TMI Blog2024 (1) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... [ 2023 (7) TMI 360 - CESTAT AHMEDABAD] . From the above judgment, it can be seen that this Tribunal has categorically held in para 4.2 of the order that Notification No. 04/2006-CE (Sr. No. 54 and 59) is conditional one, therefore, it is an option for assessee either to avail such exemption or not. In the present case, the goods were supplied under notification No. 108/1995-CE depending upon the nature of supplies and as per Rule 6(6)(iv) the provision of Sub Rule (1), (2), (3) and (4) shall not be applicable. Accordingly, the appellant is on one hand eligible for Cenvat credit and is not required to pay 5% in terms of Rule 6(3) of Cenvat Credit Rules, 2004 accordingly, the demand of 5% is not sustainable. Moreover, it is a settled legal position that when two beneficial provisions are available to the assessee, it is the choice of the assessee to avail the more beneficial provision, which is settled in SHARE MEDICAL CARE VERSUS UNION OF INDIA [ 2007 (2) TMI 2 - SUPREME COURT] and COLLECTOR OF CENTRAL EXCISE, BARODA VERSUS INDIAN PETRO CHEMICALS [ 1996 (12) TMI 66 - SC ORDER] . The demand of 5% is not sustainable, hence, the impugned order is set aside - Appeal allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of the goods, which were cleared under Notification No. 108/1995-CE, that the said goods were supposed to be cleared under notification 04/2006-CE. Therefore, the appellant was supposed to pay 5% in terms of Rule 6 (i) of Cenvat Credit Rules, 2004. Now the mute question to be answered is, whether the Notification No. 04/2006-CE is absolute or conditional and consequently whether the appellant was mandatorily required to avail such notification. 4.1 We find that the issue that whether the exemption notification No. 04/2006-CE (Sr. No. 54 and 59) are conditional or otherwise, It was held that the said notification is conditional one in the appellant s own case, for which the order was passed by this Tribunal vide final order No. 11450-11451/2023 dated 07.07.2023. The said judgment is reproduced below: 4. We have carefully considered the submission made by both the sides and perused the records. The issue to be addressed by us in the present appeal is that whether the appellant is liable to pay 5% amount of the value of the goods exported partly under claim for rebate and partly under Bond/ LUT in terms of Rule 6(3) of Cenvat Credit Rules, 2004 for the reason that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59. 30 Formulations manufactured from the bulk drugs specified in List 1. Nil Explanation. - For the purposes of this notification, the expression formulation means medicaments processed out of or containing one or more bulk drugs, with or without the use of any pharmaceuticals aids (such as diluent, disintegrating agents, moistening agent, lubricant, buffering agent, stabiliser or preserver) which are therapeutically inert and do not interfere with therapeutical or prophylactic activity of the drugs, for internal or external use, or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply. From the reading of the above notification it can be seen that in both the entry the exemption was granted to 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices]. 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 value shall be determined by using reasonable means consistent with the principles of valuation contained in the Finance Act, 1994 and the rules made thereunder.] [(2) A manufacturer who exclusively manufactures exempted goods for their clearance upto the place of removal or a service provider who exclusively provides exempted services shall pay the whole amount of credit of input and input services and shall, in effect, not be eligible for credit of any inputs and input services.] [(3) (a) A manufacturer who manufactures two classes of goods, namely :- (i) non-exempted goods removed; (ii) exempted goods removed; or (b) a provider of output service who provides two classes of services, namely :- (i) non-exempted services; (ii) exempted services, shall follow any one of the following options applicable to him, namely :- [(i) pay an amount equal to six per cent. of value of the exempted goods and seven per cent. of value of the exempted services sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 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 [(iva) supplied for the use of foreign diplomatic missions or consular missions or career consular offices or diplomatic agents in terms of the provisions of Notification No. [12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated the 17th March, 2012]; or] (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case where the input or input service is commonly used in the manufacture of dutiable and exempted goods. As opined by us herein above since appellant have not availed the exemption Notification No. 4/2006-CE question of application of rule 6(3) does not apply. Moreover in respect of the goods cleared under claim for rebate the appellant have admittedly paid the excise duty. Once the excise duty has been paid the demand under rule 6(3) shall not be sustainable. 4.4 Without prejudice we also find that 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. Some of the judgments are given below:- (a) In the case of Drish Shoes Ltd 2010 (254) ELT 417 (HP), the Hon ble High Court passed the following judgment:- 8. It is not in dispute that the respondent is engaged in the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules 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 August, 2004 and March, 2005 and it was not clear as to when the inputs were received, so reference has been made to both the sets of rules. As already noticed, the provisions of both the rules are similar, except that under the Rules of 2002, exception contained in sub-rule (5) of Rule 6 was applicable only to the exempted goods, while under the Rules of 2002, exception applies to all excisable goods, irrespective of the fact whether they are exempted or subject to levy of duty. 13. Assistant Commissioner file, rejecting the claim of the respondent, held that since the finished leather exported by the respondent was exempt from duty, no bond or Letter of Undertaking was required to be furnished and the furnishing of bond by the respondent was only a device to claim CENVAT credit under the CENVAT Credit Rules. He took the view that Rule 6(1) clearly stated that CENVAT credit was not permissible in respect of exempted goods. 