Custom, Excise & Service Tax Tribunal
M R Tubes Pvt Ltd vs Commissioner, Cgst-Dehradun on 23 September, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH- COURT NO.1
Excise Appeal No. 50541 of 2022-DB
(Arising out of Order-in-Appeal No. DDN/EXCUS/000/APPL/145-146/2020-21 dated
23.03.2021 passed by the Commissioner (Appeals), Dehradun)
M R Tubes Pvt. Ltd. ...Appellant
Plot No. 3, Sector-IIDC, IIE,
SIDCUL, Pantnagar, Rudrapur,
Udham Singh Nagar, Uttarakhand
versus
The Commissioner (CGST) ...Respondent
Division (Rudrapur) Range-II E-Block, Nehru Colony, Haridwar Road, Dehradun WITH Excise Appeal No. 50543 of 2022-DB (Arising out of Order-in-Appeal No. DDN/EXCUS/000/APPL/145-146/2020-21 dated 23.03.2021 passed by the Commissioner (Appeals), Dehradun) M R Tubes Pvt. Ltd. ...Appellant Plot No. 3, Sector-IIDC, IIE, SIDCUL, Pantnagar, Rudrapur, Udham Singh Nagar, Uttarakhand versus The Commissioner (CGST) ...Respondent Division (Rudrapur) Range-II E-Block, Nehru Colony, Haridwar Road, Dehradun, Uttarakhand AND Excise Appeal No. 51926 of 2018-DB (Arising out of Order-in-Appeal No. 13/COMMR/Dehradun/2018 dated 28.03.2018 passed by the Commissioner, Central GST; E-Block, Nehru Colony, GST Commissionerate-Dehradun) M R Tubes Pvt. Ltd. ...Appellant Plot No. 3, Sector-IIDC, IIE, Pantnagar, Udham Singh Nagar, Uttarakhand versus The Commissioner (CGST) ...Respondent Dehradun, Uttarakhand 2 E/50541 & 50543/2022 and E/51926/2018-DB APPEARANCE:
Shri Puneet Agarwal, Ms. Purvi Sinha, Shri Ketan Jain and Shri Chetan Kumar Shukla, Advocates for the Appellant Shri Sanjay Kumar Singh, Authorized Representative of the Department CORAM:
HON'BLE MR.JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P. V. SUBBA RAO, MEMBER (TECHNICAL) Date of Hearing: 27.07.2022 Date of Decision: 23.09.2022 FINAL ORDER No.: 50892-50894/2022 JUSTICE DILIP GUPTA:
Excise Appeal No. 50541 of 2022 and Excise Appeal No. 50543 of 2022 have been filed by M/s M.R. Tubes Pvt. Ltd.1 to assail the common order dated 19/23.03.2022 passed by the Commissioner (Appeals) dismissing two appeals bearing No‟s 70/2019 and 79/2019 that had been filed to assail the orders dated 17.09.2010 and 23.10.2019 respectively passed by the Assistant Commissioner denying the benefit of exemption Notification No. 50/2003-CE dated 10.06.20032 and confirming the demand of Central Excise duty with interest and penalty. It needs to be noted that Excise Appeal No. 50541 of 2022 relates to order dated 23.10.2019 passed by the Assistant Commissioner adjudicating the show cause notice dated 23.03.2018, while Excise Appeal No. 50543 of 2022 relates to the order dated 17.09.2019 passed by the Assistant Commissioner pursuant to the remand order passed by the Tribunal on 04.01.2018.
1. the appellant
2. the notification 3 E/50541 & 50543/2022 and E/51926/2018-DB
2. Excise Appeal No. 51926 of 2018 has been filed by the appellant to assail the order dated 28.03.2018 passed by the Commissioner adjudicating the show cause notice dated 06.06.2017 by denying the exemption claimed by the appellant under the notification and also confirming the demand of Central Excise duty of Rs. 2,51,52,996/- with interest and penalty.
