Custom, Excise & Service Tax Tribunal
Proveda Herbals vs Dehradun on 16 November, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi - 110 066.
Date of Hearing: 26.7.2018
Date of Pronouncement: 16.11.2018
Appeal No. E/50265/2016-DB
(Arising out of Order-in-Original No. DDN-EXCUS-COM-000-33-35-2015 dated
6.11.2015 passed by the Commissioner, Central Excise, Dehradun)
M/s Proveda Herbals Appellant
Vs.
CCE, Dehradun Respondent
Appearance Shri R.M. Saxena, Advocate - for the appellant Shri R.K. Mishra, AR - for the respondent CORAM: Hon'ble Mr. Bijay Kumar, Member (Technical) Hon'ble Ms. Rachna Gupta, Member (Judicial) Final Order No. 53292/2018 Per Bijay Kumar:
The appellant - M/s Proveda Herbals, Plot No. 43, Sector 2, IIE, SIDCUL, Hardwar is company against whom adverse order-in-
original were passed by Commissioner, Central Excise & Customs, Dehradun (Uttrakhand). The order pertains to the period from April, 2010 to December, 2014, on the issue that whether or not the appellant commenced commercial production on or before 31st March, 2010, a requirement to obtain the benefit of Notification No. 50/2003-CE dated 10th June, 2003. Findings in the order-in-original were that the appellant had not commenced the commercial production until 31st March 2010 and therefore did not fulfil mandatory condition to avail the benefit under Notification dated 2 E/50265/16-DB 10th June 2003. Accordingly, the appellant was liable to pay Central Excise duty including education cess and secondary higher education cess as well as penalty under the provisions of Section 11A/11A(4) of Central Excise Act, 1944, 11AB, 111AC of the Central Excise Act (for short 'Act') read with Rule 25 of Central Excise Rules, 2002 (for short 'Rules').
2. The brief fact of the case is that the appellant vide letter dated Nil, received in the office of Deputy Commissioner, Central Excise, Dehradun Division on 29.3.2010, filed a declaration under Notification No. 50/2003-CE dated 10.6.2003 along with various documents in support of setting up of manufacturing unit proposed to be started from 29.3.2010 under the said notification. As per the provisions of Notification No. 50/2003-CE dated 10.6.2003 as amended the exemption was allowed to specified goods in Central Excise Tariff, except those specified in Annexure-I of their aforesaid notification and cleared by unit located in area specified in Annexure-II or Annexure-III appended thereto, subject to fulfilment of other condition of notification, one among which was that the unit should have commenced commercial production by 31.3.2010.
3. In order to verify the eligibility under the aforesaid notification dated 10.6.2003, a team of Central Excise officer visited the factory premises of the appellant on 24.4.2010 and during the course of verification, the visiting officer of the Central Excise found that the 3 E/50265/16-DB appellants have not commenced commercial production till 31.3.2010. During the visit a Panchnama was also drawn by the Central Excise officer and consequently, the Deputy Commissioner, Central Excise, Dehradun Division vide letter dated 19.5.2010 intimated to the appellant that they are not eligible for exemption of the aforesaid notification and advised them to discharge their duty liability after getting registered under the Central Excise Rules.
