CX - Notfn 11/97 amending Notfn. 67/95 for exemption to intermediate
products used in manufacture of goods supplied under exemption to Intl
Organization as per Notfn. 108/95 is to be considered clarificatory in
nature - Appeal allowed: CESTAT
MUMBAI , SEPT 20, 2013 :
NOTIFICATION No. 108/95-CE dated 28.8.95 exempted all goods falling
under the Schedule to the CETA, 1985 when supplied for the official use
of United Nations or International Organisation or for the projects
funded by United Nations or an International Organization and approved
by the Govt. of India.
Rule 57C of the CER, 1944 prevailing
during February 1997 provided for disallowance of Modvat credit when
final product was exempted from duty. However, exception was made in
respect of supplies made in terms of Notification No. 108/95-CE dated
28.8.95. The appellants were, therefore, entitled for Modvat credit of
duty paid on the components used in the manufacture of motor vehicles
supplied to United Nations or International Organizations.However, the
captive consumption NotificationNo.67/95-CE dated 16.3.95 did not
mention about clearances of the final product to the International
Organization, whom the appellants were supplying.
Nonetheless, an
amendment came by virtue of Notification No.11/97-CE, dated 01.03.1997
including these International Organizations.
In the present case,
the period involved is of February, 1997 and the Department demanded
the duty on the intermediate products utilized in the final products
cleared under exemption 108/95-CE. The lower authorities confirmed the
demand.
Before the CESTAT, it is submitted that the subsequent
amendment is to be given effect retrospectively even for the month of
February 97 also inasmuch as the situation of Revenue neutral; that the
Notification No. 11/97-CEdt. 1.3.97 is clarificatory in nature to the
Notification No. 108/95 dt. 28.8.1995. Reliance is placed on the
decision in Premier Tyres Ltd.( 2003-TIOL-55-HC-KERALA-CX ) .
The
Revenue representative reiterated the order passed by the lower
authority and submitted that the Notification No. 11/97-CE cannot be
given retrospective effect and, therefore,the appeal should be
dismissed.
The Bench observed -
"7. Considering the
submissions made by both sides and after examining the issue before us.
We find that as per Rule 57C, the credit of duty was not allowed if
final products are exempted but which reproduced hear as under:
"Rule
57C. Credit of duty not to be allowed if final products are exempt.- No
credit of the specified duty paid on the inputs used [in the
manufacture of a final product (other than those cleared either to a
unit in a Free Trade Zone or to a hundred percent Export-Oriented Unit)]
[ or unit in an Electronic Hardware technology Park or to a unit in
Software Technology Parks] [or 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 28 th
August, 1995] shall be allowed if the final product is exempt from the
whole of the duty excise leviable thereon or is chargeable to nil rate
of duty".
We further find that as per Notification No. 108/95-CE
dt. 28.8.95 the goods were exempted which were supplied to the United
Nations or an international organization for their official use. We
further find that as there was an anomaly in the Rule to plug that
anomaly Notification NO. 11/97-Ce dated 1.3.1997 came into effect…….In
the case in hand before us, also the parts assemblies to the motor
vehicle which is the final product supplied to unit. Therefore, the
intermediate product of the parts assembled, the benefit of Notification
No. 67/1995 read with Notification NO. 108/95 is available to the
appellants. Accordingly, the impugned order is set aside and the appeal
is allowed with consequential relief if any."
In passing :
Through every rift of discovery some seemingly anomaly drops out of the
darkness, and falls, as a golden link, into the great chain of order -
Edwin Hubbel Chapin.
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