3. The issue that arises for consideration in these appeals is regarding the exemption from the whole of the duty of excise in regard to goods manufactured in specified areas in the States of Uttarakhand and Himachal Pradesh. The Central Government exempted the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 19853 and cleared from a unit located in certain specified areas from the whole of the duty of excise or additional duty of excise with certain conditions. The relevant portion of the exemption notification is reproduced below:-
"Notification No. 50/2003-C.E., dated 10.06.2003 GOODS MANUFACTURED IN SPECIFIED AREAS IN UTTARAKHAND AND HIMACHAL PRADESH-
EXEMPTION FROM EXCISE DUTY In exercise of the powers conferred by sub-section (I) of section SA of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act. 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the goods specified in Annexure-I appended hereto, and cleared from a unit
3. the Tariff Act 4 E/50541 & 50543/2022 and E/51926/2018-DB located in the Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area, as the case may be, specified in (J Annexure-Il and Annexure III appended hereto, from the whole of the duty of excise or additional duty of excise, as the case may be, leviable thereon under any of the said Acts:
Provided that the exemption contained in this notification shall apply subject to the following conditions, namely:
(i) The manufacturer who intends to avail of the exemption under this notification shall exercise his option in writing before effecting the first clearance and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaining part of the financial year;
(ii) xxxxxxxx
(iii) xxxxxxxx
2. The exemption contained in this notification shall apply only to the following kinds of units, namely:-
a. new industrial units set up in areas mentioned in Annexure-Il and Annexure-III, which have commenced commercial production on or after the 7th day of January, 2003, but not later than the 3Ist day of March, 2010 b. xxxxxxxxx"
4. M/s Adhunik Telecom Services (P) Ltd.4 had set up a new manufacturing unit in Pantnagar in the State of Uttarakhand for manufacturing excisable goods, namely step ladder and door canopies. It claims to have started commercial production and to have cleared 10 pieces of two step ladders by invoice dated 30.03.2010 bearing number 592. It further claims to have sold the
4. ATSPL 5 E/50541 & 50543/2022 and E/51926/2018-DB said items on 30.03.2010 to M.R. Traders. To avail exemption under the notification, ATSPL filed the prescribed declaration dated 30.03.2010 and intimation regarding commencement of production was also filed on 30.03.2010 in the office of the Assistant Commissioner of Central Excise. However, ATSPL withdrew the application claiming exemption, by a letter dated 06.04.2010. A letter dated 08.04.2010 was also submitted by the Manager of ATSPL to the Superintendent mentioning therein that due to some unavoidable circumstances it was not availing the exemption. In the said letter, reference was also made to the earlier letter dated 06.04.2010 submitted by ATSPL to the Deputy Commissioner for cancellation of the declaration. Subsequently ATSPL obtained Central Excise registration on 04.06.2010 and started paying duty on the goods manufactured.
5. The Central Board of Excise and Customs5 sent a letter dated 17.03.2008 to the Chief Commissioner of Central Excise, Meerut clarifying the meaning of „first clearance‟ with the reference to the notification. The first clearance, it was clarified, would be subsequent to the filing of the option. Thus, if a unit intended to avail the benefit of the said notification, then the unit was required to first exercise option in writing and thereafter clear the goods. The CBEC also clarified that such option could be exercised at any time.
6. CBEC also issued a Circular dated 22.12.2010 regarding the scope of the notification. The Circular provided that the provisions of the notification do not place a bar or restriction on any addition/modification in the plant or machinery or on the production
5. CBEC 6 E/50541 & 50543/2022 and E/51926/2018-DB of new products by an eligible unit after the cut-off date and during the exemption period of 10 years as per the notification. However, the period of exemption would remain to be 10 years and would not get extended on account of such modifications or additions under any circumstances. The relevant portion of this Circular dated 22.12.2010 is reproduced below:-
"2. Representations have been received from Trade and Industry Association seeking clarification on the availability of the exemption benefit under these notifications in the following situations:
(i) Where a unit starts producing some new products after the cut-off date using plant and machinery installed up the said cut-off date and without any further addition to the plant and machinery.
(ii) Where the installed capacity in a particular unit is upgraded after the cut-off date, so as to increase the efficiency of the machinery by installing ancillary machines or replacement of some parts etc but in such a way that it does not lead to increase in capacity of production.
(i) Where new dosage forms are manufactured after the cut-off date on the same line of production with the same machinery.
(ii) Where a unit manufacturers a new product by installing fresh plant, machinery or capital goods after the cut-off date.
3. Board has examined the matter. Under the said notifications, any new unit set up or an existing unit which has undergone substantial expansion that commences commercial production before the cut-off date is entitled to excise duty exemption in respect of excisable goods (other than those appearing in the negative list) manufactured and cleared for a period of ten years from the date of commencement of commercial production. The provisions of these notifications do not place a bar or restriction on any addition/modification in the plant or 7 E/50541 & 50543/2022 and E/51926/2018-DB machinery or on the production of new products by an eligible unit after the cut-off date and during the exemption period of ten years as per the notification.
Therefore, it is clarified that in all the above situations, the benefit of the excise duty exemption under the notifications would continue to be available to eligible industrial units. However the period of exemption would remain ten years and would not get extended on account of such modifications or additions under any circumstances."
7. The Tax Research Unit of the Department of Revenue also clarified by a letter dated 26.04.2012 that an eligible unit can exercise option even after the sunset clause for the purpose of availing benefit of the exemption under notification as sunset clause was relevant only for eligibility. The relevant portion of the communication is reproduced below:-
"2. The matter has been examined. According to the condition of the notification, the manufacturer who intends to avail of the exemption shall exercise his option in writing before effecting first clearances and such option shall be effective from the date of its exercise. Although the units in question are admittedly eligible for exemption because they were either set up or undertook substantial expansion within the prescribed time limit, some field formations have denied them the benefit of exemption on the ground that they exercised the option after the sunset date and not at the time of commencement of commercial production. There is nothing in the language of the above provisions which lends support to this interpretation. The sunset clause is relevant only for the purposes of eligibility and the eligibility criteria that a unit has to fulfill for availing the benefit of exemption under the said notification are that a new unit should be set up or an existing unit should undertake substantial expansion and these units commence commercial production not later than the 31st day of March, 2010. It is therefore clarified that so long as the units are able to establish with documentary evidence which the field formations may 8 E/50541 & 50543/2022 and E/51926/2018-DB verify that they meet the eligibility criteria, the benefit of exemption would be available to goods on which an excise duty or mandatory excise duty levy has been imposed subsequently.