3.1 The appellant contested the aforesaid letter of the Deputy Commissioner, Central Excise, Dehradun Division and vide their letter and the Authorised Representative of the appellant Shri Braham Prakash Sood, appeared before him on 21.3.2011 and tendered a statement under Section 14 of the Act, wherein it was stated by him that the commercial production of Winter Cherry 'Moisturizing Lotion' and 'Boosting Shampoo' has commenced on 31.3.2010. He, in his statement has also given the details of the plant and machinery, raw material, equipment and packing material used for manufacturing of Moisturizing Lotion and Shampoo and provided the various documents which is as under:
(a) "Retail Invoice/Cash Memo/Bill No. 156 dated 18.3.2010 of M/s Emkay Engineering Works, B-33, DDA Shed, Okhla Industrial Area, Phase-II, New Delhi;4
E/50265/16-DB
(b) Retail Invoice No. NP/09/8349 dated 27.3.2010 of M/s Artek Enterprises Pvt. Ltd., 505 Madhuban Building 55, Nehru Palace, New Delhi;
(c) Form 16 No. UK VAT B 2009 1563582, 1563583, 1563584 and 1563585;
(d) Consignment Note 2553 dated 28.3.2010 of M/s Rathi Transport Co., Sitapur By Pass, Roorkee Road, Near Janta Dharam Kanta, Jwalpur, Hardwar;
(e) Sl. No. C/1033 dated 26.3.2010 of M/s K.K. Trading Co., 1028, Gali Telian, Tilak Nagar, New Delhi;
(f) Retail Invoice No. 0464 dated 26.3.2010 of M/s R.P. Enterprises, S-22, Ground Floor, Shivaji Park, Punjabi Bagh (West), New Delhi;
(g) Test Report of M/s Savita Oil Technologies Ltd., Plot No. Sivasa regarding Testing of Light Liquid Paraffin IP;
(h) Consignment Note 9996 dated 27.3.2010 of M/s Rajdhani King Road Carriers, New Delhi;
(i) Invoice No. 420, 421, 422, 423, 424 and 425 all dated 27.3.2010 of M/s Meenakshi Enterprises 817, Sector 23 N.I.T. Faridabad (Haryana);
(j) Invoice No. 770 dated 27.3.2010 of M/s Vishwakarma Industries C-167, Sector-3, Bawana Industrial Area, Delhi;
(k) Invoice No. 613 dated 20.3.2010 of M/s Vision Graphics, 1-A, Mavi Mohalla, Tehkhand Okhla Industrial Area, Ph-1, New Delhi;
(l) Form 32 License to manufacture Cosmetic Products;
(m) Stock Register of Bottle 200 Ml. for the month of March 2010;
(n) Stock Register of Jar 50 Ml. for the month of March 2010;
(o) Stock Register of Labels for the month of March 2010;
(p) Daily Stock Account of Shampoo for the month of March 2010;
(q) Daily Stock Account of Moisturizer for the month of March 2010;
(r) Stock Register of Glycerine for the month of March 2010;
(s) Stock Register of Light Liquid Paraffin for the month of March 2010;
(t) Stock Register of Propylene Glycol for the month of March 2010;
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E/50265/16-DB (u) Stock Register of Phenoxy Ethanol for the month of March 2010;
(v) Stock Register of Xantham Gum for the month of March 2010;
(w) Stock Register of Suffolon LME-28 for the month of March 2010;
(x) Stock Register of CAPB for the month of March 2010; (y) Stock Register of Cocodi for the month of March 2010; (z) Stock Register of Cocomono for the month of March, 2010;
(aa) Stock Register of EGMS for the month of March 2010; (bb) Stock Register of T.L.S. for the month of March 2010; (cc) Stock Register of C-2011 for the month of March 2010; (dd) Stock Register of Triethanol Arine for the month of March 2010.
The appellant vide their letter under Ref. PHH/005/10-11 dated 25.3.2011, also submitted following documents:-
(i) First Sale Invoice No. 001 dated 31.3.2010 of the appellant;
(ii) List of Employee/workers working in the unit as on 31.3.2010;
(iii) Copy of retail invoice No. R/10-11/78 dated 24.7.2010;
(iv) Copy of Quarterly return for the quarter ending March 2010;
(v) Copy of power of attorney in the name of Bharam Prakash Sood by the proprietor of the appellant;
(vi) Copy of Cash bill dated 22.3.2010 issued by M/s Shivalik Closures, Plot No. 21, Sec. 3, I.I.E. SIDCUL, Ranipur, Hardwar in respect of Outer Box;
(vii) Copy of Trading & Profit/Loss Account of the appellant for the period ending 31.3.2010. Later Shri Braham Prakash Sood, vide his letter Ref. PHH/001/11-12 dated 5.4.2011, submitted following documents:
(a) License to Manufacture cosmetics for sale from Drug Licensing & Controlling Authority, Uttrakhand.
