GREEN BRILLIANCE ENERGY PVT. LTD. Vs. COMMISSIONER, CENTRAL EXCISE & SERVICE TAX
LAWS(CE)-2015-9-18
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on September 08,2015

Green Brilliance Energy Pvt. Ltd. Appellant
VERSUS
Commissioner, Central Excise And Service Tax Respondents




JUDGEMENT

H.K.THAKUR,MEMBER (T) - (1.)This Larger Bench was constituted in terms of Referral Order No. M/13697 -13698/2014, Dt. 21.07.2014, passed by Division Bench of CESTAT Ahmedabad. Appellant is a 100% EOU and procured inputs by importation or by locally purchasing under Notification No. 22/2003 -CE, Dt. 31.03.2013 and No. 52/2003 -Cus, Dt. 31.03.2013, for the manufacture of their finished goods Solar Panels. Appellant cleared finished goods by export and also by making DTA clearances. Solar Panels are cleared at fully exempted rate as per Sr. No. 84 List 5 (Item No. 11) of Notification No. , Dt. 01.03.2006. Similarly, under the Customs Tariff Act, no Customs duty/CVD is payable if such Solar Panels are imported. There is a second proviso to Clause 6 of Exemption Notification No. 22/2003 -CE, Dt. 31.03.2003, which reads as follows: - -
"Provided further that where such articles (including rejects, waste, scrap and remnants) are either non -excisable or such articles (including rejects, waste, scrap and remnants), if imported, are leviable to nil rate of duty of customs specified under first Schedule to the Customs Tariff Act, 1975 (51 of 1975) and nil additional duty leviable under Sec. 3 of the said Customs Tariff Act, read with exemption notification in this regard, if any, no exemption in respect of inputs utilized for the purpose of processing, manufacture, production or packaging of such articles (including rejects, waste, scrap and remnants) shall be available under this notification."

Proviso to Clause -3 of Notification No. 52/2003 -Cus, Dt. 31.03.2003 is as follows: - -

"Provided further that where such finished goods (including rejects, waste, scrap and remnants) are either non -excisable or such finished goods (including rejects, waste, scrap and remnants), if imported, are leviable to nil rate of duty of customs specified under first Schedule to the Customs Tariff Act, 1975 (51 of 1975) and nil additional duty leviable under Sec. 3 of the said Customs Tariff Act, read with exemption notification in this regard, if any, no exemption in respect of inputs utilized for the purpose of manufacturing of such finished goods (including rejects, waste, scrap, remnants and by products) shall be available under this notification."

(2.)During passing of the referral order, it was argued before the Division Bench that there are following judgments which give conflicting view on the interpretation of the above proviso: - -
"i) Synergies -Doorway Automative Ltd. & Ors [2008 (226) ELT 529 (Tri -Bang)]

ii) Indira Printers v/s. CCE Delhi -II [2010 (262) ELT 940 (Tri -Del)]"

(3.)Shri S.R. Dixit (Advocate) and Ms. Anoli Patwa (Advocate) appeared on behalf of the Appellant. Shri S.R. Dixit argued during the course of proceedings before the Larger Bench, as well as through written submissions, that as per the second proviso to Clause 6 of Notification No. 22/2003 -CE, the finished goods should be non -excisable and if imported, should attract Nil rate of duty of Customs or Nil Additional duty of Customs. It was his case that Solar Panels manufactured by the Appellant, if imported, would attract free rate of duty and not Nil/Exempted rate and will not be hit by the second proviso to Clause 6 of Notification No. 22/2003 -CE. To support his argument that free rate can not be equated with Nil/Exempted rate of duty, learned Advocate relied upon the case law of Geetanjali Woolens Pvt. Ltd. v/s. CCE Vadodara [ : 2007 (218) ELT 512 (Tri -Ahmd)]. That CESTAT in this case was interpreting the proviso to Para 3 to Notification No. 52/2003 -Cus. That since Solar Panels are classifiable under the Central Excise Tariff, therefore, the same are excisable as per Sec. 2(d) of the Central Excise Act, 1944 and not hit by the above proviso.
3.1 Learned Advocate further argued that the case law of Madras High Court Century Flour Mills v/s. UOI [ : 2014 (301) ELT 73 (Mad.)] (Para 15 & 21), relied upon by the learned Authorised Representative, is actually in support of the Appellant in as much as it was held by Madras High Court that free and Nil rate of duty are different rates of duty for raising the rate of duty from one rate to another. That as per the law laid down by Apex Court in the case of Shabina Abraham & Ors v/s. UOI [2015 -TIOL -159 -SC -PX] (Para 26, 31 to 33) also the issue goes in favour of the Appellant.

3.2 It was also the case of the learned Advocate appearing on behalf of the Appellant that word or used in the relevant proviso to Notification No. 22/2003 -CE and No. 52/2003 should be used conjunctively and not dis -conjunctively. That if the word or is not read conjunctively then such reading will lead to following serious and absurd situations: - -

"(a) That finished products with Nil rate of Customs duties or exempted from Customs duties as non -excisable products which will be directly a contradiction to the definition of excisable goods given in Sec. 2(d) of the Central Excise Act, 1944.

(b) That such deeming fiction to treat Nil rated or exempted finished goods as non -excisable goods has come about by virtue of Para 6.8(j) of the Foreign Trade Policy. That a provision under the Foreign Trade Policy cannot create a deeming fiction under Central Excise Act, 1944 which is an altogether a separate independent enactment.

(c) That the above said proviso will render infructuous in cases one where EOU supplies finished products to another EOU. The reading of the proviso as per Indira Printers (supra) will render all such transactions quite meaningless. The same will also be contrary to the Larger Bench decision in the case of Ghodela Impex [ : 2013 (294) ELT 223 (Tri -LB).

(d) That the proviso does not take into consideration the ground reality in cases where both DTA manufacturer and EOU manufacturer are at par in terms of the duty aspects. That solar panel manufacturer in DTA enjoy the exemption from payment of duty on the finished products as well as from payment of duty from all its raw materials (under different exemption notifications). These are the very same benefits that an EOU solar panel manufacturer enjoys. That by recovering the duty on inputs, in terms of the above proviso, used by an EOU solar panel manufacturer, the Revenue would be placing such manufacturers at a disadvantage in comparison to DTA solar panel manufacturers. That this is an absurd proposition which needs to be struck down.

(e) That Certain issues such as even if exemption is denied to the Appellant under Notification No. 22/2003 -CE, the duty should be demanded from supplier and not the 100% EOU, or that the Appellant is already covered under other Paras of Notification No. 22/2003 -CE, and Notification No. 52/2003 -Cus, and hence, exemption cannot be denied to them;"

3.3 That in view of the above arguments, the word or used in the above provisos of exemption notifications have to be read as and for a harmonious interpretation. That accordingly law laid down by CESTAT in the case of Synergies -Doorway Automotive Ltd. v/s. CC&CE Visakhapatnam -I (supra) was the correct interpretation of provisions that the finished goods should be excisable for getting the benefit on DTA clearances under the said notifications. Learned Advocate relied upon the use of expressions free, Nil or exempted rates of duties mentioned in Notification No. , Dt. 17.03.2012.

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