Ministry of Finance
Department of Revenue
Central Board of Excise of Revenue & Customs
Circular No. 937/27/2010 - CX
North Block, New Delhi
Dated the 26th November, 2010
To
Director Generals (All)
Chief Commissioners of Central Excise including LTU (All)
Commissioners of Central Excise including LTU (All)
Sir,
Sub: Application of provisions of section 5A (1A) of the Central Excise Act
References had been received from the field formations as well as trade to
clarify the ambiguity arising out of simultaneous prevalence of two exemption
notifications
namely 29/2004-CE dated 9.7.2004 as amended by
notification No. 58/2008-CE dated 7.12.2008 and another
notification 59/2008-CE dated 7.12.2008.
The period of dispute is from 7.12.2008 to 6.7.2009. During this period while
one notification No. 29/2004-CE as amended granted full exemption to certain
items of Textile Sector without any condition, the second notification
59/2008-CE prescribed a concessional rate of duty of 4% on these items, with the
benefit of Cenvat Credit.
- The dispute was with regard to whether an assessee can avail the benefit of
either of the above said two notifications whichever is beneficial to him or he
is bound to avail the unconditional exemption under notification No. 20/2004 -
CE, as amended, during the period under dispute in terms of the provisions of
section 5A(1A) of the Central Excise Act, 1944.
- The matter was examined in the Board. As a substantial question of law was
involved, the matter was referred to the Law Ministry for its opinion. The
Ministry of Law has opined that the language used in said section 5A(1A) is
unambiguous and principles of harmonious construction cannot be applied in the
instant case in view of specific provision under sub-section (1A) of section 5A
of the Central Excise Act. The Law Ministry has accordingly concluded that in
view of the specific bar provided under sub-section (1A) of section 5A of the
Central Excise Act, the manufacturer cannot opt to pay the duty under
notification 59/2008-CE dated 7.12.2008 and he can not avail the Cenvat Credit
of the duty paid on inputs.
- The aforesaid opinion of Law Ministry has been accepted by the Board. Pending
issues, if any, may be decided accordingly.
- Trade may be informed suitably.
- The receipt of this circular may be acknowledged.
- Hindi version would follow in due course.
Yours faithfully,
(Madan Mohan)
Under Secretary (CX1)
F.No.52/1/2009- CX.1 Pt