14. The Commissioner (Appeals), while accepting the appeal and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion 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 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. 22. In view of the aforesaid answers to the questions of law, appeal is dismissed. (b) In the case of Repro India Ltd 2009 (235) ELT 614 (Bom.), the Hon ble Bombay High Court has passed the following judgment:- 5. The question for consideration is whether in respect of exempted goods for export, the inputs in respect of which are dutiable, can be cleared by giving bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rer 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 payment of duty and rebate claimed under Rule 12. Thus the Ministry of Finance vide letter dated 8th November, 2001 has specifically clarified that even the exempted goods can be cleared for export under bond in terms of Rule 13 of the erstwhile Central Excise Rules, 1944, which is pari materia with Rule 19 of the Central Excise Rules, 2002. The Circulars issued by the Central Government are binding on the Central Excise Department. The Madras High Court in Tamil Nadu (Madras State) Handloom Weavers Co-operative Society Ltd. v. Assistant Collector of Central Excise, Erode, 1978 (2) E.L.T. (J57) has expressly held that the goods figuring in the Schedule to Central Excise Tariff Act for which duty specified is Nil are also excisable goods. This view has been approved by the Supreme Court in Wallace Flour Mills v. CCE, 1989 (44) E.L.T. 598 (S.C.). As such though the printed books attract nil rate of duty under Heading 49.01 of the First Schedule to the Central Excise Tariff Act, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Central Excise Rules, 1944 as they stood prior to 1st April, 2000. From 1st April, 2000 till 30th June, 2001 similar provisions were contained in Rule 57AD of the Central Excise Rules, 1944. In the context of these Rules circular dated 8th November, 2001 of the Ministry of Finance was issued. It dealt with the question whether 8% has to be paid on the sale price of exempted goods. Under Rule 6(3)(v) of Cenvat Credit Rules, 2004, to 8% has been increased to 10%. The relevant portion of the Circular dated 8th November, 2001 reads as under :- Further, it is now clearly and specifically mentioned in Rule 57AD(4) that the provisions relating to non-availability of Modvat credit and reversal @ 8% is not applicable in case the exempted goods are cleared for export under bond in terms of the provisions of Rule 13 . In the new rule 57AD, it has been explicitly provided what was implicity in erstwhile rules 57C and 57CC. Further, the present rule 57AD(4) clearly goes on to show that the exempte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itive. 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 consciously and expressly enacted with the specific objective to ensure that duty is not levied even on inputs going to the export products. This method of adjustment, both from the point of Government and the assessee is to allow the assessee to take Cenvat credit on the inputs used in the export products and allow the assessee himself to adjust it for payment of duty on other products. If the adjustment is not possible, Cenvat credit is refunded in cash. This appears to be the Scheme of Rule 5 of the Cenvat Credit Rules, 2004. With a view to achieve this object, the Central Government has specifically enacted Rule 6(6)(v) of the Cenvat Credit Rules, 2004 to the effect that the bar created by Rule 6(1) will not apply for goods exported. Considering the conscious and express provisions contained in Rule 6(6)(v) for exported goods, to deny the permission to export under bond and/or to levy 10% on the value of the exported goods under Rule 6(3)(b) on the footing that the printed books exempt an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, number GSR 602(E) dated the 28th August, 1995; or (vi) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002. We may reproduce Rule 6(6) of the Cenvat Credit Rules, 2002, which read as under :- 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 per cent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nments 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 applicable in cases the goods removed without payment of duty, therefore in case of goods cleared under Bond/LUT also the demand under Rule 6(3) of Cenvat Credit Rules, 2004 will not sustain. The contention of the revenue is that during the relevant time under the Notification No. 42/2001-CE(NT) dated 26.06.2001 there was condition (1) (iv) of the notification, the same is reproduced below:- (iv) that export of excisable goods which are chargeable to nil rate of duty or are wholly exempted from payment of duty, other than goods cleared by a hundred per cent export-oriented undertaking, shall not be allowed under this notification;) 4.6 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)(v) is not available to the appellant. We find that even though there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 exported. With these objective if the demand under Rule 6(3) is made, all these schemes which is with the objective that no duty should be charged on input will be defeated. For this reason also the duty paid on the inputs which is used in export goods cannot be demanded under Rule 6(3) of Cenvat Credit Rules, 2004. As the whole exercise is revenue neutral, for this reason also the demand under Rule 6(3) is not sustainable. As per our above discussion the demand under Rule 6(3) is not sustainable on various counts. 4.9 Without prejudice we also find that the appellant have contested strongly the demand on time bar. In this regard we find that the show cause notice dated 02-08-2012 was issued for the period April-2010 to March-2011. Accordingly, the extended period of limitation was invoked. As per the undisputed fact the appellant was registered and were maintaining all the records such as RG-1 Central Excise invoices were issued under Rule 11 of Central Excise Rule, 2002 indic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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