CX - As respondents are procuring raw materials viz. tapes, without payment of duty, they are not entitled to benefit of Notfn. 6/2002 as they would not have fulfilled condition 34 - consequently, exemption Notfn. 13/98 not available: CESTAT
By TIOL News Service
MUMBAI, MAR 18, 2016: THIS is a Revenue appeal.
The respondent EOU manufactures nylon ropes out of polypropylene tapes and cleared the same to DTA after claiming the benefit of Notfn. No. 13/98-CE dated 02/06/98. The exemption under the said notification was available subject to the condition that -
a) such finished products, if manufactured and cleared by a unit other than a hundred per cent export-oriented undertaking or a unit in a free trade zone, are wholly exempt from the duties of excise or are chargeable to Nil rate of duty; and
b) the finished products, rejects and waste or scrap are allowed to be sold in India under and in accordance with the provisions of sub-paragraphs (a),(b),(c), (d) or (f) of paragraph 9.9 or of paragraph 9.20 of the Export and Import Policy, 1 April, 1997- 31 March, 2002.
Revenue alleged that the first condition was not fulfilled.
Consequently, the benefit of the notification was denied and the demand was confirmed.
However, the Commissioner (Appeals) set aside the order and allowed the appeal resulting in the department filing an appeal before the Tribunal. The year is 2005.
The appeal was heard recently.
The AR submitted that the respondents are not entitled to the benefit of Notification No. 13/98-CE dated 02/06/1998 as the goods are clearly recognizable as being manufactured using fully exempted raw materials viz. tapes procured duty free.
The respondent assessee argued that ropes manufactured by domestic manufacturers are exempted by Notification No. 6/2002-CE dated 01/03/2002, serial No. 142 and hence the exemption was rightly availed. Reliance is also placed on the decisions in SRF Ltd. - 2015-TIOL-87-SC-CUS & Kent Introl Pvt. Ltd. - 2014-TIOL-2073-CESTAT-MUM in support.
The Bench extracted the notifications in question, in particular, condition no. 34, sr. no. 142, notification 6/2002-CE which reads -
"If made from yarn, monofilament, tapes or strips on which the appropriate duty of excise leviable under the Fist Schedule, the special duty of excise leviable under the Second Schedule or as the case may be the additional duty leviable under the Customs Tariff Act, 1975, has already been paid."
Thereafter, the CESTAT observed -
++ In order to avail the benefit of notification 13/98-CE it is essential to establish that such goods are otherwise exempt. The respondents had sought to establish that they are entitled to benefit of notification 6/2002-CE. In the instant case the raw material is obtained without payment of duty.
++ The expression 'such finished products' for the condition (a) relates to the product manufactured by the respondent. There is no doubt that the respondents are procuring their primary raw materials, tapes, without payment of any duty. As a result they would not be entitled to the benefit of Notification No.6/2002-CE as they would not have fulfilled the condition 34 specified in the said notification. Therefore, they would not have been eligible for availing of Notification No. 13/98 as they failed to establish availability of notification 6/2002-CE.
The case laws cited by the respondent were held to be inapplicable on the ground that the facts involved are fundamentally different.
In fine, the impugned order was set aside and the Revenue appeal was allowed.
Certainly, a long wait…hopefully, not a pyrrhic victory!
(See 2016-TIOL-649-CESTAT-MUM)
