M/s Incopac Parts Pvt. Ltd. Versus CCE & CGST, Jaipur
Central Excise
2018 (7) TMI 1366 – CESTAT NEW DELHI – 2018 (362) E.L.T. 904 (Tri. – Del.)
CESTAT NEW DELHI – AT
Dated:- 18-7-2018
Excise Appeal Nos. 51200 – 51201 of 2018 – Final Order No. 52538 – 52539/2018
Central Excise
Hon'ble Sh. V. Padmanabhan, Member ( Technical )
Sh. Somesh Arora, Advocate for the appellant
Sh. K. Poddar, AR for the respondent
ORDER
Per : V. Padmanabhan
The present appeals are challenging the Orders-in-Appeal Nos.32-33 (SJ)/CE/JPR/2018 dated 02.02.2018 passed by the Commissioner (Appeals), Central GST and Central Excise, Jaipur. The period of dispute is April to September, 2014.
2. The appellant is a 100% EOU. For manufacture of goods in the EOU, the appellant procured various inputs on payment of duty and availed cenvat credit of duty paid on such goods. The dispute pertains to the refund claims made by the appellant under Rule 5 of the Cenvat Credit Rules, 2004. Part of the ref
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arised below:
(i) Ld. Advocate submitted that the inputs were procured on payment of duty. The department is not justified in denying the cenvat credit of duty paid on such inputs for the reasons that the exemption notification which was available for procurement of such goods i.e. Notification No. 22/2003 dated 31.03.2003 is a conditional notification and the exemption in terms of such notification will be available only subject to fulfilment of such condition. In view of the conditions in the notification, he submitted that the provision of Section 5A(1) cannot be held against the appellant.
(ii) In this connection, he relied on the decision of the Karnataka High Court in the case of CCE, Bangalore-II vs. Federal Mogul TPR India Ltd. -2016 (334) ELT 476 (Kar.). In the above decision, he argued that the Hon'ble High Court has taken the view that Section 5A(1A) cannot be cited in the case of job work exemption under Notification No. 8/2005-ST.
4. Ld. AR appearing for the Revenue j
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iscussed the issue on merit and has rejected the refund claim and hence the appeal filed by the appellant on merits may be considered.
6. After hearing both sides and on perusal of record, I find that the crux of the dispute is whether the appellant is entitled to cenvat credit of duty paid on inputs procured by them for use in the manufacture of final product in the EOU. It is not in dispute that the inputs have been procured on payment of duty, even though the appellant could have procured the same without payment of duty in terms of Notification No. 22/2003 dated 31.03.2003. The concurrent finding of both the authorities below is that the cenvat credits are irregular and hence the refund of such credits under Rule 5 of the Cenvat Credit Rule will not be admissible.
7. The provision of Section 5A (1A) of the Central Excise Act is reproduced below:
“where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has
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on unconditionally. The appellant, being EOU was entitled to procure inputs without payment of duty under Notification No. 22/2003. A reference to this notification indicates that the exemption is granted subject to various conditions including the condition that the procedure contained in Central Excise (Removal of Goods at Concessional Rate of Duty for manufacture of Excisable Goods) Rules, 2001. The above clearly reveals that the exemption is conditional and is not absolute. In view of the above, it is to be concluded that provision of Section 5A(1A) as well as the Circular dated 26.11.2010 are not applicable for procurement of goods under Notification No. 22/2003. Consequently, there is no infirmity in the availment of credit by the appellant on duty paid. Further, the appellant will also be entitled to refund under Rule 5 of the Cenvat Credit Rules subject to satisfaction of conditions for claim of such refund.
10. Ld. AR has raised the ground that the impugned order has been pas
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