The Commissioner of Central Excise & Service Tax @APPELLANT@Hash M/s. Bell Ceramics Ltd.

The Revenue has filed this appeal under Section 35G of the Central Excise Act, 1944 raising the purported substantial questions of law to be arising

from the order of CESTAT, South Zonal Bench, Bengaluru, dated 18.02.2016.

The suggested substantial questions of law are quoted below for ready reference.

SUBSTAINTIAL QUESTION OF LAW

Whether on the facts and in the circumstances, the CESTAT was correct in interpreting the issue and not considering the objections raised by the

Department?

Whether, the citations in the judgment of tribunal regarding the entitlement of more beneficial Notification by the assessee are squarely applicable in

this case?

Whether CESTAT was right in concluding that Revenue intends to compel assessee to avail the Notification No.05/2006 - CE when the fact is that

it was assessee’s decision to avail Notification No.05/2006 - CE?

The learned counsel for appellant-Revenue has urged before us that the respondent-Assesee was not entitled to avail CENVAT credit because

condition No.7 of the Notification No.05/2006-C.E. dated 01.03.2006 prohibited the assessee from availing any CENVAT credit under CENVAT

Credit Rules, 2002 on the manufacture of ceramic tiles manufactured in a factory not using electricity for firing kiln, falling under Chapter 69 vide

Entry No.13 of the said Notification No.05/2006-C.E. dated 01.03.2006. He submitted that the said Notification No.05/2006-C.E. dated 01.03.2006

came to be amended by Notification No.58/2008-C.E. dated 07.12.2008 and vide Entry No.6 thereof, the rate of duty was fixed at 4% in place of 8%,

which rate of 8% was again restored later on by Notification No.15/2009-C.E. dated 07.07.2009 at Annexure-E.

Learned counsel for Revenue, Mr.Aravind K V, submits that condition No.7, which stood throughout including the period in question involved in the

present case from 07.07.2009 to 26.02.2010 read as under:

“7. If no credit of the duty paid on the inputs used in or in relation to the manufacture of such ceramic tiles has been taken under rule 3 or rule 11

of the CENVAT Credit Rules, 2002.â€​

He, therefore, submitted that despite there being another Notification No.02/2008-CE dated 01.03.2008 vide Entry No.48 of Chapter 69, the rate of

duty of 8% having been prescribed for such ceramic tiles, without any condition of non-availment of CENVAT Credit in the said Notification

No.2/2008-CE dated 01.03.2008, the assessee was not entitled to claim the said CENVAT Credit. He drew our attention towards the finding of the

learned adjudicating authority in order (Original) Annexure-A dated 24.07.2013 in paragraph- 14 of the said order in which the assessing authority has

relied upon the declarations made by the assessee in ER-1 returns filed for the relevant period from 07.07.2009 to 26.02.2010. The relevant paragraph

Nos.13 and 14 of the order of the adjudicating authority is quoted below for ready reference.

“13. As a result of the amendments to both the Notification Nos.5/2006 CE dated 1.3.2006 and 2/2008 CE dated 1.3.2008 over a period of time,

during the period from 7.7.2009 to 26.2.2010, rate of duty applicable under Notification No.5/2006 dated 1.3.2006 (with condition of non-availment of

Cenvat credit on inputs) and under Notification No.2/2008 dated 1.3.2008 (without any conditions) were at uniform rate of 8% advalorem.

The assessees were operating under self assessment scheme during the relevant period and were at liberty to avail benefit of concessional rate

under any eligible notification and pay applicable duties on the clearance of the goods. In the instant case, the assessee have availed the benefit of

Notification No.5/2006 dated 1.3.2006 (as amended by Notification No.15/2009 CE dated 7.7.2009) for the clearances affected during the period from

7.7.2009 to 26.2.2010 and the same is evident from the declarations made by them in the ER-1 returns filed for the relevant period. The same is also

evident from the invoices issued by them for clearance of the goods during the impugned period, wherein they have indicated Notification No.15/2009

CE dated 07.07.2009 against the Notifications claimed. Accordingly, for the period upto 26.02.2010, as per the condition under the said Notification,

they were not eligible to avail Cenvat Credit of duty paid on the inputs used in or in relation to the manufacture of the goods. If the assessee had any

intention to shift to any other notification, in this case Notification No.2/2008 CE dated 1.3.2008, they should have done the same prospectively, for the

subsequent clearances and there is no provision under any notification to extend the benefit of the notification which was not claimed by the assessee

at the time of clearance of the goods, for the previous period. In the light of the above, the assessees were not entitled for the said credit of

Rs.1,11,02,931/- which relates to the period prior to 26.02.2010 and availment of the same by them in March, 2010 is in contravention of the underlying

condition under Notification No.5/2006 dated 1.3.2006. Hence, entire credit of Rs.1,11,02,931/- is liable to be recovered from them along with

interest.â€​

 6. When the assessee took up the matter further before the learned CESTAT, the learned CESTAT, however, allowed the appeal of the assessee

following the view taken by the CESTAT at Ahmedabad in the case of assessee himself on 09.04.2014 and in another case in M/s.Savana Ceramics.

