1. This appeal has been filed by the appellants against the order in original dated 27-1-2000 (wrongly described as order in appeal in the memo of appeal) passed by the Commissioner of Central Excise vide which he had confirmed the duty demand of Rs. 36,46,103/- and imposed penalty of Rs. 2 lac on them.
2. The facts giving rise to this appeal may briefly be stated as under : 3. The appellants are engaged in the manufacture of TV Glass Shells of 14" and 17' classifiable under sub-heading 7008.20 of the CETA and during the manufacture of that product, intermediate goods, namely, glass panels, glass funnels and glass necks were also produced by them during the period 1-3-1999 to 28-9-1999 from the various raw materials including neck tubes etc. These intermediate goods were used captively by them in the manufacture of their final product i.e. TV glass shells.
They availed benefit of Notification No. 67/95-C.E. dated 16-3-1995 in respect of these goods. On 9-9-1999 the preventive party of Central Excise paid surprise visit to their factory premises and during checking of the records, it revealed that they had cleared their final product, TV glass shells to M/s. Samtel India Ltd. against CT-2 certificates at nil rate of duty under Notification No. 47/94-C.E. (NT) dated 22-9-1994. They, therefore, could not avail the benefit of Notification No. 67/95-C.E. dated 16-3-1995 in respect of the intermediate goods i.e. glass panels, glass funnels and glass necks, for having cleared the final product (TV glass shells) at nil rate of duty under Notification No. 47/94. They accordingly were served with a show cause notice dated 1-10-1999 for payment of duty amount of Rs. 36,46,103/- on the intermediate goods i.e. glass panels, glass funnels and glass necks, captively used for the manufacture of final product during the period 1-3-1999 to 28-9-1999 and penalty was also proposed to be imposed on them. They, however, contested the correctness of that notice by alleging that the clearances of their final product to M/s.
Samtel India Ltd. under CT-2 certificate who in turn exported the same under Rule 13 of the Rules, could not be treated as clearances exempt from payment of duty or chargeable to nil rate of duty for denying them the benefit of Notification No. 67/95. But the adjudicating authority, namely, Commissioner, did not agree with their contention and accordingly confirmed the duty demand of the amount mentioned above and as indicated in the show cause notice and also imposed penalty of Rs. 2 lac on them through the impugned order.
4. The appellants have come up in appeal against the above said impugned order of the Commissioner before the Tribunal.
5. The facts are not much in dispute. Admittedly the appellants are engaged in the manufacture of TV glass shells of 14" and 17" classifiable under sub-heading No. 7008.20 of the CETA. During the manufacture of their final product, they produced intermediate goods, namely, glass panels, glass funnels and glass necks from various raw materials and captively consumed for the manufacture of the TV glass shells. It also remains undisputed that the TV glass shells were cleared by them to M/s. Samtel India Ltd. against CT-2 certificate at nil rate of duty under Notification No. 47/94-CER (NT) dated 22-9-1994 issued by the Government, who in turn exported the same under Rule 13 of the Central Excise Rules.
6. Notification No. 67/95-C.E. dated 16-3-1995 provides exemption to all capital goods and inputs if captively consumed within the factory of production. This notification had been issued by the Government in exercise of powers conferred under Sub-section (1) of Section 5A of the Central Excise Act. However, proviso appended to this Notification enacts that nothing contained in the notification shall apply to inputs used in or in relation to the manufacture of final product (other than those cleared to a unit in free trade zone or to an 100% export oriented undertaking) which are exempt from the whole of duty of excise leviable thereon or chargeable to nil rate of duty. The benefit of this notification had been denied by the adjudicating authority (Commissioner) to the appellants by invoking this proviso on the ground that the final product i.e. TV glass shells were cleared by them to M/s. Samtel India Ltd. against CT-2 certificate at nil rate of duty under Notification 47/94-C.E. dated 22-9-1994.
7. The controversy thus centres round the question as to whether the clearances of the final product (TV glass shells) made by the appellants against CT-2 certificate to exporter M/s. Samtel India Ltd. who in turn exported the same, at nil rate of duty, could be termed under the law as "goods which were exempt from the whole of duty of excise leviable thereon or chargeable to nil rate of duty in terms of the proviso appended to Notification No. 67/95-C.E. or not.