3. As regards the requirement for a manufacturer to exercise his option for availing the benefit of these notifications, the relevant provision nowhere stipulates that such an option must be exercised before the sunset clause. Therefore it is also clarified that an eligible unit can exercise the option even after the sunset clause for the purpose of availing the benefit of the aforesaid exemption."
8. The appellant had entered into a Memorandum of Understanding6 on 01.03.2013 with ATSPL for transfer of the industrial property in favour of the appellant for a consideration of Rs. 59,45,000/-. This consideration was to include cost of part value of plant and machinery, raw material, in-process goods and finished goods. The MoU also provided that possession of the said unit would be transferred through a sale deed. The relevant portion of the MoU is reproduced below:-
"10. That upon execution of transfer of lease of the said industrial property the Assignee shall have exclusive right on all benefit accrued and obtained by the Assignor including those in relation to matters Central Excise etc and the Assignor shall lose its right on all such rights as accrued or obtained by the Assignor till the date of execution of the deed.
xxxxxxxxxxxx
13. That simultaneously upon execution of the Deed of Sale/Transfer, the Assignor shall handover vacant and peaceful possession of the said Industrial property to the Assignee along with all the title documents in original thereto including the permissions, licenses, drawings etc. xxxxxxxxxxx
6. MoU 9 E/50541 & 50543/2022 and E/51926/2018-DB
15. That at the time of execution of Deed of Sale/Transfer, the Assignor shall sign all requisite Applications, forms etc. for the effective transfer of the said Industrial property in favor of the Assignee along with the Transfer of Electricity, Water, Sewage & other service connections along with the Security Deposits made thereto by the Assignor in favor of the concerned Department/Agencies. The Assignor shall render all the necessary assistance for the Transfer of the connections referred herein.
xxxxxxxxxxxx
19. That both the parties shall be bound by the terms and conditions of this Agreement to Sell and shall comply with the same in letter and spirit."
9. Thereafter, ATSPL submitted a letter dated 06.04.2013 to the Assistant Commissioner mentioning that it had commenced commercial production on 30.03.2010 and was, therefore, eligible to file the declaration for availing exemption, which it intended to avail from 22.04.2013. It was also stated that the Central Excise registration would be surrendered and that it intended to add new products, namely sheet metal components for automobiles and for such manufacture it had to add new plant and machinery as well. A fresh declaration was submitted by ATSPL in the prescribed format. Subsequently, a corrigendum letter dated 22.04.2013 was filed by the ATSPL before the Assistant Commissioner mentioning therein that the exemption would be claimed from 01.05.2013. ATSPL started commercial production after availing exemption and issued the first invoice dated 03.05.2013.
10. On 27.07.2013 the entire payment in terms of the MoU was made by the appellant to ATSPL and on 14.08.2013 a sale deed and a lease deed were executed between ATSPL and the appellant. The total consideration in the sale deed dated 14.08.2013 for transfer of 10 E/50541 & 50543/2022 and E/51926/2018-DB industrial plot was Rs. 29,45,000/-. The lease deed was also executed on 14.08.2013 for lease of the land for an amount of Rs. 29,26,376/-. The balance amount included price for plant and machinery and stock.
11. The appellant, after taking over the ownership of said unit, submitted option in writing/declaration dated 27.08.2013 to the Assistant Commissioner apprising him about the taking over of the said unit from ATSPL and continuing the area-based exemption admissible to ATSPL till 20.03.2020.
12. After filing the declaration with the Department, as per the notification, the appellant started manufacturing the declared goods and cleared them by availing the area-based exemption under notification. The appellant submitted copies of the quarterly returns with the jurisdictional Commissioner of Central Excise Range- Rudrapur-1.
13. The appellant sent a reminder letter dated 06.02.2015 to the Assistant Commissioner for finalizing the admissibility claimed by the appellant. This letter was in furtherance of the earlier letter dated 27.08.2013 submitted by the appellant to the Department. Another reminder dated 20.02.2015 was sent by the appellant for finalizing the declaration submitted by the appellant on 27.08.2013.
