CX - Considering provisions of Rule 6 and obligation of buyer for execution of bond, it is clear that if at all exemption is not available, duty can be recovered from buyer and not from supplier: CESTAT
By TIOL News Service
MUMBAI, JAN 24, 2017: THE appellant cleared Wires and Cables [CSH 8544.90] at NIL rate of duty to M/s. BalrampurChini Mills Ltd. under exemption notification No. 6/2002-CE on the basis of Annexure-I submitted by the buyer of the goods following the provisions of Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001.
Under this provision, the buyer has executed the bond and obtained Annexure and provided the same to the appellant for clearance of the goods under NIL rate of duty.
It is the contention of the department that wires and cables are not covered by exemption notification No. 6/2002-CE under Sr. No. 237 as claimed by the appellant.
The CE duty demand was confirmed by the original authority and upheld by the Commissioner(A).
Before the CESTAT, the appellant submitted that -
+ Irrespective of whether the goods supplied by the appellant is eligible for exemption or not the appellant have supplied the goods on the basis of Annexure-I provided by the buyer under provisions of Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001.
+ Annexure-I was issued by the jurisdictional Asstt. Commissioner of buyer knowingly and under the belief that goods are covered under Sr. No. 237 of the Notification No. 6/2002-CE and, therefore, on such goods duty cannot be demanded from the appellant.
+ If at all exemption is not admissible, duty can be demanded only from the buyer of the goods particularly under the provisions of the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. [Kuil Fireworks Industries - 2002-TIOL-424-SC-CX refers.]
The AR reiterated the findings and justified the demand.
The Bench observed -
++ In normal course, the duty should have been demanded from the manufacturer of the goods but particularly in case of the facts of the present case the goods were cleared by the appellant under NIL rate of duty not on their own but on the basis of annexure provided by the buyer which was issued by the jurisdictional Asstt. Commissioner of the buyer confirming that the goods so supplied is meant for non-conventional energy device, in such circumstances end use of the goods cannot be the responsibility of supplier, responsibility is of the buyer of the goods.
++ It is for that purpose, as per concessional duty Rules, 2001, buyer is under obligation to execute bond in respect of foregone duty. If the goods procured under the said provision is not used for intended purpose or diverted otherwise, excise duty shall be recovered by encashing bond/bank guarantee, otherwise, no purpose will be served for execution of bond.
After extracting rule 6 of the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, the CESTAT concluded -
++ From the above Rules, it is absolutely clear that under the provision of Concessional Duty Rules, 2001 the recovery of duty shall be made only from the user manufacturer and not by the supplier manufacturer, therefore, taking into consideration the provisions of Rule 6 and the obligation of the buyer for execution of the bond, we are of the clear view that if at all exemption is not available duty can be recovered from buyer and not from the supplier.
The impugned order was set aside and the Appeal was allowed.
(See 2017-TIOL-210-CESTAT-MUM)
