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2021 (3) TMI 1084 - HC - Central ExciseReversal of Cenvat Credit - Scope of exemption notification - Notification exempting the basic excuse duty but not additional duty of excise - interpretation of provisions of Rule 6(1) and 6(4) of the Cenvat Credit Rules, 2004 - conditional exemption - contention of the appellants that the final product being exempt from payment of basic duties ignored - benefit of the notification dated 09.07.2004 as amended from time to time - HELD THAT:- In case of COMMISSIONER OF SALES TAX, JAMMU AND KASHMIR AND OTHERS VERSUS PINE CHEMICALS LTD. AND OTHERS [1994 (10) TMI 262 - SUPREME COURT], brief facts were that the Government of Jammu & Kashmir had granted exemption to goods manufactured by large or medium industrial units within 5 years of its commencement of production and sold within the said period. In such context, it was observed that such exemption was a conditional exemption and not a general exemption. The Notification appears to have a dual purpose in the mind of the authority. First was to encourage investment in manufacturing units of specified products in the North-Eastern States. The second purpose also is equally important namely, that the element of duty waived by the Government of India is also ploughed back into the region by augmenting the manufacturing capability of a unit in the said region or for other purposes such as development of infrastructure or civil works or social projects in the region. The amount of duties saved by the manufacturer thus under this Notification, was to be utilized in a specified manner. As per Rule 2(d), “exempted goods” would mean excisable goods which are exempt from the whole of the duty of excise leviable thereon or the goods which are chargeable to “Nil” rate of duty. The exemption Notification dated 21.01.2004 as amended subsequently cannot be seen as a Notification granting unconditional exemption from payment of duties. Such exemption was conditional on various requirements which limited the scope of the assessee to utilize the duty element so exempted, for any purpose at all. Such exemption, thus, did not directly increase the profitability of the product since the assessee could not retain the sum equivalent to the duty payable and utilized it at will. Appeal dismissed.
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