(b) Wrappers/Labels in respect of Boosting Shampoo (200ml.) and Winter Cherry Moisturizer."6
E/50265/16-DB 3.2 The Excise officer also summoned Shri Lokesh Kumar Shambhu, Manufacturing Chemist of the appellant for giving his statement under Section 14 of the Act. On being asked by the Excise officer about meaning of 'Aqua' he has stated that Aqua is water. However, in the process of manufacture of 'Boosting Shampoo' and Winter Cherry Moisturizing Lotion, normal water is not used because quantity of TDS (Total Dissolved Solids) in the normal water are very high. The high TDS leads to easy fungus growth, which subsequently reduced the shelf life of any cosmetic product. Therefore, only De mineralized water are used for manufacturing of cosmetic products by the Appellant. DM water was being procured by the unit/or manufactured with the help of RO Plant/DM water plant installed in the factory. Further, it can be purchased from the open market if need arises in case of exigency. 3.3 The departmental officer scrutinised the documents submitted by the Appellant and thereafter it was found that 'Boosting Shampoo' was shown to have been cleared by Invoice No. 001 dated 31.3.2010. However, going through the back label, of 'Boosting Shampoo' it was noticed that Aqua is printed under key ingredients. The DM water which is used in the 7 E/50265/16-DB manufacture of the cosmetics products is sometimes also referred as Aqua. On being asked about the installation of the DM plant/RO plant on or before 31.3.2010, Shri Braham Prakash Sood, in his statement dated 21.3.2011 stated that no DM water plant/RO plant was installed till 31.3.2010. Both DM plant and RO plant were installed by the appellant after 31.3.2010, which is clearly evident from the purchase invoice in respect of RO to DM plant on or before 31.3.2010 and, therefore, it was concluded by the department that there was no commercial production on or before 31.3.2010 as there was no facility of manufacturing of DM water which is one of the essential ingredient of the said shampoo and 'Winter Cherry Lotion'.
3.4 Stock registers of the appellant was also scrutinised by the department and from the scrutinisation thereof it was found that although the various other ingredients required for the manufacture of boosting shampoo and winter cherry moisturizing lotion have been recorded therein but there was no record of procurement and despatch of DM water and, therefore, it was also concluded that the appellant have not manufactured these products on or before 8 E/50265/16-DB 31.3.2010, the sunset clause of notification for availment thereof.
3.5 The manufacturing of the aforesaid two products could not have been done without the DM water as per the statement of Shri Lokesh Kumar Shambhu, the chemist of the appellant unit. Similarly, the stock register also revealed that many of the important ingredients such as propylene glycol, xanthan gum, tri ethanol amine etc. Cosmetic products which are the essential ingredients of the manufacture have not been issued by the appellant for their manufacture. 3.6 During the visit of the Central Excise officer the photographs were taken which showed that no plant machinery or necessary equipments have been found to be installed which also supported the fact that the appellant failed to commence the commercial production before the stipulated date of 31.3.2010 as per the notification.
3.7 Based on the above facts, the show cause notices were issued to the appellant vide C. No. V(15)OFF/ADJ- 1/5/2012 dated 31.1.2015 for the period April 2010 to March 2014.
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E/50265/16-DB Another show cause notice was also issued to the appellant vide SCN No. V(15)OFF/Adj./DDN/49/2015 dated 27.4.2015 which was for the period from April 2010 to March 2015.
The aforesaid show cause notices were adjudicated upon vide the impugned order confirming the demand along with interest and penalty under Central Excise Act, 1944.
