TMI Blog2023 (7) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... not all the goods of the chapter mentioned at column No. 2 of the Table but in case of Sr. No. 54 only to some limited items for which list was appended to the notification, therefore, it cannot be said that the notification is absolute, moreover, in respect to entry Serial No. 59 specific condition is provided as explanation in column No.3 of the table of the notification. Therefore, the notification is not absolute and it is conditional one, therefore it was option for appellant either to avail the exemption under Notification No. 4/2006-CE or not. Accordingly, on this count which is the foundation of the entire case the demand is not sustainable. In catena of judgments, it has been held that even though if on any product duty is not payable for any reason but the assessee paid the duty the Cenvat cannot be denied consequently the provision of Rule 6(3) of Cenvat Credit Rules, 2004 will not be applied. The revenue has interpreted that as per the above condition the appellant was not supposed to clear the goods under Notification No 42/2001-CE(NT) dated 26.02.2001 therefore the clearance of goods cannot be treated as export under bond and consequently the benefit of Rule 6(6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lia at (Unit-II), Plot No.24 to 28 and 30, Survey No. 366, Premier Industrial Estate, Kachigam, Daman. 1.1 The following medicaments are exempt under Notification No.4/06-CE dated 01.03.2006 at Sr. No. 54. (1) Insulin (2) Lamivudine (3) Ritonavir (4) Saquinavir (5) Zidovudine (6)Atazanavir. 1.2 The following medicaments are exempt under Notn.No.4/06-CE dtd.1.3.2006 at Sr. No. 59. (1) Streptomycin (2) Isoniazid (3) Thiacetazone (4) Ethambutol (5) Sodium PAS 6) Pyrazinamide (7) Dapsone (8) Clofazamine (9) Tetracycline Hydrochloride (10) Pilocarpine (11)Hydrocortisone (12)ldoxuridine (13)Acetazolamide (14) Atropine (15) Homatroprn (16)Chloroquine (17)Amodiaquine (18)Quinine (19)Pyrimethamine (20)Sulfamethopyrezine (21)Diethyl Carbamazine (22) Arteether or formulation of artemisinin. 1.3 The said medicaments, at Sr. No. 54 59 of Notification No.4/06-CE are exempt subject to fulfillment of various conditions stipulated therein. The Appellants have cleared the said medicaments at nil rate of duty availing exemption for home clearances. However, when the said medicaments were cleared for export, the same were exported either under Bond/LUT under Notification No.42/01- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule Learned Commissioner has also imposed penalty of Rs 5,000 under Rule 15A of Cenvat Credit Rule, 2004 and penalty of Rs 25 lakhs under rule 25 of CER on Shri Vinayak Shirodkar, Vice President of the appellants-company. The Oder-in-Original is based on the findings that since the goods exported were fully and unconditionally exempt from duty neither input stage rebate is admissible nor such goods could have been exported under Bond/LUT and hence, they were required to pay presumptive tax of 5% of the value of the exempted goods exported under Rule 6(3) of Cenvat Credit Rule. Hence this appeal. 2. Learned Counsel Ms. Manasi Patil with Shri Viraj Reshamwala, Advocates appearing on behalf of the appellant submits that the Appellants were availing exemption under Notification No 4/2006-CE at Sr.Nos. 54 and 59 for clearances of medicaments (i.e. formulations) falling under TI 3004 90 57 that exemption at Sr.No.59 is subject to condition that the formulations should have been manufactured from bulk drugs specified in list 1, while at Sr.No.54 bulk drugs or formulations are subject to the condition that the same should be specified in list 3. that barring provision under Section 5A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard she placed reliance on the following judgments: CCE, Vadodara v. Jayant Oil Mills-2009 (235) ELT 223 (Guj) Suncity Alloys Pvt. Ltd. - 2007 (218) ELT 174 (Raj) Norris Medicines Ltd.-2003 (56) RLT 353 (T) Medispan Ltd.-2004 (178) ELT 848 (T) Omkar Textile Mills2000 (122) ELT 115 (T)- SRF Ltd.-2002 (149) ELT 469 (T) Steelco Gujarat -2000 (121) ELT 557 (T) JCT Ltd.-1999 (114) ELT 618 (T) Alpha Drug India Ltd-2000 (118) ELT 783 (T) Hunsur Plywood Works -1996 (82) ELT 256 (T) 2.5 She submits that once the conditions of Rule 18 read with Notification No. 19/2004-CE(NT) are fulfilled and the fact of export on payment of duty is not disputed, disputing the credit availed on inputs used for manufacture of goods exported under claim for rebate, on the ground that, the same goods were cleared for home consumption by availing exemption under Notn.4/2006- CE [Sr. No.54 59], is incorrect, especially when there is no such bar for entitlement of rebate under Rule 18, CER., 2002; 2.6 She submits that on export of goods, either of the following benefits is available, with regard to taxes borne on the inputs used for manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the part of the assessee. In such circumstances, extended period is not invocable, in support of which reliance was placed on following judgments: (a) Lanxess ABS Ltd. - 2010 (259) ELT 551 (T) (b) Neptune Equipments-2010 (259) ELT 588 (T) 2.10 She submits that once central excise records were audited by Dept., extended period is not invokable based on the following judgments: (a) Pragathi Concrete Products-2015 (322) ELT 819 (SC) (b) Rajkumar Forge Ltd-2010 (262) ELT 155 (Bom) (c) MTR Food-2012 (282) ELT 196 (Kar) (d) Trans Engineers India Pvt. Ltd. = 2015 (40) STR 490 (T) -do- Upheld by Bombay High Court-2018-TIOL-133-HC-MUM-CX 2.11 She further submits that, in any case, in Appellants' own case, on the very same issue pertaining to refund, for the period 07/07/2013 and 09/07/2013, Hon'ble CESTAT vide Order No. A/11704/2019 dated 09.08.2019 [2019-TIOL-2868-CESTAT-AHM], has allowed the appeal by sanctioning the refund claim and remanded the matter for the purpose of considering the aspect of unjust enrichment. That Appellants' case pertaining to the refund claim of Rs. 71, 01,440/- for export of exempt medicaments under rebate/bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), as are given in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified thereon under the First Schedule to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table and subject to the relevant conditions specified in the Annexure to this notification, and the Condition number of which is referred to in the corresponding entry in column (5) of the Table aforesaid. Explanation.