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IN THE HIGH COURT OF KARNATAKA, BENGALURU
TH
DATED THIS THE 25 DAY OF JULY 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON’BLE Mrs.JUSTICE S.SUJATHA
C.E.A.No.65/2016
BETWEEN:
THE COMMISSIONER OF CENTRAL EXCISE
& SERVICE TAX,
BENGALURU-I COMMISSIONERATE,
ND
NOW AT: 2 FLOOR, SOUTH WING,
SHIVAJI NAGAR BUS STAND COMPLEX,
SHIVAJI NAGAR,
BENGALURU – 560 051. …APPELLANT
(BY MR.ARAVIND.K.V, ADV.)
AND:
M/S. BELL CERAMICS LTD.,
(NOW ORIENT BELL LTD.,)
CHOKKAHALLI VILLAGE,
HOSKOTE TALUK,
BENGALURU – 562 114. …RESPONDENT
(BY MR.K.S.RAVISHANKAR, ADV. AND
MR.N.ANANDA, ADV.)
Date of Judgment 25-07-2018 C.E.A.No.65/2016
The Commissioner of Central Excise & Service Tax Vs.
M/s. Bell Ceramics Ltd.,
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THIS C.E.A IS FILED UNDER SECTION 35G OF
THE CENTRAL EXCISE ACT, ARISING OUT OF ORDER
DATED 17.02.2016 PASSED IN FINAL ORDER
NO.20260/2016, PRAYING TO 1. ANSWER THE
SUBSTANTIAL QUESTIONS OF LAW FRAMED ABOVE
IN FAVOUR OF THE APPELLANT IN THE INTEREST OF
JUSTICE AND EQUITY; 2. SET ASIDE THE IMPUGNED
FINAL ORDER NO.20260/2016 DATED 17.02.2016
PASSED BY THE CESTAT, SOUTH ZONAL BENCH,
BENGALURU IN THE INTEREST OF JUSTICE AND
EQUITY; AND 3. PASS SUCH OTHER ORDER,
DIRECTION AS THIS HON’BLE COURT DEEMS FIT IN
THE CIRCUMSTANCES OF THE CASE IN THE
INTEREST OF JUSTICE AND EQUITY.
THIS C.E.A. COMING ON FOR ADMISSION, THIS
DAY, Dr. VINEET KOTHARI J . DELIVERED THE
FOLLOWING:-
JUDGMENT
Mr.K.V.Aravind , Adv. for Appellants- Revenue
Mr.K.S.Ravishankar , Adv. &
Mr.N.Ananda , Adv. for Respondent - Assessee
The Revenue has filed this appeal under Section
35G of the Central Excise Act, 1944 raising the
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The Commissioner of Central Excise & Service Tax Vs.
M/s. Bell Ceramics Ltd.,
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purported substantial questions of law to be arising
from the order of CESTAT, South Zonal Bench,
Bengaluru, dated 18.02.2016 .
2. The suggested substantial questions of law
are quoted below for ready reference.
SUBSTAINTIAL QUESTION OF LAW
1. 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?
2. Whether, the citations in the judgment of
tribunal regarding the entitlement of more
beneficial Notification by the assessee are
squarely applicable in this case?
3. 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?
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The Commissioner of Central Excise & Service Tax Vs.
M/s. Bell Ceramics Ltd.,
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3. 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.
4. Learned counsel for Revenue, Mr.Aravind K
V, submits that condition No.7, which stood throughout
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The Commissioner of Central Excise & Service Tax Vs.
M/s. Bell Ceramics Ltd.,
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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.”
5. 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
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The Commissioner of Central Excise & Service Tax Vs.
M/s. Bell Ceramics Ltd.,
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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.
14. 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
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The Commissioner of Central Excise & Service Tax Vs.
M/s. Bell Ceramics Ltd.,
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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
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The Commissioner of Central Excise & Service Tax Vs.
M/s. Bell Ceramics Ltd.,
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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.”
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
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M/s. Bell Ceramics Ltd.,
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own case in respect of the Bharuch (Gujarat)
factory.
2. 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.
3. 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.
4. We find that the Tribunal in the
appellant’s own case reported as Bell
Ceramics Ltd., vide Final Order
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M/s. Bell Ceramics Ltd.,
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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.”
7. Aggrieved by the same, the Revenue has
preferred this appeal on the aforesaid contentions.
8. 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
Date of Judgment 25-07-2018 C.E.A.No.65/2016
The Commissioner of Central Excise & Service Tax Vs.
M/s. Bell Ceramics Ltd.,
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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
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The Commissioner of Central Excise & Service Tax Vs.
M/s. Bell Ceramics Ltd.,
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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.
9. 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.
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M/s. Bell Ceramics Ltd.,
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10. 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
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M/s. Bell Ceramics Ltd.,
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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.
11. 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.
12. 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
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M/s. Bell Ceramics Ltd.,
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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 .
13. 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
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M/s. Bell Ceramics Ltd.,
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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
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M/s. Bell Ceramics Ltd.,
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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.
13. .....
14. .....
15. .....
16. 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
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M/s. Bell Ceramics Ltd.,
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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
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M/s. Bell Ceramics Ltd.,
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the Revenue is without any merit and is liable to be
dismissed.
Appeal is accordingly, dismissed . No costs.
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