The relevant findings of the short order passed by the learned CESTAT, is also quoted below for ready reference.

“After allowing the stay petition unconditionally, we proceed to decide the appeal itself with the consent of both sides as the issue stands decided in

the appellant’s own case in respect of the Bharuch (Gujarat) factory.

After hearing both sides, we find that the issue relates to availability of the benefit of exemption Notification No.02/2008-C.E. dated 01.03.2008

which allows the concessional rate of duty subject to the appellant availing benefit of Cenvat credit. Revenue is of the view that another Notification

No.05/2006-C.E. also provides the same concessional rate of duty without availing benefit of Cenvat credit. As such the credit availed by the

assessee stands disallowed to them.

The assessee’s contention is that when Notification No.02/2008-C.E. prescribed same concessional rate of duty and allows availment of credit,

Revenue cannot compel them to avail the Notification No.05/2006-C.E.

We find that the Tribunal in the appellant’s own case reported as Bell Ceramics Ltd., vide Final Order No.A/10580/2014 dated 09.4.2014, by

following the earlier order of the Tribunal on identical issue in the case of Savana Ceramics, has allowed the appellant’s appeal. Inasmuch as the

same issue is involved in the present appeal, we, by following the earlier order, set aside the impugned order and allow the appeal with consequential

relief to the appellant. Stay petition as also the appeal get disposed of in above manner.â€​

Aggrieved by the same, the Revenue has preferred this appeal on the aforesaid contentions.

On the other hand learned counsel for the assessee, Mr.K.S.Ravishankar, has urged before the Court that assessee has correctly claimed

CENVAT credit only after he came to know of the Notification No.11/2010 dated 27.02.2010 whereby, the aforesaid Entry No.13 in the Notification

No.05/2006-C.E came to be omitted and therefore, the assessee for the aforesaid period of 07.07.2009 to 26.02.2010 made its claim on CENVAT

credit against the duty payable by it at the rate of 8% from 01.03.2010, which has been wrongly denied by the learned assessing Authority but the

learned Tribunal has rightly allowed the same. The learned counsel for the assessee also urged before the Court that the anomaly of the two

notifications namely, (i) Notification No.05/2006-C.E. dated 01.03.2006 as amended on 07.07.2009 with condition No.7 against availment of CENVAT

credit and (ii) Notification No.02/2008-CE dated 01.03.2008 was removed by the Central Government, only by the Notification No.11/2010 dated

27.02.2010 deleting Entry No.13 in the Notification No.05/2006 dated 01.03.2006. He, however, submitted that if the assessee can claim CENVAT

credit under another valid Notification, viz., No.02/2008 dated 01.03.2008 by availing the CENVAT credit for the aforesaid period, he cannot be

deprived of the same merely because another Notification No.05/2006 as amended on 07.07.2009 also was operating during the same period with the

condition against availment of CENVAT credit and the assessee is entitled to choose a more beneficial or advantageous notification applicable to him

and there is no malafide on the part of the assessee to claim such CENVAT credit for the aforesaid period of 07.07.2009 to 26.02.2010 under the

aforesaid Notification No.02/2008-C.E. dated 01.03.2008.

He also submitted that, the said matter stood concluded with the decision of the Tribunal in the case of M/s.Savana Ceremics against which no

appeal was filed by Revenue. Even though, the appeal against the order passed by the Tribunal in the case of the assessee on 09.04.2014 has been

appealed against before the Gujarat High Court where the same is still pending. He, therefore, submitted that no substantial question of law arises for

consideration of this Court.

