26 December 2013
Mega Exemption notification 25/2012-Compulsion or optional
We are manufacturers of footwear and pay full excise duty on removal of our final products. Please clarity whether mega exemption notification no. 25/2012 has to be compulsorily availed or it is optional. Some of our Job workers who are covered under serial no. 30 of this notification but do not want to avail this exemption thus charging service tax on their bills. If we avail CENVAT credit of the same, will it be in order or we should compel our job workers to compulsorily avail this notification and do not charge service tax on thier bills raised to us. Please clarify.
26 December 2013
Credit at recieving end cannot be disputed even if somebody opts to pay ST instead of availing exemption. Job workers normally opt to pay ST as otherwise they are liable to reverse Cenvat credit in terms of Rule 6 of CCR.
Also,there is nothing specifically mentioned in the Mega Exemption Notification No. 25/2012 that whether exemptions mentioned in the said notification are compulsory or optional. But there are case laws which suggest that an exemption Notification should be construed stricly.
Exemption Notification should be read in its entity. Further, exemption notification has to be read strictly so far as the eligibility is concerned. Conditions stipulating therein cannot be ignored - CCE v Ginni Filaments (2005 (2) TMI 116 - SUPREME COURT OF INDIA) = 2005 (181) ELT 145 (SC 3 member bench).
When wording of a notification are clear, then the plain language of the notification must be given effect to. An interpretation which is not borne out by the plain wording of notification cannot be given effect to - Excon Bldg. Material Mfg. Co. P Ltd. v CCE (2005 (3) TMI 137 - SUPREME COURT OF INDIA) = 2005 (186) ELT 263 (SC 3 member bench).
Exemption notification has to be interpretated on its wording. No words, not used in the Notification, can be added - CCE v. Sunder Steels (2005 (2) TMI 117 - SUPREME COURT OF INDIA) = (181 ELT 154 ) (AIR 2005 SC 1307(SC 3 member bench).
Therefore with refernce to the above cases the exemption should be availed by Job workers.
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