Commr. of C. Ex., Bangalore-II vs Eta Technology Pvt. Ltd.

N.K. Patil, J.—This appeal is filed by the Revenue being aggrieved by the Final Order No. 2083/2006, dated 19-12-2006 [2007 (212) E.L.T. 371 (T)], on the file of the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, vide Annexure ''C'' and to restore the order dated 29-11-2006 in Appeal No. 206/2005-Central Excise passed by the Commissioner of Central Excise (Appeals), Bangalore, vide Annexure ''B'', by raising the following substantial questions of law :-

(a) Whether the Tribunal was correct, in holding that the principle laid down by the Apex Court in the case of Chandrapur Magnets case continues to apply despite the introduction of Cenvat Credit Rules, 2002?

(b) Whether the Tribunal was correct in ignoring the statutory provisions of Rule 6 of Cenvat Credit Rules, 2002 and the Board''s clarification issued vide Circular No. 654/45/2002-CX, dated 19-8-2002 and holding that the assessee had reversed the credit at the time of removal of goods and they are not required to pay 8% of the price of the exempted goods?

The respondent is the manufacturer of friction welding machines. During the course of audit of the records of the assessee, the Internal auditors pointed out that the assessee had cleared one number of friction welding machine valued at Rs. 34,00,000/- to M/s. Indian Institute of Technology, Chennai, without payment of duty by availing the benefit of the Notification No. 10/97, dated 1-3-1997. Since the assessee had not maintained separate accounts of inputs as per Rule 6(2) of Cenvat Credit Rules, 2002, they were liable to reverse/pay an amount, equal to 8% of the total price, excluding Sales Tax and other Taxes. Since the assessee had reversed only the credit taken on inputs along with the interest at the time of removal of the said exempted goods, the jurisdictional authority was constrained to issue notice on 30-12-2004. After receipt of the reply, the Assistant Commissioner being the competent authority passed the order-in-original No. 22/2005 (E2)/1949, dated 18-8-2005 and confirmed the demand made in the show cause notice. Aggrieved by the order-in-original dated 18-8-2005, the assessee filed an appeal before the Commissioner of Central Excise (Appeals), Bangalore and the Commissioner of Appeals in turn, after going through the orders passed by the adjudicating authority and after considering the relevant material on record, dismissed the appeal confirming the order passed by the adjudicating authority. Being aggrieved by the order passed by the Commissioner of Central Excise (Appeals), the respondent-assessee filed Appeal No. Excise/79/2006 before the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore. When the said matter had come up for consideration before the Tribunal, the Tribunal by its order dated 19-12-2006, allowed the appeal holding that the assessee is not required to pay 8% of the price of the exempted goods and being aggrieved by the order impugned at Annexure ''C'' dated 19-12-2006, the Revenue felt necessitated to present this appeal, by raising the aforesaid questions of law.

We have heard the learned counsel appearing for the appellants/Revenue and the learned counsel appearing for the respondent/assessee.

After careful perusal of the order impugned passed by the Tribunal it is manifest on the face of the order that the Tribunal has considered all the relevant material on record and has afforded reasonable opportunity and by placing reliance on the notification and also the judgment of the Apex Court in the case of Chandrapur Magnet Wires (P) Ltd. v. CCE, Nagpur [1996 (81) E.L.T. 3 (S.C.)] and applying the ratio of the said case to the facts in hand, has reversed the order passed by the assessing authority and held that assessee is not liable to pay 8% of the price of the exempted goods and consequently, allowed the appeal. In view of the reasons assigned in Paragraphs 2 and 4 of the order, we do not find any error of law or irregularity as such committed by the Tribunal in allowing the appeal filed by the assessee and therefore, interference by this Court in the present appeal is not called for.

Another reason the appeal filed by Revenue is liable to be dismissed as rightly pointed out by the learned counsel appearing for the assessee is that, in view of the Finance Act, 2010, issued on 8-10-2010, the period of effect of amendment to Rule 6 of the Cenvat Credit Rules, 2002, the period is extended from 1st day of March, 2002 to the 9th day of September, 2004 (both days inclusive). In the instant case, the date of removal of friction welding machines is on 1-1-2004 and the said date comes within the extended period of September, 2004 as per the Finance Act. Therefore, on this ground also, the appeal filed by the appellants is liable to be dismissed.

For the foregoing reasons, the appeal filed by the appellants is dismissed.

In view of the dismissal of the appeal, the substantial questions of law raised in this appeal are answered against the Revenue.