- For the purposes of this notification, the rates specified in column (4) of the said Table are ad valorem rates, unless otherwise specified. S. No. Chapter or heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No 54. 28, 29 or 30 The bulk drugs or formulations specified in List 3 Nil 59. 30 Formulations manufactured from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied 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. Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory. Explanation 2. - Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made there under. Explanation 3. - For the purposes of this rule, exempted services as defined in clause (e) of rule 2 shall include an activity, which is not a service as defined in section 65B(44) of the Finance Act, 1994 [provided that such activity has used inputs or input services]. Explanation 4. - Value of such an activity as specified above in Explanation 3, shall be the invoice/agreement/contract value and where such value is not available, such val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on any goods and services that are not inputs or input services. Explanation 3. - For the purposes of this sub-rule and sub-rule (3A),- (a) non-exempted goods removed means the final products excluding exempted goods manufactured and cleared upto the place of removal; (b) exempted goods removed means the exempted goods manufactured and cleared upto the place of removal; (c) non-exempted services means the output services excluding exempted services.] [(3A) ------------------------------------------------------------------------------------------------------------- [(4) ---------------------------------------------------------------------------------------------------------------- [(5) --------------------------------------------------------------------------------------------------------------- (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 to a developer of a special economic zone for their authorised operations; or] (ii) cleared to a hundred per cent. export-oriented u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is provided or agreed to be provided by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India.] (8) For the purpose of this rule, a service provided or agreed to be provided shall not be an exempted service when :- (a) the service satisfies the conditions specified under rule 6A of the Service Tax Rules, 1994 and the payment for the service is to be received in convertible foreign currency; and (b) such payment has not been received for a period of six months or such extended period as maybe allowed from time-to-time by the Reserve Bank of India, from the date of provision :] [Provided that if such payment is received after the specified or extended period allowed by the Reserve Bank of India but within one year from such period, the service provider shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier in terms of sub-rule (3) to the extent it relates to such payment, on the basis of documentary evidence of the payment so received.] From the above rule it can be seen that the demand of an amount under Rule 6(3) of Cenvat Credit Rules, 2004 shall arise only in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case the excisable goods removed without payment of duty are : (i) xxxxxx (ii) xxxxxx (iii) xxxxxx (iv) xxxxxx (v) cleared for export under bond in terms of provisions of the Central Excise Rules, 2002. 11. The only difference between the Rules of 2002 and 2004 is that while in case of 2002 rules, exception clause contained in sub-rule (5) of Rule 6 was applicable in case of only exempted goods, while exception clause contained in sub-rule (6) of Rule 6 of 2004 rules, applies both to exempted goods, as also goods subject to duty, because the term used in sub-rule (6) is excisable goods and not exempted goods , as was the case in Rules of 2002. 12. Reference has been made hereinabove to the Rules of 2002, as also 2004, because from the record, it cannot be made out which rules should be applicable. Rules of 2002 were applicable in respect of inputs or capital goods received in the factory after 1st day of March, 2002. They remained in force till the Rules of 2004 came into force. Rules of 2004 are applicable in respect of inputs received by the manufacturer after 10th day of September, 2004. Since finished leather was exported between Augus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 for CENVAT could not be claimed in respect of input of those goods, at least under the aforesaid exception clause. To overcome this kind of anomalous situations, exception clause contained in sub-rule (6) of Rule 6 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is connection the following would indicate that even exempted goods can be exported in accordance with the provisions of Rule 13. Rule 13 provides that the Central Government may by Notification in Official Gazette permit export of specified goods subject to safeguards, conditions and limitations. In the notification issued under Rule 13, the Government has specified all excisable goods to be eligible for export under bond in terms of Rule 13. The Notification does not make any distinction between the dutiable