4. It was submitted by the appellant that they have set up the unit in Hardwar at Plot No. 43, Sector 2, IIE, Sidcul for the manufacture of cosmetics preparation falling under Chapter 33 and 35 of Central Excise Tariff, 1985 and claiming Area Based Exemption under Notification No. 50/2003-CE dated 10.6.2003, for which they are registered with the District Industries Centre after obtaining NOC from Uttrakhand Environment Protection and Pollution Control Board. They also got the power connection installed and got themselves registered with the VAT department. The appellant had purchased machinery, equipments, raw materials and packing materials etc. for manufacture of the two products viz. boosting shampoo and winter cherry moisturizing lotion. The appellant has also got the staff employed and engaged for carrying out their manufacturing activity at the aforesaid unit. 10
E/50265/16-DB 4.1 It was also stated that before commencing the commercial production, the appellant filed a requisite option as prescribed in the aforesaid notification by writing the jurisdictional Deputy Commissioner, Central Excise, with a copy to the Range Supdt. on 29.3.2010. It was submitted that the appellant commenced production of the aforesaid two products in their factory on 29.3.2010. The appellant was hopeful of getting finished product cleared on 30.3.2010 and, therefore, they prepared the Invoice No. 001 to 006 bearing date as 30.3.2010. But due to non-receipt of Drug Licence from the competent authority; the first lot of finished goods could be cleared on 30.3.2010. Therefore, the invoice No. 001 to 006 were re-made on 31.3.2010 in the name of the buyers with the same details. However, the appellant on account of their business on account of fast approaching last date, though cancelled invoices dated 30.3.2010 but the same remained lying in the office as the appellant could not destroy the same. The copies of the cancelled invoice dated 30.3.2010 were inadvertently submitted along with reply to the show cause notice to the adjudicating authority. No goods were removed on invoice dated 30.3.2010 and therefore, the invoice bearing the same number dated 30.3.2010 was the correct invoice.
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E/50265/16-DB
5. At the time of hearing, ld. Advocate has submitted that following facts had been admitted in the impugned show cause notice:
(i) That the show cause notice does not level allegation of absence of plant and machinery except DM/RO water plant; the appellant could manufacture their finished goods even without the RO/DM plant, number of employees were sufficient and the receipt of raw material was also not disputed.
(ii) That the sales and manufacture of the product are two entirely different events. The exemption under impugned Notification (50/2003-CE dated 10.6.2003) only requires the commencement of production by 31.3.2010. Whether the goods were manufactured and sold by 31.3.2010 is not the condition for availing the aforesaid exemption.
(iii) Panchnama which was drawn by the officer of the department on their visit to the factory alleges non- commercial production by 31.3.2010 on the basis that at the time of drawing of the Panchnama no plant and machinery were visible and also some of the material used for manufacture of these products were not 12 E/50265/16-DB shown to have been issued for the issue register maintained by the appellant.
(iv) That the Commissioner has observed that the entry of the issuance of raw material found in the stock register of some of the raw material was an afterthought to cover up the documentary evidence. This observation in the impugned order is not acceptable as the stock register, whether contained the entries or not, were submitted to the investigating officer on 21.3.2011.
6. The ld. Advocate also submitted that there was no statutory obligation on their part to maintain the stock register and regular entries in their stock as they were neither registered with the Central Excise Department nor were availing the Cenvat credit. Moreover, as the sunset date was approaching fast that lot of things had to be managed, the Accountant inadvertently forgot to make entries of issuance in their three ingredients in the stock registers. Non-issuance in the stock register in respect of one of the essential inputs required for the manufacture of boosting shampoo and three of the five essential input in respect of winter care moisturising lotion cannot lead to conclusion that about said raw materials were not used and consequently production of boosting shampoo and winter cherry moisturizing lotion have not been done. 13
E/50265/16-DB 6.1 As regards to allegation of non use of grapes, echinacea, coco butter and winter cherry for manufacturing shampoo, Shri Lokesh Kumar Shambhu, Chemist in their unit, in his statement dated 8.4.2011, stated that these products namely boosting shampoo and winter cherry moisturizing lotion, could be manufactured without using these items. The Commissioner cannot and should not reject part of expert opinion and relying on the some part of the same while rejecting the others and reliance was placed on the case of Ratnamani Metal & Tubes Ltd. Vs. CC - 2013 (291) ELT 369 (Tri.-Ahmd.). It was also submitted by the ld. Advocate that if certain ingredients are not used in manufacture of products, the department cannot force them to do so as this was within the purview of different law enforcing agency. In the appellant's case the buyers have submitted affidavit that they had not received any complaint against the product purchased by their customers which were purchased at the strength of invoice dated 31.3.2010 of the appellant. Further, also not making the entry in the 'issue' column of the 14 E/50265/16-DB stock register maintained by the appellant it cannot be concluded that the said raw materials were not used in the manufacture of finished goods. The Panchmama is not reasonable and therefore arbitrary. None use of raw material can only be ascertained by physical stock- taking of the raw material and comparison of their quantity with the quantity received. But no physical stock taking of the raw material was undertaken by the officers who visited the appellant's unit on 24.4.2010 or even thereafter. Therefore, the allegation as well as the finding of non use of the essential raw material (ingredients) in the manufacturing of aforesaid goods is merely based on the assumption and presumption and cannot have any evidentiary value.