14. The Assistant Commissioner denied the said exemption to the appellant by letter dated 17.08.2015 for the reason that the appellant did not fulfill the mandatory requirement/formalities of availing exemption under the notification. The appellant filed an appeal before the Commissioner (Appeals) and by an order dated 25.04.2016 the appeal was dismissed. The relevant portion of the order of the 11 E/50541 & 50543/2022 and E/51926/2018-DB Commissioner (Appeals) is reproduced below:-
"Thus, from the above discussed case laws, it is quite evident that the benefit of Notification No. 50/2003-CE dated 10.06.2003 is available only when declaration, as prescribed, is filed before effecting first clearance and since in this case after signing of Memorandum of Undertaking on date 01.03.2013 the appellant filed a letter dated 06.02.2015 after nearly 23 months, hence I find that the appellant has filed to fulfill the conditions as laid down vide CBEC Circular No. 960/03/2012-CX.3 dated 17.02.2012. Further when the original owner had given up his claim for exemption in 2010 itself, the new owner cannot after 3 years lay claim to that exemption without fulfilling any of the essential conditions stipulated in the relevant Notifications."
(emphasis supplied)
15. Feeling aggrieved, the appellant filed Excise Appeal No. 52501 of 2016 before the Tribunal. The Tribunal allowed the appeal by the order dated 04.01.2018. The matter was remanded to the original authority for a fresh decision. It is necessary to reproduce the entire order dated 04.01.2018 passed by the Tribunal and it is as follows:-
"The appellant is aggrieved by the order dated 25/04/2016 of Commissioner (Appeals-I), Meerut. The brief facts of the case are that M/s Adhunik Telecom Services Pvt. Ltd. (ATSPL) established a manufacturing unit in Uttrakhand for manufacture of sheet metal components and auto parts. They have availed area based exemption under Notification 50/2003-CE dated 10/06/2003. However, on 06/04/2010 ATSPL gave an intimation to the Revenue to opt out of the area based exemption scheme for the financial year 2010-2011 thereafter they continued to discharge Central Excise duty without availing the exemption. The appellant purchased the manufacturing facility in terms of MoU dated 01/03/2013. They have taken possession of the unit on 14/08/2013 after the execution of sale deed for the said purchase. In the meantime, on 06/04/2013 ATSPL gave 12 E/50541 & 50543/2022 and E/51926/2018-DB intimation to the Jurisdictional Assistant Commissioner for availing the area based exemption w.e.f. 22/04/2013. Previous to that date, they were paying applicable excise duty on the finished goods. After acquiring the manufacturing facility from ATSPL the appellants filed an intimation on 27/08/2013 opting to avail area based exemption. The Revenue did not allow such exemption to the appellant on the ground that they have taken over the unit as per MoU dated 01/03/2013. The intimation given on 06/02/2015 after 23 months of such take over will not satisfy the conditions in terms of Board circular dated 17/02/2012, The original owner gave up the area based exemption in 2010 itself. As such, the new owner cannot avail the concession three years afterward.
2. The learned Counsel contesting the finding by the lower authorities submitted a list of chronology of dates started from 13/03/2010 upto 09/08/2016 tracing the development of various events relevant to the present case. It is the submission of the appellant that the exemptions are granted to the manufacturing unit in the designated area and the ownership is of no consequence. While the notification did not bar the manufacturing unit from availing area based exemption from any particular date, but the choice made should be applicable for the whole financial year. Except for this stipulation, there is no condition regarding opting in or opting out of the scheme by the manufacturing unit during the applicable period of notification. The main grievance of the appellant is that they have given due intimation on 27/08/2013 to avail area based exemption and thereafter continued to file regular quarterly returns claiming such exemption. It is submitted that the Revenue recording wrong facts of date of Intimation under the notification denied the concession to them.
3. The learned AR contesting the appeal submitted that when the appellants have taken over the manufacturing unit on 01/03/2013 itself in terms of MoU, the intimation to avail area based exemption should have been filed immediately. Further, there is no merit in the claim of the 13 E/50541 & 50543/2022 and E/51926/2018-DB appellant that they can opt for exemption any time in the financial year. The scheme is to be operated for the whole financial year and there is no provision for opting in or opting out in the middle of the financial year. Regarding intimation given by the appellant, the learned AR submitted that the lower authorities clearly recorded that the said intimation is given only on 6/02/2015. As such, the applicability of area based exemption, if any, will not arise prior to such intimation. The requirement to file intimation is a statutory condition and cannot be considered as procedural.
4. We have heard both the sides and perused the appeal record. The dispute in the present case mainly relates to the fact relating to the date of change of ownership of the unit and the date of filing intimation by the appellant to avail the area based exemption. We note that the notification stipulates as below:-
"(i) The manufacturer who intends to avail of the exemption under this notification shall exercise his option in writing before effecting the first clearance and such option shall be effective from the date of exercise of the option and shall not be withdrawn during the remaining part of the financial year".
