The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed the Revenue’s appeal and reaffirmed that hot rolled stainless steel pattas and pattis are eligible for exemption under Serial No. 203 of Notification No. 12/2012-CE, even if no further process is carried out after hot rolling, so long as the goods have not undergone cold rolling. 

The Bench of Justice Somesh Arora (Judicial Member) and Satendra Vikram Singh (Technical Member) has observed that since hot rolling itself occurs before the cold rolling stage, the goods clearly satisfy the conditions prescribed under the exemption notification.

The appellant/assessee is engaged in the manufacture of stainless steel hot rolled patta/patti and cold rolled patta/patti falling under Chapter Heading 7220 of the Central Excise Tariff. While the cold rolled products were cleared on payment of central excise duty, the assessee cleared certain quantities of hot rolled patta/patti at Nil rate of duty by availing the benefit under Serial No. 203 of Notification No. 12/2012-CE dated March 17, 2012. 

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The Revenue alleged that the exemption was wrongly claimed because the hot rolled pattas and pattis received from job workers were cleared without undergoing any further manufacturing process. According to the Department, the notification required that the goods should be subjected to a process other than cold rolling, and since no additional process was carried out after hot rolling, the exemption was unavailable. 

Based on this interpretation, the Department issued several show cause notices covering different periods. The present appeal related to the notice dated 24 October 2018 for the period December 2016 to July 2017, demanding ₹40.40 lakhin central excise duty along with interest, confiscation of goods valued at ₹3.23 crore, and imposition of penalties. 

The Department argued that the exemption was intended only where pattas and pattis were subjected to processes such as annealing, pickling, levelling or slitting, and not where no further process was undertaken. The assessee had admitted during investigation that no additional process was carried out on the hot rolled pattas before their clearance. Exemption notifications must be interpreted strictly, and unless every prescribed condition is fulfilled, the benefit cannot be extended. Reliance was placed on earlier judicial precedents and Supreme Court rulings emphasizing strict interpretation of exemption notifications and mandatory penalties. 

The assessee submitted that the issue was no longer open for debate because the Tribunal had already decided the identical issue in its own favour in earlier rounds of litigation through Final Order Nos. 12770-12773/2024 dated 22 November 2024.

It further relied upon the Tribunal’s earlier decision in Multi Metal Industries, which had examined the scope of the exemption in light of the CBIC Instruction dated 7 December 2015. 

The Tribunal observed that the controversy had already been conclusively settled in the assessee’s own earlier appeals.

Referring extensively to its previous judgment and the CBIC clarification issued during the Central Excise Tariff Conference, the Bench held that the Board had categorically clarified that all processes prior to the stage of cold rolling are eligible for exemption under Serial No. 203 of Notification No. 12/2012-CE. The expression “pattis and pattas” includes stainless steel flats in trade parlance. The benefit of exemption extends even to the hot rolling process, and field formations are bound by the Board’s clarification. 

Accordingly, the Bench held that the demand of excise duty was unsustainable.

Holding that the matter is no longer res integra, the Tribunal followed its earlier decisions and upheld the order passed by the Commissioner (Appeals), which had granted the exemption to the assessee.

Consequently, the Tribunal dismissed the Revenue’s appeal and affirmed that hot rolled stainless steel pattas and pattis cleared before cold rolling are entitled to exemption under Notification No. 12/2012-CE. 

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