Having heard learned counsels for the parties, we are of the clear opinion that no substantial question of law arises in the present case requiring

our consideration. It is not disputed before us that the Notification No.02/2008 dated 01.03.2008 was also applicable to the assessee in the present

case for the period 07.07.2009 to 26.02.2010 in question. The Show Cause Notice of the assessing authority dated 16.03.2011 and the order (Original)

Annexure-‘A’ dated 24.07.2013 clearly admits this position vide aforesaid quoted paragraph Nos.13 and 14 from the Order-in-Original. The

assessee has not claimed CENVAT credit during the aforesaid relevant period in violation of condition No.7. It has started to claim the said CENVAT

credit only after 01.03.2010, after the anomalous position between the two Notifications No.05/2006 with the condition against availment of CENVAT

credit and Notification No.02/2008 without any such condition, was removed by the Central Government on 27.02.2010. Therefore, no malafide can

be attributed to the respondent-assessee in claiming such CENVAT credit after removal of the anomaly by the Central Government itself.

Why the two Notifications governing the same commodity and exigibility of excise duty on the same commodity one with the condition and another

without condition of CENVAT credit is not for the assessee to explain. On the contrary, it is for the Central Government to take the responsibility of

prescribing the same rate of excise duty under two different Notifications, but one with the condition against the availment of CENVAT credit and

another without any such condition.

The claim of CENVAT credit in the eye of law by the assessee in the present case appears to be perfectly in consonance with the Notification

No.02/2008 dated 01.03.2008. Merely because the assessee in the said period filed its returns in form No.ER-1 indicating the payment of said 8%

excise duty under Notification No.15/2009-C.E. dated 07.07.2009, which amended the original Notification No.05/2006-C.E. dated 01.03.2006 and did

not mention anything about Notification No.02/2008 dated 01.03.2008, though the said later Notification also equally applies for the said period, the

respondent-assessee cannot be bound down to abide by the condition No.7 of the said Notification No.05/2006-C.E. dated 01.03.2006.

We are supported for our aforesaid view by the decision of the Hon’ble Supreme Court in the case of Share Medical Care vs. Union of India

reported in 2007 (209) E.L.T 321 (S.C.), wherein the Hon’ble Supreme Court held that if two exemption notifications are applicable in a given

case, the assessee may claim benefit of the more beneficial notification. This position of law was re-iterated by the Apex Court following its earlier

decisions in the case of Collector of Central Excise, Baroda vs. Indian Petro Chemicals and H.C.L. Limited v. Collector of Customs, New Delhi.

We quote below paragraph Nos.12 and 16 of the said judgment for ready reference:

“12. In Collector of Central Excise, Baroda v. Indian Petro Chemicals, (1997) 11 SCC 318, this Court held that if two exemption notification are

applicable in a given case, the assessee may claim benefit of the more beneficial one. Similarly, in H.C.L Limited v. Collector of Customs, New Delhi,

(2001) 130 E.L.T. 405 (S.C.), this Court relying upon Indian Petro Chemicals, held that where there are two exemption notifications that cover the

case in question, if the assessee is entitled to the benefit of that exemption notification which may give him greater or larger relief. In Unichem

Laboratories Ltd. v. Collector of Central Excise, Bombay, (2002) 7 SCC 145: JT 2002 (6) SC 547, the appellant was a manufacturer of bulk drugs.

Exemption was granted to him under one item. He, thereafter, filed a revised classification list categorizing its bulk drugs under the other Head

claiming more benefit. The claim was rejected on the ground that the appellant had not claimed the benefit of exemption at the time of filing the

classification list and subsequently it could not be done. The appellant approached this Court.

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In the instant case, the ground which weighed with the Deputy Director General (Medical), DGHS for non-considering the prayer of the appellant

was that earlier, exemption was sought under category 2 of exemption notification, not under category 3 of exemption notification and exemption

under category 2 was withdrawn. This is hardly a ground sustainable in law. On the contrary, well settled law is that in case of applicant is entitled to

benefit under two different Notifications or under two different Heads, he can claim more benefit and it is the duty of the authorities to grant such

benefits if the applicant is otherwise entitled to such benefit. Therefore, non-consideration on the part of the Deputy Director General (Medical),

DGHS to the prayer of the appellant in claiming exemption under category 3 of the notification is illegal and improper. The prayer ought to have been

considered and decided on merits. Grant of exemption under category 2 of the notification or withdrawal of the said benefit cannot come in the way of

the applicant in claiming exemption under category 3 if the conditions laid down thereunder have been fulfilled. The High Court also committed the

same error and hence the order of the High Court also suffers from the same infirmity and is liable to be set aside.

 14. We, therefore, do not find any substantial question of law to be arising in the present appeal filed by the Revenue and therefore, the said appeal

filed by the Revenue is without any merit and is liable to be dismissed.

 Appeal is accordingly, dismissed. No costs.