5. It is clean-that the statutory mandate is that the manufacturer should opt in writing before affecting the first clearance. Such option shall be effective from the date of exercise and shall not be withdrawn during the remaining part of the financial year. Except for this stipulation, we could not get any other provision with reference to opt in or opt out of the scheme during the operation of the said notification. The fact with reference to the date of filing intimation by the appellant is in dispute. Different dates are claimed by both the parties. This requires verification with supporting evidence available with the jurisdictional officer. The appellant strongly pleads that they have all the supporting evidences to claim the due intimation as per the notification. On verification of such facts; the Original Authority has to decide the case afresh. The 14 E/50541 & 50543/2022 and E/51926/2018-DB appellant also contesting the reliability of a letter dated 08/04/2010 purported to have been given by Manager of ATSPL to the Revenue. The appellants claimed they are not party to the said intimation and in any case they are not provided a copy of the same. The Original Authority can provide a copy of the said letter for comments by the appellant.
6. The matter will be decided afresh after verification of the facts, as discussed above in terms of the provision of Notification 50/2003-CE and the clarificatory circular issued by the Board on the said notification.
7. Accordingly, the impugned order is set aside. The matter is remanded to the Original Authority for a fresh decision. The appeal is allowed by way of remand."
(emphasis supplied)
16. Earlier, the Commissioner had issued a show cause notice dated 06.06.2017 to the appellant for the period from July 2013 to December 2016 to show cause as to why the exemption claimed under the exemption notification should not be denied and Central Excise duty amounting to Rs. 2,51,52,996/- should not be demanded with interest and penalty. The appellant submitted a reply but this show cause notice adjudicated upon by the Commissioner by order dated 28.03.2018. The benefit of the exemption notification was denied and the demand proposed in the show cause notice was confirmed. It is against this order dated 28.03.2018 passed by the Commissioner that the appellant has filed Excise Appeal No. 51926 of 2018.
17. The Assistant Commissioner also issued a show cause notice dated 21.03.2018 to the appellant proposing a demand of Central Excise duty of Rs. 31,16,508/- with interest and penalty for the period January, 2017 to March 2017. This show cause notice was adjudicated by the Assistant Commissioner by order dated 15 E/50541 & 50543/2022 and E/51926/2018-DB 23.10.2019 confirming the demand proposed in the show cause notice. This order dated 23.10.2019 passed by the Assistant Commissioner was assailed by the appellant before the Commissioner (Appeals) by filing Appeal Number 79 of 2019.
18. It also needs to be pointed out that pursuant to the order passed by the Tribunal on 04.01.2018, the Assistant Commissioner passed an order dated 17.09.2019 denying the exemption claimed by the appellant under the notification. The Assistant Commissioner noted that the issue involved was whether the appellant had filed the declaration for availing the benefit of exemption on 27.08.2013 or on 06.02.2015 and decided this issue in favour of the appellant by holding that the declaration was filed by the appellant on 27.08.2013. The Assistant Commissioner, however, undertook a fresh look of the entire case, as according to the Assistant Commissioner such an exercise was also required to be undertaken in terms of the order passed by the Tribunal on 04.01.2018. The Assistant Commissioner then observed that the availability of the benefit of exemption cannot only be mapped only to the aspect as to when the declaration was filed but the pivitol issue was whether the appellant was eligible to the benefit of exemption. On this issue, the Assistant Commissioner observed that ATSPL had not commenced commercial production before 31.03.2010. Thus, when ATSPL was not eligible to claim exemption, the appellant which had purchased the unit from ATSPL could not claim the exemption. This order dated 17.09.2019 passed by the Assistant Commissioner was assailed by the appellant before the Commissioner (Appeals) in Appeal No. 70 of 2019.
16
E/50541 & 50543/2022 and E/51926/2018-DB
19. Both the aforesaid Appeals bearing Number 70 of 2019 and 79 of 2019 were decided by the Commissioner (Appeals) by a common order dated 23.03.2021. The Commissioner (Appeals) noticed that the Tribunal, in the decision dated 04.01.2018, had drawn its attention to the following three issues:
i. The dispute mainly relates to the date of change of ownership of the „unit‟ and the date of filing of intimation by the appellant and required verification of these dates;
ii. The appellant had contested the authenticity of the letter dated 08.04.2010 before the Tribunal, by which ATSPL had withdrawn its intention to avail the benefit of the notification. The Tribunal had directed the Original Authority to provide a copy a letter dated 08.04.2010 purported to have been given by the Manager of ATSPL to the department; and iii. The Tribunal required that Circular of the Board should be considered while deciding the matter afresh.
20. The findings recorded by the Commissioner (Appeals) in the order dated 23.03.2021 are as follows:
"7.4. This has an immediate consequence that the 'unit', that they had taken over in 2013 is no longer a 'unit' that was availing the benefit of the exemption notification No. 50/2003-CE dated 10.06.2003, as the very act of trying to claim that benefit vide its letter dated 30.3.2010 had become null and void vide their own letter dated 8.4.2010 in fact, they were duly paying duty thereafter.