6.2 The ld. Advocate also stated that the demand is time-barred on the ground that Department was aware of the entire fact about the manufacturing activity and commencement of production.
7. On the other hand, the ld. AR has submitted that the impugned order is correct, legal and proper. It was argued that at the time of visit by the officers of the department, it was ascertained 15 E/50265/16-DB that there was no existence of plant and machinery required for the manufacture of goods. Also from the perusal of the stock register, it was obvious that some of the ingredients, which were held to be essential for the manufacture of the aforesaid two products viz. the moisturizing lotion and shampoo were not issued and have shown to be used in the manufactured goods. It is also on record that the Drug Licence was issued to the appellant on 30.3.2010 and therefore, they could not have produced the goods before that date, also the appellant has agreed that they could not obtain DM/RO plant before 31.10.2003. Therefore, it could not be possible for the appellant to manufacture the aforesaid goods before the sunset date of 31.10.2010 for manufacture of aforesaid goods as required under the Notification No. 50/2003.
8. We have gone through the submissions made by the ld. Advocate and ld. DR.
9. We have also perused the case record and various submissions made by the appellant. The issue before us is to decide as to whether the appellant had manufactured their goods before the prescribed date i.e. 31.3.2003 or not. It has been held by the adjudicating authority that there was no DM/RO plant in the factory before 31.10.2003, which is one of the essential ingredient for the manufacture of the cosmetic products manufactured and cleared by 16 E/50265/16-DB the appellant. This fact is also not disputed by the appellant as the record shows that the DM/RO plant has been purchased on 31.10.2010 by the appellant. Therefore this fact is uncontroverted. However, it is seen that the DM/RO plant is required to produce demineralised water which is required for the manufacture of shampoo and moisturizing lotion manufactured by the appellant. It has been argued by the appellant and also accepted by the Chemist of the appellant that the product could be manufactured without demineralised water plant on account of the fact that the plant is required to produce the distilled water which is to be used in the product manufactured by the appellant. It has been argued that for the demineralised water, it is not necessary that appellants should be having the plant within its manufacturing unit. As the time limit for availing the notification the appellant was approaching fast the appellant decided to use distilled water for the purpose of manufacture of lotion and boosting shampoo. The department has not disputed the use of the distilled water for the manufacture of the above products. It has been affirmed by the Chemist of the unit that DM/RO plant is meant to produce distilled water required for the manufacture of their final product. The Appellant has used the distilled water for the manufacture of said product which cannot be disputed by the department. The only non-existence of the DM/RO plant will not prove that the products has not been manufactured by the appellant on or before 31.10.2010. The other ground taken by the department is that the Drugs Licence which is required for the 17 E/50265/16-DB purpose of manufacture of the cosmetic products has been issued on 30.3.2010 and therefore, the appellant could not have manufactured the said product before obtaining the same from the competent authority. We have seen drug licence, it is issued by the competent authority on 30.3.2010 before commencement of last date as contained in the Notification No. 50/2003. It is the contention of the appellant that they have manufactured these products in anticipation of getting the licence from Drug Controller which was due to unavoidable reasons could not be issued before 30.3.2010. They further state that they had stock of finished products which they have manufactured and cleared them before the last date as contained in the notification for availing the benefit of exemption. The above argument of the appellant appears to be acceptable to us as it is for the Revenue to find out as to whether the appellant has contravened the provision of Drugs Control Act by undertaking the manufacturing before the issue of drug licence or not. If there is a contravention the same could have been referred to the competent authority under Drugs and Cosmetics Act. Moreover, the product which are being manufactured by the appellant is not the one which required the complex manufacturing process and in order to avail area based exemption before the expiry of the date they could manage to manufacture the goods before the last of the notification. The Department has also contended that the appellant has produced two sets of invoice for the same product mentioned in invoice name 001 to 006 and dated 30.10.2010 and 31.1.2010 for the denial of 18 E/50265/16-DB benefit of notification. It has been explained by the appellant that they were anticipating the clearance of these products on 30.10.2010 but due to certain technical reasons they could not do so and despatch their products on 30.10.2010 by the other set of invoices which was made on 31.10.2010. This argument of the appellant cannot be rejected on the ground that when any intention to suppress the fact would have been there they could not have produced these invoice in their reply to their show cause notice, even inadvertently. It is, therefore, that there was no mala fide on the part of the appellant. Subsequently, on being aware of the mistake they submitted another set of invoices which was issued on 31.10.2010. Since the expiry date of the notification was coming fast there was no option but to clear the goods before 31.10.2010. After going through the Notification 50/2003 we have seen that the condition is as under :
Notification No. 50 /2003 - Central Excise "G.S.R (E) .- In exercise of the powers conferred by sub- section (1) of section 5A 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 located in the Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial 19 E/50265/16-DB Estate or Scheme Area, as the case may be, specified in Annexure-II 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.
