CX - Notf. 64/95-CE - D.G sets & parts supplied to Mazagon Dock for construction of warship of Indian Navy - it is nowhere mentioned in condition to notification that goods have to be supplied to Indian Navy - Exemption available: CESTAT
By TIOL News Service
MUMBAI, FEB 09, 2016: THIS is a Revenue appeal filed in the year 2007.
The respondent, in the month of October 2003, cleared D.G. Sets and parts thereof to M/s. Mazagon Dock, Mumbai (A/c Indian Navy) at nil rate of CE duty in terms of Notification No. 64/95-CE dated 16-03-1995 as amended. They also obtained a certificate as required from the Indian Navy.
A SCN was issued on 09.09.2004 alleging that the Notf. 64/95-CE dated 16-03-1995 was applicable to the goods supplied to the Indian Navy but since the goods were supplied to M/s. Mazagon Dock, Mumbai the exemption had been wrongly claimed.
Later, another SCN dated 06.10.2005 was also issued wherein it was alleged that the respondent instead of paying 8% of the price of the exempted final products had reversed the actual cenvat credit in r/o inputs used for the manufacture of the exempted final products.
In adjudication, the CCE, Raigad dropped both the demands and, therefore, Revenue is in appeal.
The AR while reiterating the grounds of appeal submitted that the exemption is not available to the respondent in view of the Supreme Court decision in case of Leader Engineering Works - 2006-TIOL-138-SC-CX. Moreover, as regard the demand under Rule 6(3)(b) of CCR, 2002, he submits that since the respondent has availed the cenvat credit on certain inputs which have been used in the exempted goods, the only option left is to pay 8% of the value of the exempted goods in terms of Rule 6(3)(b) and reversal of actual credit will not be sufficient. Inasmuch the demand(s) were wrongly dropped, the AR emphasized.
The respondent submitted that although the goods were supplied to Mazagon Dock they were for construction of warship of Indian Navy and to this effect, a certificate from Indian Navy was produced and, therefore, the exemption is available. The apex court decision was sought to be distinguished by submitting that the same was in the context of exemption entry i.e. "All goods other than Cigarettes if supplied as store for consumption on board a vessel of the India Navy" whereas in the present case the exemption is covered under Entry No. 21 of the table of the Notification No. 64/95-CE as amended vide Notification No. 25/2002-CE dated 11-04-2002 which reads -
|
(1)
|
(2)
|
(3)
|
|
21.
|
All goods.
|
If,-
(a) the said goods are supplied for use in construction of warships of the Indian Navy; and
(b) before clearance of the said goods, a certificate from an officer not below the rank of a Rear Admiral of the Indian Navy or of any other officer of the Indian Navy equivalent to the Joint Secretary to the Government of India, to the effect that the said goods are intended for the said use, is produced to the proper officer .
|
Reliance is also placed on the decision in Akzo Nobel Coatings (India) Pvt. Ltd. - 2005-TIOL-87-CESTAT-BANG in support. In the matter of demand made u/r 6(3)(b) of CCR, it is submitted that since the actual credit taken in respect of inputs used for manufacturing the exempted goods has been reversed, additional liability does not arise in view of the decisions in Chandrapur Magnet Wires - 2002-TIOL-41-SC-CX, Indian Hume Pipe - 2008-TIOL-41-CESTAT-MUM, Bombay Dyeing & Mfg. Co. - 2007-TIOL-115-SC-CX & Madhyadesh Papers Ltd. - 2015-TIOL-2562-CESTAT-MUM.
The Bench after considering the submissions made by both sides extracted the subject entry 21 to the notification and observed -
+ The goods supplied should be used in the construction of warship of Indian Navy and a certificate from the Indian Navy should be produced to the Central Excise officer. In the said condition, it is nowhere mentioned that the goods has to be supplied to Indian Navy.
+ There is no dispute that the goods were supplied to Mazagon Dock for manufacture of Indian Navy warship, therefore, in our considered view there is no need that the goods should be supplied to Indian Navy only.
The apex Court decision was distinguished as being involving different facts. The judgments cited by the respondent were extracted and it was concluded thus -
++ In view of the above judgments, it is clear that the respondent is entitled for exemption notification No. 64/95-CE (Sr. No. 21) on their goods supplied for construction of warship of Indian Navy. As regard demand under Rule 6(3)(b), we find that the respondent have admittedly reversed the cenvat credit in respect of inputs used in exempted goods at the time of clearance of such exempted goods which tantamount to non-availment of credit. This view is supported by various judgments cited by the Ld. Counsel. Moreover as per the retrospective amendment made in Rule 6 vide Finance Act 2010; the assessee is required to reverse the actual cenvat credit attributable to exempted goods. For this reason also the demand of 8% proposed in the SCN under Rule 6(3)(b) is not correct.
Holding that the order passed by the CCE, Raigad is just and legal, the Revenue appeal was dismissed.
(See 2016-TIOL-363-CESTAT-MUM)
