for export on the basis of Bond in terms of Central Excise Rules, 2002 and which the assessee did for the periods in question, the claim of refund under Rule 5 is not defeated and therefore, while the Assessing Authority was in error in rejecting the claim of refund on the grounds which were wholly untenable, the Tribunal has correctly held in favour of the assessee that the assessee was entitled to such accumulated CENVAT credit in their account.
7. The learned counsel for the assessee Mr.K.S.Ravishankar also submitted that the Assessing Authority was in error in denying the refund inter alia on the ground that there was NIL balance in the credit of the CENVAT account of the assessee as on 1.3.2008.
He further submitted that refund of CENVAT credit is claimed by the assessee of CENVAT Credit which got accumulated only after 1.3.2008 on the inputs Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 27/38 procured by the assessee and used in the manufacture of Battery Operated Cars in question, which were exported under Bond and Letter of Undertakings in terms of Rule 19 of Central Excise Rules, 2002. The said Rule 19 is also quoted below for ready reference.
" Rule 19. Export without payment of duty.- (1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner.
(2) Any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner.
(3) The export under sub-rule (1) of sub-rule (2) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board."
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 28/38
8. The relevant Notification under Rule 19 of the Central Excise Rules, 2002, was also produced before us for perusal and to submit that the conditions for availing such exemption on export were duly complied with by the assessee in the present case. The learned counsel for the assessee also submitted that the Proviso to Rule 5 of CENVAT Credit Rules, 2004, for denying the refund of credit inter alia on the ground where the assessee claim rebate of duty under Central Excise Rules, 2002, was also not applicable to the facts of case of the assessee, because, the rebate referred to in the said Proviso of Rule 5 of CENVAT Credit Rules, 2004, relates to the rebate under Rule 18 and not under Rule 19 of Central Excise Rules, 2002, which also quoted below for ready reference :
" Rule 18. Rebate of duty.- where any goods are exported, the central Government may, by notification, grant rebate of duty paid Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 29/38 on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification.
Explanation.- "Export" includes goods shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft."
The assessee did not avail any such rebate under the aforesaid Rule 18.
9. The learned counsel, therefore, urged that the learned Tribunal was perfectly justified in allowing the claim of refund of the assessee in terms of the aforesaid two decisions of High Courts relied upon by the learned Tribunal.
10. In Repro India Ltd., (supra), the learned Division Bench of Bombay High Court has held as under :
Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 30/38 "A perusal of the aforesaid Rules would clearly show that sub-rule (i) to (vi) are identical and the difference in Rule 6(6) of the Cenvat Credit Rules, 2004 and Rule 6(5) of the Cenvat Credit Rules, 2002 is not relevant for the purpose of the present case. Rule 6(1), 6(2), 6(3) and 6(4) of the Cenvat Credit Rules under Cenvat Credit Rules, 2002 as well as under the Cenvat Credit Rules, 2004 remains the same. As noted earlier the object and purpose of Rule 6(6) of Cenvat Credit Rules, 2004 is to promote the policy of the Government that the benefit of duty paid on input is available as credit in respect of certain exempted goods as well as the exempted goods exported under bond. The minor change in the wordings of Rule 6(6) of the Cenvat Credit Rules, 2004 by using the term "excisable goods" instead of exempted goods is that the term `exempted goods' may not cover the dutiable goods which are exported under bond. Therefore, in order to widen and cover both dutiable and exempted goods exported under bond, Rule 6(6) of Cenvat Credit Rules, 2004 uses the Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 31/38 expression "excisable goods". As an illustration, if a car which is dutiable is exported under bond without payment of duty there may be doubt as to whether credit on the inputs will be available, since the car is cleared without payment of duty under Rule 6(5) of Cenvat Credit Rules, 2002. It could be argued that it covers only the exempted goods exported and not dutiable goods exported. In order to cover such a situation also, Rule 6(6) of Cenvat Credit Rules, 2004, used the expression `excisable goods' which is wider to include both dutiable as well as exempted goods."
11. Similarly, the Himachal Pradesh High Court in the case of Commissioner of Central Excise -vs-
Drish Shoes Ltd., {2010 (254) E.L.T. 417 (H.P)}, following the decision of the Bombay High Court in Repro India Ltd., (supra) held as under:
" 16. The Scheme of CENVAT Credit Rules, 2002, as also 2004, reference to the relevant provisions of which has been made Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 32/38 hereinabove, shows that CENVAT credit/refund is allowed on the inputs of all manufactured goods which are not exempt from duty, as is clear from a combined reading of Rule 3 and sub-rule (1) of Rule 6 of the CENVAT Credit Rules, 2002, as also the Rules of 2004, so as to avoid indirect double taxation on inputs. However, this rule is not absolute. It is subject to exception clause, contained in Rule 6(5) of the Rules of 2002 and 6 (6) of the Rules of 2004, and one of the exceptions is in respect of excisable goods, which are cleared for export under bond in terms of the provisions of Central Excise Rules, 2002.