The exemption contained in this notification shall apply only to the following kinds of units, namely:-
(a) new industrial units which have commenced their commercial production on or after the 7th day of January, 2003;
(b) industrial units existing before the 7th day of January, 2003, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty five per cent, on or after the 7th day of January, 2003.
3. The exemption contained in this notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification in the Official Gazette or from the date of commencement of commercial production, whichever is later."
10. The condition only prescribes that commencement of the production should start on or before 31.10.2010. It nowhere prescribes clearance of the goods before 31.10.2010, that is last date contained in the notification. Even if the appellant manufactured products before 31.10.2010, it cannot said with certainly that they not manufactured the goods before that date. The appellant has relied upon the various decisions about the excisability and marketability of the product. Excisability is to be decided on the point of manufacturing of the sale where marketability is altogether different event. The excise duty is required to be paid on the manufacture of the goods however, the payment of duty has been deferred to the marketing thereof.
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E/50265/16-DB
11. It is on record that the department had issued a letter to the appellant vide letter F.C No. II(8)/PREV/NIP/PROVEDS/357/10 dated 19.5.2010 stating that :
"With reference to your aforesaid intimation, a team of officers of this division was deputed to verify the correctness of your intimation and claim of exemption under said notification. The officers visited your factory premises on 24.04.10. At that only one person, Shri C.H. Viswakarma was available in the unit. He told the Officers that he look after the maintenance of the unit. During visit the Officers found that no plant and machinery was available in the premises except one Pedal Filing Machine. Though some raw material was also available in the unit but neither manpower nor any record was available. Further no manufacturing was being done in the premises. The Officers requested to Shri Vishwakarma to tender his statement but he denied and submitted that he is not authorised for the same. The Officers shot the photographs of the unit and drawn a panchnama in the presence of two independent witnesses. The Officers observed that you have not commenced the commercial production till 31.3.2010 as stipulated under the said notification no. 50/2003-CE dated 10.06.03 and therefore not eligible for Central Excise duty exemption under said notification.
In view of above observations, you are suggested to get yourself registered under Central Excise Rules, immediately and discharge your duty liability properly."
