CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL NEW DELHI PRINCIPAL BENCH – COURT NO. I EXICSE APPEAL NO. 51949 OF 2017 (Arising out of Order-in-Original No. ALW-EXCUS-000-COM-013-17-18 dated 19.09.2017 passed by the Commissioner, Central Goods & Service Tax, Alwar, Raj.)

M/s. Continental Engines Ltd. ..…Appellant (Machinery Division)

A-88, RIICO Industrial Area, Bhiwadi, Distt. Alwar, Alwar VERSUS The Commissioner, .....Respondent Central Goods & Service Tax, “A” Block, Surya Nagar, Alwar (Raj.)

WITH EXICSE APPEAL NO. 50731 OF 2018 (Arising out of Order-in-Original No. ALW-EXCUS-000-COM-020-17-18 dated 03.11.2017 passed by the Commissioner, Central Goods & Service Tax, Alwar, Raj.)

M/s. Continental Engines Ltd. ..…Appellant (Machinery Division)

A-88, RIICO Industrial Area, Bhiwadi, Distt. Alwar, Alwar VERSUS The Commissioner, .....Respondent Central Goods & Service Tax, “A” Block, Surya Nagar, Alwar (Raj.)

APPEARANCE:

Shri K.S. Naveen Kumar, Shri Dakshina Murthy, Shri Mayank Srivastava, Advocates and Shri Asish Choudry, Chartered Accountant for the Appellant Shri Rakesh Agarwal, Authorized Representative for the Department CORAM:

HON’BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON’BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)

Date of Hearing: 15.09.2025 Date of Decision: 27.02.2026 FINAL ORDER NO’s. 50303-50304/2026 JUSTICE DILIP GUPTA:

Excise Appeal No. 51949 of 2017 has been filed by the M/s.

Continental Engines Ltd. (Machinery Division)¹ to assail the order dated 19.09.2017 passed by the Commissioner, Central Goods & Service Tax, Alwar, Rajasthan² that adjudicates the show cause notice dated 21.04.2017 that was issued for the period April, 2012 to April, 2015 seeking to deny the benefit of Notification No. 23/2003 dated 31.03.2003³. The order, therefore, confirms the demand of central excise duty by invoking the extended period of limitation contemplated under section 11A(4) of the Central Excise Act, 1944⁴ with interest and penalty.

2. Excise Appeal No. 50731 of 2018 has been filed by the appellant to assail the order dated 03.11.2017 passed by the Commissioner that adjudicates the show cause notice dated 28.08.2017 that was issued for the period August, 2015 to June, 2017 seeking to deny the benefit of the Exemption Notification. The order, therefore, confirms the demand of central excise duty with interest and penalty.

3. The appellant is an Export Oriented Undertaking⁵. It is engaged in the manufacture of automotive cylinder heads falling under Central Excise Tariff Heading 8409 in its Machining Division. The said goods are used in automobiles. The Company had two manufacturing unit, namely, Machining

1. the appellant

2. the Commissioner

3. the Exemption Notification

4. the Central Excise Act

5. EOU Division which is an EOU and Foundry Division situated in the Domestic Tariff Area⁶

4. The process followed by the appellant with respect to the clearance of automotive cylinder heads under two scenarios has been described by the appellant in the form of a flow chart which is as follows:

FLOW CHART SHOWING PROCESSES EMPLOYED UNDER TWO SCENARIOS Machining Division – Foundry Division –

(E OU) Appellant (DTA) Processes the manufactures Aluminium Ingots A utomotive Cylinder into Castings Heads Job worker converts scrap into processed ingots SCENARIO 1 - Clearance of Automotive Cylinder Heads manufactured out of Aluminium Ingots (major input) imported or sourced locally (not subject matter of dispute):

1. Machining Division sends Aluminium Ingots to the DTA for conversion into castings.

Some portion of the Aluminium Ingots are converted into castings by Machining Division itself.

2. Castings sent by DTA to Machining Division.

3. Machining Division manufactures automotive cylinder heads using the castings made in-house or received from DTA.

4. Automotive cylinder heads manufactured are exported (no duty implication) or cleared domestically in DTA by availing the benefit of the Exemption Notification.

5. As a practice, the Cylinder Heads cleared in DTA are m