8. The learned counsel for the appellants has contended that such clearances of the final product made against CT-2 certificate could not be treated as exempt from the whole of the duty or chargeable to nil rate of duty under the law as those were made in terms of Notification No. 47/94 which was issued under Rule 13 of the Rules, to an exporter who in turn exported the same. Therefore the proviso appended to Notification No. 67/95 referred to above could not be invoked against the appellants. In support of his contention, he has placed reliance on - (1) CCE, Vadodara v. Steeko Gujarat Ltd. - 2000 (121) E.L.T. 557 (Tribunal)CCE, Ahmedabad-I v. Omkar Textile Mills Limited - 2000 (122) E.L.T. 115 (Tribunal) (3) Alpha Drug India Ltd. v. CCE, Ouindigarh - 2000 (118) E.L.T. 783 (Tribunal)Reliance Industries Ltd. v. CCE, Bombay - 1995 (78) E.L.T. 595 (Tribunal) 9. On the other hand, the learned JDR while refuting this contention of the counsel has argued that since no duty was paid on the clearances of the final product, the benefit of Notification No. 67/95 had been rightly denied to the appellants in view of the proviso appended to it.
11. It is not the case of the Revenue that the final TV glass shells were exempt from the whole of duty of excise leviable thereon or chargeable to nil rate of duty during the period in dispute i.e.
1-3-1999 to 28-9-1999, under any provision of the Central Excise Act or the Notification issued thereunder by the Government. Rather TV glass shells were chargeable to the excise duty. No duty was, however, charged from the appellants on these goods were cleared to M/s. Samtel India Ltd., an exporter against CT-2 certificate issued by the Excise department in terms of Notification No. 49/94.
12. It cannot be disputed that under Rule 13 of the Central Excise Rules the Central Government has got power to permit the export of specified excisable goods on bond without payment of duty from the factory of manufacture or warehouse and to specify materials, removal of which without payment of duty from the place of manufacture or storage for use in the manufacture of export goods may be permitted by the Commissioner of Central Excise and in exercise of power under this Rule the Government issued under Notification No. 47/94-C.E., dated 22-9-1994 allowing exemption to the inputs used in the manufacture of such goods. The Excise department accordingly issued CT-2 certificate allowing the removal of the goods from the factory premises of the appellants to M/s. Samtel India Ltd., exporter without payment of duty in terms of this notification. Therefore, on the clearances of the final product i.e TV glass shells made by the appellants to M/s. Samtel India Ltd. against CT-2 certificate, the benefit of Notification No.67/95-C.E. dated 16-3-1995 on the intermediate goods consumed therein could not be denied as it could not be said that their final product was exempt from the whole of duty or chargeable to nil rate of duty, under the law, during the period in dispute.
13. The case of the appellants is in fact squarely covered by the ratio of the law laid down by the Tribunal in CCE, Vadodam v. Steelco Gujarat Ltd., 2000 (121) E.L.T. 557. In that case it had been observed that Rule 13 of the Rules is applicable to the manufacturer as well as to the supplier of the goods sent to the exporter in terms of Notification No. 47/94-C.E. The Tribunal observed that the goods having been supplied by the manufacturer by following Chapter X Procedure, to an exporter, could not be treated as goods exempt from the whole of the duty of excise or chargeable to nil rate of duty within the meaning of Rule 55-CC(1) of the Rules. To the same effect is the ratio of the law laid by the Tribunal in (1) CCE, Ahmedabad-I v. Omkar Textile Mills Ltd.J.K. Synthetics Limited v.CCE, Jaipur and 14. In the light of the discussion made the impugned order of the Commissioner denying the appellants benefit of Notification No. 67/95- C.E. dated 16-3-1995 and confirming the duty demand and imposing penalty on them in respect of the clearances made by them during the period in question to M/s. Samtel India Ltd., an exporter cannot be legally sustained and deserves to be set aside.
15. Consequently, the appeal of the appellants is allowed and the impugned order of the Commissioner is set aside with consequential relief, to them, if any, permissible under the law.