and exempted goods nor debars the exempted goods from export under Rule 13. Exempted goods are excisable as having been manufactured and covered under Schedule to CETA 1985 and as such are eligible to be exported under Rule 13. As per the Board s Circular No. 471/37/99-CX dated 20-7-99, even the manufacturers of goods attracting nil rate of duty or wholly exempted goods can obtain registration under Rule 174 for the purpose of exporting their goods. Obviously, such manufacturer can, after obtaining registration as permitted vide aforesaid circular, export their goods only under bond in terms of Rule 13 and not in terms of Rule 12 as such goods cannot be exported on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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)....... (ii) ..... (iii) ..... (iv) ..... (v) cleared for export under bond in terms of provisions of the Central Excise Rules, 2002. The petitioners had manufactured both dutiable and exempted final product (packaged software and printed books respectively). The petitioner has taken credit on input used in the manufacture of dutiable as well as exempted final products. If the exempted products are exported outside India the provisions of Rule 6(6)(v) of the Cenvat Credit Rules are applicable. Therefore, the bar provided under Rule 6(1) and the liability created under Rule 6(3)(b) of the Cenvat Credit Rules, 2004 are not attracted. By denying to the petitioner from exporting the printed books under bond what the respondents want to do is in fact to levy 10% on the sale price of the printed books in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004. In our opinion this is wholly impermissible. The provisions as now contained in Rule 6 of the Credit Rules, 2004 were contained in Rules 57C and 57CC of the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avail Cenvat credit in respect of the inputs used in the manufacture of the final products being exported irrespective of the fact that the final products are otherwise exempt. 8. The Cenvat credit is allowed n (sic) the duty paid on inputs to mitigate the effect of double taxation of levying duty on inputs as also on the final product. If, however, the exempted final product is exported it calls for a special relaxation/dispensation to make the goods of the country internationally competitive. As an illustration suppose a final product like tractor is otherwise exempted from excise duty even for domestic consumption and such tractors are exported. The various inputs like engines, etc., used in the tractor may have suffered excise duty. The intention is not to export taxes but only to export the goods. If the inputs like engine going into the manufacture of export commodity namely tractors are subject to excise duty, the Indian manufacturer of tractors becomes internationally uncompetitive. This appears to be the object behind the Government enacting special scheme to ensure that the duty is not levied even on inputs going to the export products. Rule 6(6)(v) has been conscio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sely needed only when the final products are exempt from payment of duty. In this context the Revenue itself has accepted that under the provisions of Cenvat Credit Rules, 2002 there were provisions for removal of exempted goods under bond but the same was not available with effect from 9th September, 2004 under Cenvat Credit Rules, 2004. We may reproduce Rule 6(5) of the Cenvat Credit Rules, 2002 which reads as follows :- (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 per cent export oriented undertaking; or (iv) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or (v) 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-CentraI Excise, dated the 28th August, 1995, numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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. 10. In our opinion therefore, the petition will have to be allowed. The Petitioners are entitled to remove the goods on furnishing the bond as set out in Annexure 16 in Form B-1 of the Central Excise Manual. Rule made absolute accordingly. There shall be no order as to costs. 4.5 As regards the goods cleared for export under bond it is undisputed that the appellant have consciously cleared the goods under Bond/ LUT. The LUT has been accepted by the department officers, the export consignments have been assessed accepting the clearances under Bond/LUT. In such case in terms of Rule 6(6)(v) of Cenvat Credit Rules, 2004 the provision of sub Rules (1),(2),(3) and (4) shall not be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be denied. Some of the judgments are cited below:- (a) 2000 (122) ELT 115 (T) - Omkar Textile Mills (b) 2002 (149) ELT 469 (T) - SRF Ltd. (c) 2000 (121) ELT 557 (T) - Steelco Gujarat (d) 1999 (114) ELT 618 (T) - JCT Ltd. (e) 2000 (118) ELT 783 (T) - Alpha Drug India Ltd. (f) 1996 (82) ELT 256 (T) Hunsur Plywood Works 4.8 Without prejudice to the above findings, we further find that in any case Cenvat credit cannot be denied on the inputs in case the finished goods wherein such inputs were used, exported out of country. Various mechanisms were provided for giving relief of input duty such as drawback, procurement of input without payment of duty under Notification No. 43/2001-CE(NT), rebate of duty of inputs, in terms of Rule 18 of Central Excise Rule 2012, refund of Cenvat of input used in export goods in terms of Rule 5 of Cenvat Credit Rules. Under all this scheme government has ensured that the input used in the manufacture of export goods should not suffer duty or if at all any duty is paid the same should be refunded. In other words, in the overall policy for export of goods, neither the duty on inputs nor the duty of finished goods should be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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