By TIOL News Service

NEW DELHI, JAN 02, 2017: THE appellants are engaged in the manufacture of electrical insulators and were availing Cenvat credit of duty paid on inputs. They have cleared some of the finished excisable goods to Mundra Ultra Mega Power Project without payment of duty under Notification No. 46/2008-CE dated 14/08/2008. Since they have not maintained separate account of inputs used for manufacture of exempted final products, proceedings were initiated against them to demand and recover an amount equal to 10% of value of such exempted goods cleared in terms of Rule 6 (3) (i) of Cenvat Credit Rules, 2004. The period involved is May 2009 and June 2009.

The appellant contended that the provisions of clause (vii) of sub-Rule (6) of Rule 6 of Cenvat Credit Rules, 2004 was substituted by Notification No. 6/2010-CE dated 27/02/2010. The effect is that the provisions of sub-Rules (1), (2) and (3) of Rule 6 of Cenvat Credit Rules, 2004 were not applicable when the final products were cleared with exemption for Mega Power Project set up through tariff based competitive bidding. The amendment carried out by the above Notification in Rule 6 (6) (vii) should be treated as clarificatory and made available to the period of their clearance (May and June, 2009).

However, the Tribunal held:

+ The appellant's plea that the amendment carried out in sub-Rule (6) of Rule 6 vide Notification No. 6/2010-CE dated 27/02/2010, should be considered clarificatory and apply to the clearances made in May and June, 2009, as legally unsustainable. There is nothing in the amending notification to indicate such presumption. The amendment carried out by Notification No. 6/2010-CE cannot be given retrospective effect as pleaded by the appellant. We have also examined the case laws relied upon by the appellant these are on general principles of interpretation of exemption notification and no case is covering the facts now being dealt by in the present appeal. The appellant specifically referred to the decision of the Tribunal in S.P. Fabricators Pvt. Ltd. vs. CCE, Belapur reported in 2016 (334) E.L.T. 105 (Tri. - Mumbai). The said decision dealt with regarding applicability of exclusion made under Rule 6 (6) for SEZ developer. It was interpreted that SEZ will include the SEZ developer operating within the zone and accordingly the amendment carried out later was held to be all along available. We find in the present case the amendment by Notification No. 6/2010-CE brought in new type of clearances for exclusion under Rule 6 (6). In the absence of any indication to the effect in the statutory provision, it cannot be held that the said amendment should be considered as retrospective. The decisions of the Hon'ble Supreme Court in Government of India vs. Indian Tobacco Association - 2005-TIOL-109-SC-CUS and in W.P.I.L. Ltd. vs. CCE, Meerut, U.P. were dealing with either the general principle of interpreting an exemption notification and specific case of re-introduction of exemption for pumps in a given context. The substitution by Notification No. 6/2010-CE clearly brought in power projects of specific categories for exclusion from the application of sub-Rules (1), (2) and (3) of Rule 6 of Cenvat Credit Rules, 2004. There is nothing to indicate that the clearances to these power projects should be considered for exclusion even before the amendment carried out by the said notification. There is no legal basis for such interpretation. Accordingly, there is no merit in the appeal filed by the appellants on the demand confirmed by the lower Authorities.