12. After receipt of the aforesaid letter they filed reply to Deputy Commissioner, Customs & Central Excise, Dehradun vide their letter dated Nil which was received by the Assistant Commissioner on 29th Nov. 2010 itself. In the said letter, the appellant has contested the review to the department that the manufacturing process has not 21 E/50265/16-DB commenced till 31.3.2010 as per Notification No. 50/2003 dated 10.6.2013 and therefore, not eligible for Central Excise exemption. In the said letter, it was stated that at the time of visit of the officer to their unit which was around 1200 hrs. i.e. 24.4.2007. It was also informed that the department due to power cut they were forced to close their unit before 1800 hrs and thus there was no manpower available at the site. The factory plan comprises of a ground floor and a first floor. At the time of visit of the officer, the workers and employee had already left the factory at 1800 hrs. and the first floor was locked with the keys taken by the factory Manager Shri Mohan Lal Soniwal. The appellant also asked for the Panchnama drawn at the time of visit along with the photograph which was alleged to have been taken by the officer during their visit to the appellant's unit on 24.4.2010. In the letter, appellant also given the description of the activity undertaken by them for the commencement of manufacturing operation before 31.3.2010. The event wise activities are described as under:
Serial No. Description Annexure
reference
1. CST Registration certificate dated 05/01/2010 1
2. Uttarakhand VAT Registration dated 25/01/2010 2
3. Directorate of Industries Certificate (issued by GM, 3
District Industry Centre, Roorkee) Part-1 No. 050131201378 dated 27/01/2010 4. Uttarakhand Commercial Tax Registration 4 Certificate dated 28/01/2010
5. Central Investment Subsidy Registration 5 Certificate dated 08/02/2010
6. Possession letter dated 26/02/2010, issued by 6 State Infrastructure and Industrial Development Corporation of Uttarakhand, for allotment and 22 E/50265/16-DB transfer of industrial land on a lease of 99 years
7. No Objection Certificate issued by Uttarakhand 7 Pollution Control Board dated 27/03/2010
8. Declaration dated 29/03/2010 claiming 8 exemption under notification 50/2003-CE dated 10/06/2003 as amended
9. Power connection transfer Certificate dated 9 29/03/2010
10. Drug license Certificate no. 33/CA/2010 dated 10 30/03/2010
11. Chartered Engineer's Certificate dated 11 31/03/2010
12. Khasra Number Certificate dated 08/04/2010, 12 issued by Tehsildar, Haridwar.
13. Air and Water Consent from Uttarakhand 13Pollution Control Board Certificate dated 01/10/2010
13. The department has not verified all these submissions made by the appellant and concluded that the manufacturing activity has not started before 31.3.2010, which is not correct on the part of the Revenue. We find that the appellant has contested the Revenue's stand that manufacturing operation has not taken place has been contested by the appellant. The due verification was required to be done by the Revenue before proceeding with denial of exemption notification raising against the appellant. We do not find any evidence to the effect that these activities were not undertaken by the appellant.
14. In this regard, we also find that similar issue has been decided by Hon'ble CESTAT in the case of Vega Auto Accessories Pvt. Ltd. Vs. CCE & ST, Meerut-I vide Final Order No. 50711-50715/2017 dated 6.2.2017, wherein the Tribunal had held as under : 23
E/50265/16-DB "8. We find that during March, 2010 the appellant did not possess all the machinery to manufacture helmet from raw material (plastic) to finished goods (helmet). However, admittedly, they undertook manufacture of helmet from semi-finished shell procured by them. We have perused various photographs submitted by the appellant to explain the manual processes involved in making helmet from such shells. The said processes do not require elaborate/sophisticated machinery. The timely declaration of commencement of production and thereafter clearance of helmet before 31.3.2010 was intimated to the jurisdictional officers. The impugned order rejected the two clearances made by the appellant as forged documents. Such serious allegation was not elaborated with any shred of evidence. The sales of helmets are to specific parties and transport also has been evidenced. No verification has been carried out by Revenue on this aspect. We find that the impugned order was passed in a presumptive and summary manner without due analysis of all evidences, details submitted by the appellant.
9. Thus, we are of the view that the department has not properly conducted the inquiry in order to arrive at the conclusion that the appellant is not entitled for the exemption provided in Notification dated 16.3.2010. The evidences submitted by the appellant show the commencement of commercial production and VAT paid clearances of excisable goods by the unit prior to 31.3.2010."
15. In this case also, we find that the Revenue has not conducted the proper investigation about the manufacture and clearance of the goods as discussed in the foregoing para. In fact the appellant has produced the document for transport of manufactured goods also along with the affidavits from the buyer that the goods were received by them and also there was not defect in the goods sold the presumption of their manufacture, sale and transport cannot be doubted.24
E/50265/16-DB
16. In the circumstances, , we are of the view that the appellant has started commencement of the production before 31.10.2010 and therefore, eligible for area based exemption as contained in the impugned notification.
17. Accordingly, we allow the appeal.
(Pronounced in Court on 16.11.2018)
(Rachna Gupta) (Bijay Kumar)
Member (Judicial) Member (Technical)
RM