8. However, I also find that M/s ATSPL were manufacturing completely different products and the appellant after its takeover in 2013 was manufacturing completely different products which requires different kind of plant and machinery. As such, on this score too, they have not taken over the same 'unit' which was being run by M/s ATSPL. What they have actually taken over is merely the land and physical premises as elaborately discussed 17 E/50541 & 50543/2022 and E/51926/2018-DB in the Order-in-Original dated 17.09.2019."
xxxxxxxxxxx
9. I further observe that the appellant has repeatedly tried to assert that the Order-in-Original has gone beyond the directions of CESTAT while remanding the matter. I find that in view of the false stand taken by the appellant amounting to perjury before CESTAT with respect to the letter dated 8.4.2010, it was extremely important for the Adjudicating authority to examine all the issues especially with respect to the factual position.
10. In view of the above discussions and findings, the appeal bearing No. 70/CE/APPL/DDN/2019 dated 01.11.2019 and appeal No. 79/CE/APPL/DDN/2019 dated 30.12.2019 filed by M/s M.R. Tubes Pvt. Ltd., Plot No. 03, Sector-IIDC, IIE, SIDCUL, Pantnagar, Udham Singh Nagar, Uttarakhand are here by rejected."
(emphasis supplied)
21. The main submission advanced by Shri Puneet Agarwal, learned counsel for the appellant assisted by Ms. Purvi Sinha, Shri Ketan Jain and Shri Chetan Kumar Shukla is that the Assistant Commissioner and the Commissioner (Appeals) completely misconstrued the order dated 04.01.2018 passed by the Tribunal and proceeded to even examine issues which were not remitted by the Tribunal. In this connection, learned counsel pointed out from the order dated 25.04.2016 passed by the Commissioner (Appeals), which order had been assailed before the Tribunal, that only two reasons had been given for denying the exemption. The first reason was that the letter was filed by the appellant on 06.02.2015 after a period of 23 months from the signing of the MoU which would be against the terms of the Circular dated 17.02.2012 and the second was that when the original owner had given up its claim for exemption in 2010 itself, a new owner cannot after three years, claim exemption. Learned Counsel for 18 E/50541 & 50543/2022 and E/51926/2018-DB the appellant pointed out that after noticing these two reasons given by Commissioner (Appeals), the Tribunal remanded the matter to the Assistant Commissioner to determine as to whether the appellant had given intimation on 27.08.2013 as claimed by the appellant or on 06.02.2015 as claimed by the Department. Learned Counsel pointed out that the Tribunal in paragraph 6 of the order made it clear that the matter will be decided afresh by the Assistant Commissioner after verification of the facts. The submission of the learned counsel for the appellant, therefore, is that the Assistant Commissioner could not have decided issue beyond the terms of the remand order.
22. Shri Sanjay Kumar Singh, learned authorized representative appearing for the Department, however, placed emphasis on the operative part of the order of the Tribunal contained paragraph 7 and submitted that since the impugned order was set aside and the matter was remanded to the original authority for a fresh decision, the original authority was justified in examining the issues regarding exemption under the notification claimed by the appellant in its entirety rather than restricting it to only the determination of the date of filing of the intimation to the Department by the appellant.
23. The Tribunal, in its decision dated 04.01.2018, noted that though ATSPL had, after signing of MoU on 01/03/2013 sent a communication dated 06.09.2013 to the Assistant Commissioner for availing the area based exemption w.e.f. 22.04.2013 but the appellant had also, after execution of the sale deed on 14.08.2013 and taking of the possession, submitted the option in writing/declaration to the Assistant Commissioner on 27.08.2013 apprising him about the taking over of the unit from ATSPL and its 19 E/50541 & 50543/2022 and E/51926/2018-DB intention to continue the area based exemption which was admissible to ATSPL till 20.03.2020. The Tribunal also noticed the contention advanced on behalf of the appellant that due intimation had been given to the Assistant Commissioner on 27.08.2013 to avail area based exemption. The Commissioner (Appeals), in the order dated 25.04.2016, denied exemption for the reason that it was only on 06.02.2015 that the appellant informed the Department of its intention to avail the benefit of the notification after 23 months from the singing of the MoU on 01.03.2013 and that the appellant could not claim exemption when the original owner had given up its claim for exemption in 2010.
24. It is clear from the order dated 04.01.2018 of the Tribunal that the only issue that was remitted to the adjudicating authority was to determine the date on which intimation was given by the appellant to avail the areas based exemption. Paragraph 6 of the order of the Tribunal is very explicit in this regard as it records that the matter will be decided after verification of the facts, as discussed above. Paragraphs 4 and 5 of the order of the Tribunal make it clear that what was in dispute was the date of filing of intimation by the appellant for claiming the exemption.
25. The Assistant Commissioner, pursuant to the remand order of the Tribunal, decided this issue in favour of the appellant by order dated 17.09.2019 in as much as it was found as a fact that the appellant had by the letter dated 27.08.2013 filed a revised declaration to avail exemption and the letter dated 06.02.2015 was subsequently submitted by the appellant for finalizing the claim for exemption.
