TMI Blog2008 (10) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... AT credit thereon, was entitled to remove the inputs as such, without reversal of the credit or payment of equivalent amount of duty, to a 100% EOU under CT-3 certificate in terms of Notification No. 1/95 dated 4-1-1995." 2. Heard both sides. 3. The facts, in brief, relevant for considering the referred issue are as follows: (a) The appellants are manufacturers of knitting machines. For use in the manufacture of the said final products, they procured/received parts/components; they took credit of the duty paid on such inputs. (b) The appellants supplied their final products (knitting machines) to100% Export-Oriented Units (EOUs) without payment of duty against CT-3 certificates in terms of Notification No.1 /95-C.E., dated 4-1-1995. In addition to supplying the final products (knitting machines) manufactured by them, they also cleared some inputs (on which cenvat credit has been taken by them) to the 100% EOUs. They have neither paid the excise duty nor reversed the cenvat credit attributable to such inputs cleared. (c) The department held that the 100% EOUs were entitled to receive the duty free inputs only directly from the factory of manufacture; that the inputs sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following decisions: (i) Lakshmi Machine Works v. Commissioner of Central Excise, Coimbatore [2005] (184) E.L.T. 61 (Tri.-Chennai)]. (ii) Lakshmi Synthetic Machinery Manufacturers Ltd. v. Commissioner of Central Excise, Coimbatore [2002] (184) E.L.T. 109 (Tri.-Chennai). (iii) Gharda Chemicals Ltd. v. Commissioner of Central Excise, Pune-II [2006 (196) E.L.T. 325 (Tri.-Mumbai)]. (iv) Sidhartha Tubes Ltd. v. Commissioner of Central Excise, Indore [2002] (148) E.L.T. 796 (Tri.-Del.)]. (v) Commissioner of Central Excise, Pune-II v. Finolex Industries Ltd. [2008] (85) RLT 395 (CESTAT-Mum.)]. (vi) Manaksia Ltd. v. Commissioner of Central Excise, Kolkata-IV [2007] (216) E.L.T. 231 (T) = 2007 (81) RLT 620 (CESTAT-Kol.)] 5. The learned SDR submitted the following :- (a) The appellants are permitted clearance of only their "final products" namely, the knitting machines to 100% EOUs under Notification No. 1/95. However, the inputs manufactured by third parties and on which they have taken credit cannot be deemed to be manufactured by the appellant especially after the amendment dated 29-6-1995 and allowed clearance to 100% EOU under N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) E.L.T. 23 (Mad.)]. 6.1 We have carefully considered the submissions from both sides. The appellant manufacture only knitting machines and they are the "final products" of the appellant; they cannot be treated as manufacturer of the inputs received from third parties; the inputs can not also be "deemed as manufactured" by the appellant after the amendment dated 29-6-1995. They are merely supplier of Cenvated-inputs to 100% EOUs. The inputs can not be allowed clearance by the appellant to 100% EOUs under Notification No. 1/95 as the said inputs are neither manufactured nor can be "deemed" to have been manufactured by the appellant. The inputs could be imported as well and the question of extending the benefit of the said notification does not arise. Extending the benefit of the Notification to such clearances of inputs procured from domestic source would render one of the conditions of the said Notification, which relate to procurement directly from the factory of manufacture, as redundant. There is no justification to treat this condition as a procedural one, as claimed by the appellant. A submission has been that the supplies have been made by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provided also that the credit of specified duty in respect of inputs used in the final products cleared either to a unit in a Free Trade Zone or to a hundred per cent Export-Oriented Unit or to a unit in an Electronic Hardware Technology park or to a unit in Software Technology parks or supplied to the United Nations or an international organization for their official use or supplied to projects funded by the, 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 under bond shall be allowed to be utilised towards payment of duty of excise on similar final products cleared for home consumption on payment of duty." 6.4 It can be seen that Rule 57F contains provisions relating to utilisation of the inputs and utilisation of credit taken. As far as the inputs are concerned, the general rule is that they should be utilised for the manufacture of final products. However, it contains certain exceptions. The inputs can be both imported as well as locally procured. The inputs can, after intimating the jurisdictional excise authorities, be exported u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted inputs (which can include imported inputs, as in the present case) by the appellants without reversing the credit and without payment of duty. Therefore, the said submission is not relevant. 6.8 We hold that the Notification 1/95 is not applicable to the present case and the clearances are governed only by the provisions of Rule 57F. We hold that the inputs cleared as such by the appellants to 100% EOUs can not be deemed to have been manufactured by the appellants; the supplies (which are deemed exports) can not be treated on par with export under bond for the purpose of Rule 57F. There is no warrant or justification to extend the instructions dated 31-12-1996 issued by the Ministry/Board to cover supplies to 100% EOU which are treated as deemed exports for certain purposes under EXIM Policy. The appellants are not entitled to remove the inputs without reversal of the credit or payment of equivalent amount of duty. 7. Under these circumstances, the contrary view taken by the Tribunal in the case of Gharda Chemicals Ltd. cited supra and other cases is overruled and the reference is answered against the appellants and in favour of the Revenue. 8. The Registry is direc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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