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2015 (7) TMI 225 - CESTAT NEW DELHI

2015 (7) TMI 225 - CESTAT NEW DELHI - 2015 (329) E.L.T. 893 (Tri. - Del.) - Denial of CENVAT Credit - Exemption under notification no. 6/06-CE dated 1/03/2006 - Non maintenance of separate accounts - Held that:- When the goods manufactured into India have been supplied against international competitive bidding, the same would be eligible for full duty exemption under notification no. 6/06-CE, if the same satisfy the condition prescribed in the notification that the same goods, if imported into I .....

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es. Sub rule 6 of Rule 6 enumerates the situations in which the cenvat credit would be available in respect of inputs/Input services even if the same have been used in or in relation to manufacture of final product which have been cleared at nil rate of duty or have been cleared without payment of duty like clearances for export under bond, supplies 100% EOU/SEZ units etc. There is nothing in this sub rule form which it can be inferred that clause-(vii) is applicable to the goods imported into I .....

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r (for the Bench): The facts leading to filing of this appeal are, in brief, as under: 1.1 The respondent Bharat Heavy Electricals Ltd. are manufacture Steam Turbine, Hydraulic Turbine, Gas Turbine, Electric Generator Sets, Motors, Panels and Condensers. The period of dispute in this case is from April 2006 to December 2006. During this period, the respondent had supplied boilers to their customers on payment of duty as well as also to their customers against international competitive bidding at .....

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to India. The Department was of the view that since, during the period of dispute the Respondent has used common Cenvat Credit availed inputs/ input services for manufacture of dutiable final product as well as exempted final product and since they have not complied with the provisions of Rule 6(2) of the Cenvat Credit Rules, 2004 i.e. they have not maintained a separate account and inventory of the inputs/ input services meant for dutiable final product and exempted final product and confined t .....

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of an amount of ₹ 30,33,30,683/- from the respondent under Rule 6(3)(b) read with Rule 14 of the Cenvat Credit Rules, 2004, and section 11A of the Central Excise Act, 1944, along with interest thereon under section 11AB and also for imposition of penalty on them under Rule 15 of the Cenvat Credit Rules, 2004 read with section 11AC of Central Excise Act, 1944. The SCN was adjudicated by the Commissioner vide order-in-original dated 26.12.2007 by which the Commissioner dropped the proceeding .....

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is applicable only to the imported goods. The above order of the Commissioner was reviewed under section 35E(1) of the Central Excise Act, 1944 by the Committee of Chief Commissioners and the Committee of Chief Commissioners vide order dated 19.03.2008 directed the Commissioner to file an application before the Tribunal under section 35E(4) of the Central Excise Act, 1944, for correct determination of the points arising out of the order as mentioned in the review order. The point to be referred .....

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pugned order by reiterating the grounds of appeal and the points raised in the review order passed by the Committee of chief commissioners and emphasized that the respondent are not entitled to the benefit of Rule 6(6)(vii) of the Cenvat Credit Rules, 2004, because in the instant case, the goods supplied to the mega power plant against the international competitive bidding, at nil rate of duty under notification no. 6/06-CE are the goods manufactured in India at Haridwar Unit of the Respondent a .....

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ng. He, therefore, pleaded that the impugned order is not correct. 4. Sh. Rupesh Kumar, Advocate the Ld. Counsel for the Respondent, pleaded that the goods had been supplied by the respondent for a mega power project against international competitive bidding and the same had been cleared at nil rate of duty under notification no. 6/06-CE (serial No. 301), that serial no. 301 of the notification no. 6/06-CE prescribes nil rate of duty for the goods of any chapter of the Central Excise tariff supp .....

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case the excisable goods removed without payment of duty are the goods which are exempt from duty of customs leviable under first schedule to the customs tariff act 1975 and additional customs duty leviable under sub section 1 of section 3 of the said Customs Tariff Act when imported into India and are supplied against international competitive bidding in terms of notification no. 6/06-CE dated 1.3.2006, that Rule 6(6) is in respect of the goods manufactured in India which have been removed at n .....

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roduce the conditions for full duty exemption under notification no. 6/06-CE in respect of the goods supplied against International Competitive Bidding and there is nothing in the language of clause (vii) of Rule 6(6) form which it can be inferred that this clause is applicable only to the imported goods and not to the goods produced or manufactured in India, that question of payment of excise duty and exemption notification no. 6/06-CE would arise only if the goods cleared and supplied against .....

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e supplied at nil rate of duty against international competitive bidding under notification no. 6/06-CE dated 1/3/2006. The notification no. 6/06-CE (serial No. 301) prescribes nil rate of duty for the goods cleared against international competitive bidding subject to condition that the goods if imported into India, are exempt from the duties of customs leviable under first schedule to the Customs Tariff Act, 1975, and also from the additional customs duty leviable under section 3 of the said Cu .....

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exempted goods. Sub rule (2) read with Sub Rule (3) of Rule 6 cover the situation where a manufacturer of final product by using common input/ input services manufactures dutiable as well as exempted final product and in accordance with sub rule 3, if he does not comply with the provisions of sub rule (2) i.e. he does not maintain a separate account and inventory in respect of inputs/ input services used in or in relation to manufacture of dutiable final product and exempted final product and co .....

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turer from the provisions of sub rule (1),(2),(3) & (4) in certain situations. In this regard, the relevant part of sub rule 6 of Rule 6 is reproduced below: "(6) The provisions of sub rule (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty and either._ (i) Cleared to a unit of special economic zone; or (ii) Cleared to a 100% Export Oriented undertaking; or (vii) all goods which are exempt from the duties of customs leviable under t .....

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ot be applicable in case the excisable goods removed without payment of duty are the goods which if imported into India are exempt from the duties of customs leviable under customs tariff act and additional customs duty leviable under section 3(1) of the said Customs Tariff Act and have been supplied against international competitive bidding in terms of notification no. 6/06-CE dated 1.3.2006. 6.1 Thus, when the goods manufactured into India have been supplied against international competitive b .....

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