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26. This was the precise issue that was required to be decided by the Joint Commissioner, but what is noticed is that after having recorded a finding on this issue in favour of the appellant, the Joint Commissioner observed that in terms of the direction issued by the Tribunal a fresh look on the other issues was also required to be examined to ascertain whether the appellant was eligible to avail the benefit of the exemption notification. The Assistant Commissioner then went on to observe that the benefit of the exemption could not be restricted to the date on which the declaration was filed and all the factors required for claiming exemption had to be examined.
27. Learned counsel for the appellant is justified in asserting that the Assistant Commissioner could not have proceeded to decide whether other factors, apart from the date of filing of the declaration, were at all required to be examined. The Commissioner (Appeals) committed the same illegality by examining host of other factors for coming to a conclusion that the appellant was not entitled to the benefit of the notification, instead of restricting his decision only on the issue as to whether the intimation was given by the appellant on 27.08.2013 or on 06.02.2015 for availing the benefit of the notification.
28. In this connection reference can be made to a Larger Bench decision of the Tribunal consisting of five Members in HI-Tech Arai Ltd. v/s Commissioner of Central Excise, Madurai7. The Tribunal observed that when the remand order specifically states the issue to be decided, the lower authority cannot travel beyond the scope and entertain new pleas. The relevant potion of order of the Tribunal is
7. [2008] taxmann.com 1384 (Chennai-CESTAT) 21 E/50541 & 50543/2022 and E/51926/2018-DB reproduced below:-
"4. After giving careful consideration to the submissions, we note that, in the present case, this Tribunal had remanded the classification dispute to the original authority for de novo consideration. We have already reproduced the operative paragraph of the remand order. It is abundantly clear from the remand order that what was remanded was a classification dispute viz Heading 84.09 Vs. Heading 87.14/85.03. The third entry viz. Heading 84.79 was not a part of the dispute considered by the Bench. It was found that the authorities had not applied their mind to the rules of interpretation of the Tariff or to the technical evidence adduced by the assessee. Therefore, the case was remanded for de novo consideration and decision and the assessee was given liberty to produce any additional evidence to support their claim. The learned counsel has argued that it was an open remand and, therefore, it was open to the assessee to claim classification of the goods under a different heading before the lower authority. We are unable to agree with this proposal. The remand order is specific. The case before The Tribunal was remanded to the original authority. The case before the Tribunal was essentially of classification dispute viz. Heading 84.09 Vs. Heading 87.14/85.03. It was this case which, was remanded and, therefore, it cannot be said that the remand was open enough to enable the assessee to claim anything they wanted. Xxxxxxxxxx The remand order passed by this bench specifically states the case but the lower appellate authority travelled beyond its scope and entertained the assessee's claim for classification of the goods under a different entry which was not part of the case which was considered by the Tribunal."
(emphasis supplied)
29. The Commissioner (Appeals) has not found that the finding recorded by the Assistant Commissioner that intimation was given to the Department by the appellant on 27.08.2013 regarding its intention to avail benefit of the notification is incorrect. The benefit of 22 E/50541 & 50543/2022 and E/51926/2018-DB the exemption notification has been denied on grounds other than the ground that was required to be examined in terms of the remand order passed by the Tribunal.
30. In view of the aforesaid, it has to be held that the appellant was entitled to exemption under the notification for the reason that the specific issue that was remanded by the Tribunal to be decided by the Assistant Commissioner has been decided in favour of the appellant. The Assistant Commissioner or the Commissioner (Appeals) could not have examined any other issue for determining as to whether the appellant was entitled to exemption under the notification.
31. Learned counsel for the appellant also, in the alternative, submitted that the findings recorded in the order dated 23.03.2021 passed by the Commissioner (Appeals) are incorrect and against the terms of the notification and the Circular.
32. The Commissioner (Appeals) has held that the „unit‟ which the appellant had taken over in 2013 is not the „unit‟ that was intending to avail the benefit of the exemption notification because initially ATSPL had claimed the benefit of the notification by a letter dated 30.03.2010, but it had subsequently expressed its unwillingness to claim exemption by a letter dated 08.04.2010 and in fact paid excise duty thereafter. The Commissioner (Appeals) also noticed that ATSPL was manufacturing different products than the products manufactured by the appellant after purchase in 2013. Thus also, according to the Commissioner (Appeals), it is not same „unit‟ that was taken over by the appellant. In fact, the Commissioner (Appeals) also held that the appellant had taken over merely the land and physical premises of ATSPL.
23
E/50541 & 50543/2022 and E/51926/2018-DB
33. The aforesaid findings recorded by the Commissioner (Appeals) run contrary to the provisions of exemption notification as also the Circular dated 22.10.2010 issued by CBEC. The exemption under the notification is qua the unit and an eligible unit can add new products, new plant and machinery and can also transfer the unit to a new owner without affecting the exemption. The provisions of the notification do not place a bar or restriction on any addition/modification in the plant or machinery or on the production of new products by an eligible unit after the cut-off date and during the exemption period of ten years as per the notification. This position not only transpries from the decision of the Tribunal in Richfeel Health and Beauty Pvt. Ltd. v/s. Commissioner of Central Excise & Service Tax, Shimla8 but also from the CBEC Circular dated 22.12.2010, which Circular is binding on the Revenue.