17. Sub-rule (5) of Rule 6 of the Rules of 2002 was applicable only in case of exempted goods. That meant that the exception was not applicable in case of dutiable goods. It appears that this led to anomalous situations. For example, if the goods were dutiable and were exported, credit of CENVAT could not be claimed in respect of input of those goods, at least under the aforesaid exception clause. To overcome Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 33/38 this kind of anomalous situations, exception clause contained in sub-rule (6) of Rule of CENVAT Credit Rules, 2004 has been made applicable to all excisable goods.
18. Learned Counsel for the appellant argued that term 'excisable goods' used in sub-rule (6) of Rule 6 of 2004 Rules, meant only dutiable goods. Submission has been noticed only to be rejected.
19. A Division Bench of Bombay High Court in 2009 (235) E.L.T.614 (Bom.), Repro India Ltd. v Union of India, while dealing with a similar situation and interpreting the provisions of Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, has held that expression "excisable goods" is wider than the expression "exempted goods" as it includes both dutiable as also exempted goods.
20. In view of the above discussion, we hold that an assessee, manufacturing goods chargeable to nil duty, is eligible to avail CENVAT credit paid on the inputs under Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 34/38 the exception clause to Rule 6(1), as contained in Rule 6(5) of CENVAT Credit Rules, 2002 and Rule 6(6) of CENVAT Credit Rules, 2004, used in the manufacture of such goods, if the goods are exported. Question No.1 is answered accordingly.
21. As regards question No.2, it is clear from a bare reading of Rule 5 of CENVAT Credit Rules, 2004 that a manufacturer, who exports the final products which are exempt from duty, can claim refund of CENVAT. So, this question is also answered against the appellant."
12. The SLP against the aforesaid decision of the Himachal Pradesh High Court Judgment came to be dismissed by the Hon'ble Supreme Court on 12th July 2016, in Civil Appeal No.2817/2012 (Commissioner of Central Excise, Chandigarh -vs- M/s.Drish Shoes Ltd.,), following their earlier similar dismissal of SLP against the decision of the Bombay High Court in the Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 35/38 case of Union of India -vs- Sharp Menthol India Ltd., {2011 (270) E.L.T. 212 (Bom.)}, on 6.4.2011.
13. A similar view was also expressed by the Division Bench of Madras High Court in the case of Commissioner of C.Ex., Chennai-III -vs- Same Duetz Fahr India (P) Ltd., {2017 (6) G.S.T.L. 453 (Mad.)}, the relevant portion of which is quoted below for ready reference.
" 13. It is no one's case that the goods manufactured by the assessee were not excisable. Though the goods were excisable, the only reason, that Central Excise duty was not paid or was not payable, was on account of the provisions of the 2006 notification. Therefore, upon executing the bond, the assessee removed what were otherwise excisable goods without payment of duty.
13.1. One of the exceptions to sub- rule(1) of Rule 6 is a circumstance, where excisable goods are exported pursuant to the Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 36/38 executions of bond, in terms of Central Excise Rules, 2002.
14. Therefore, on a plain reading, we see no difficulty in the assessee's case falling in the exception carved out in Rule 6(6)(v) of the 2004 Rules. The purpose, apparently, behind carving out of such exceptions appears to be to neutralize the impact of the duties paid by the exporters, with regard to input tax, whether paid on goods or services. The objective, obviously is not to export duties, so as to provide much needed competitive edge to Indian exporter in foreign markets.
14.1 India is a party to the WTO regime and therefore, it is permissible for it to neutralize duties on inputs, whether in the form of goods or services.
15. Thus, having regard to the Rules, qua which we have rendered our view above, and the perceptible object as to why sub-rule (6) of Rule 6 of the 2004 Rules has been put in place, we are not inclined to interfere with Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 37/38 the impugned judgment rendered by the Tribunal.
16. Accordingly, the appeal of the Revenue is dismissed. The question of law, as framed, is answered in favour of the assessee and against the Revenue. However, there will be no order as to costs."
14. No contrary view to the aforesaid views taken by the three High Courts has been brought to our notice.
15. We do not find any reason to take a different view of the matter in the aforesaid facts and circumstances of the case.
16. In view of the aforesaid, we do not find any substantial question of law arising from the order of Tribunal in the aforesaid two appeals filed by the Revenue. The same are found to be devoid of merit and Date of Judgment:18.07.2018 in CEA.Nos.49 & 61-62/2016 C/w. CEA.Nos.3 & 52-54/2016 Commissioner of Central Excise and Anr. Vs. M/s. Mahindra Reva Electric Vehicle Pvt. Ltd., 38/38 are liable to be dismissed. Accordingly, the Appeals of Revenue are dismissed. No costs.
Sd/-
JUDGE Sd/-
JUDGE bk/ (List No.1 Sl.No.3)