34. The appellant could have exercised option for availing the benefit of the notification even after the sunset clause. Sunset clause is only relevant for the purpose of eligibility and there is no bar for filing the declaration after the sunset clause. This is clear from the TRU letter dated 26.04.2012. The aforesaid TRU letter was also examined by a Division Bench of the Tribunal in Maha Lakshmi Packagers vs. CCE9 and the relevant portion of the order is reproduced below:-
"6. The appellant had commenced commercial production on 23/10/08 and at that time they were availing full duty exemption under SSI exemption Notification No. 8/03-CE and for this reason they had not opted for Notification No. 50/03-CE. However, there is no dispute that the goods manufactured by them are covered under Notification No.
8. MANU/CJ/0195/2018
9. MANU/CE/0613/2015 24 E/50541 & 50543/2022 and E/51926/2018-DB 50/03-CE, and the unit is located in the area specified in Annexure II of this exemption notification and, as such, if the appellant had exercised the option for this notification they would have been eligible for the same. The appellant crossed the SSI exemption limit on 3/11/09 and immediately thereafter, they started availing of full duty exemption under 50/03-CE. However, there is no dispute that at that stage, the appellant did not file any declaration or submitted any intimation to the Department, and that they have started availing of this exemption without filing the declaration. The declaration as per the requirement of condition No. (i) and (li) of the first para of the exemption notification was filed only on 28/6/10. The Department's case is that in view of the sun set clause prescribed in para 3 of the notification, the declaration filed after 31/3/10 is not valid and hence the appellant would not be eligible for this exemption notification at all. However, we find that this very point had been considered by the Board and the Board vide Circular No. 332/23/11-TRU dated 26/4/12 has clarified as under:-
xxxxxxxxx In view of the above Circular of the Board, we hold that the basis for denying the exemption on the ground that the declaration was filed after 31/3/2010, is not correct."
35. The Commissioner (Appeals) also ignored the submission advanced on behalf of the appellant that the order passed by the Assistant Commissioner went beyond the remand order merely for the reason that the appellant had stated that they were not aware of the letter dated 08.04.2010. This statement, according to the Commissioner (Appeals), meant that the appellant committed perjury which made it permissible for the Assistant Commissioner to examine all the issues for coming to a conclusion as to whether the appellant was entitled to exemption under the notification.
36. The Commissioner (Appeals) could not have ignored the 25 E/50541 & 50543/2022 and E/51926/2018-DB directions issued by the Tribunal to the adjudicating authority to examine only the limited issue regarding date on which the appellant had filed the declaration for claiming the benefit of the exemption. The appellant had not disputed that ATSPL had expressed its unwillingness to pursue with its claim for claiming exemption under the notification by the letter dated 06.04.2010. The letter dated 08.04.2010 was a subsequent letter which also made reference to the earlier letter dated 06.04.2010.
37. The Commissioner (Appeals) also committed an error in holding that the appellant had not taken the „unit‟ run by ATSPL, since it had only taken the land and premises.
38. It is seen that the appellant had purchased the entire unit, as is clear from the MOU itself. The agreement was for the transfer of the entire industrial property for a total consideration of 59,45,000/- which comprised plant and machinery also. Part of the said total consideration of Rs. 29,45,000/- related to sheds, for which the sale deed dated 14.08.2013 was executed and part comprised lease of land for which the lease deed of Rs. 29,26,376/- was executed. The balance amount was for plant and machinery. The appellant paid this entire amount of Rs. 59,45,000/- from its bank account, which is supported by the Certificate of the auditor certifying payment of entire amount as agreed.
39. Thus, even the findings recorded by the Commissioner (Appeals) on reasons, other than the reason on which a finding was required to be given, are factually incorrect and against the terms of the notifications and the Circular. The denial of exemption to the appellant under the notification for these reasons cannot also be 26 E/50541 & 50543/2022 and E/51926/2018-DB sustained.
40. Once it is held that the appellant is entitled to claim exemption under the notification, all the three appeals deserve to be allowed as this is the core issue on which relief has been denied to the appellant in all the three appeals.
41. In this view of the matter, it is not necessary to examine the contention raised by learned counsel for the appellant that the extended period of limitation could not have been invoked.
42. The order dated 19/23.03.2022 passed by the Commissioner (Appeals) dismissing the two appeals, therefore, deserves to be set aside and Excise Appeal No. 50541 of 2022 and Excise Appeal No. 50543 of 2022 are allowed. The order dated 28.03.2018 passed by the Commissioner is also set aside and Excise Appeal No. 51926 of 2018 is allowed.
(Order pronounced in the open Court on 23.09.2022) (JUSTICE DILIP GUPTA) PRESIDENT (P.V.SUBBA RAO) MEMBER (TECHNICAL) Rekha