Custom, Excise & Service Tax Tribunal
M/S Maha Lakshmi Packagers vs Cce, Chandigarh I on 25 February, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 25/02/2015. DATE OF DECISION : 25/02/2015. Excise Appeal No. 57375 of 2013 alongwith Misc. Application No. 55724 of 2014 [Arising out of the Order-in-Appeal No. 20/CE/Appl/CHD-I/2013 dated 28.01.2013 passed by The Commissioner (Appeals), Central Excise, Chandigarh I.] For Approval and signature : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Maha Lakshmi Packagers Appellant Versus CCE, Chandigarh I Respondent
Appearance Shri Vikrant Kackaria, Advocate for the Appellant.
Shri R.K. Grover, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) Honble Shri S.K. Mohanty, Member (Judicial) Final Order No. 50723/2015 Dated : 25/02/2015 Per. Rakesh Kumar :-
The appellant are manufacturers of Corrugated Board Boxes. There is no dispute that the goods being manufactured by them are not covered by the list of negative items mentioned in Annexure I to the Notification No. 50/03-CE and that the unit is located in the area specified in Annexure II to the exemption notification. The appellant unit had commenced commercial production on 23/10/08. Though at that time they were eligible for Notification No. 50/03-CE and could have opted for the same, but appellant unit did not opt for this exemption and had opted for SSI exemption under Notification No. 8/03-CE. On 03/11/09, the appellant unit crossed the SSI exemption limit and was no longer eligible for the SSI exemption. Immediately thereafter, the appellant switched over exemption to Notification No. 50/03-CE and as such started availing of this full duty exemption Notification number. However at that time, they did not file the required declaration for availing Notification No. 50/03-CE as per the condition of this notification. The required declaration was filed only on 28/6/10. Here it may be mentioned that in terms of para 2 of the Notification No. 50/03-CE this notification applies to two kinds of units (a) the new industrial unit set up in the areas mentioned in Annexure II and III which has commenced commercial production on or after 01/1/03, but not later than 31/3/10. (b) the units existing before 07/1/03 in the areas mentioned in Annexure II which have undertaken expansion by the way of 25% or more increase in installed capacity on or after 07/1/03 and have commenced commercial production from such expanded capacity not later than 31/3/10. The departments case against the appellant is that since the appellant had filed the required declaration after 31/3/10, they are not eligible for this exemption. It is on this basis that benefit of exemption has been totally denied and accordingly the Deputy Commissioner vide order-in-original dated 19/7/11 denied the exemption under Notification No. 50/03-CE to the appellant w.e.f. 3/11/09. This order of the Deputy Commissioner was upheld by the Commissioner (Appeals) vide order-in-appeal dated 28/1/13 against which this appeal has been filed.
2. Heard both the sides.
3. Shri Vikrant Kackaria, Advocate, the learned Counsel for the appellants, pleaded that the issue involved in this case stands clarified by the Board in its Circular No. 332/23/11-TRU dated 26/4/12 wherein it has been clarified that the sun set clause is applicable only for the purpose of determining eligibility for this notification and once a unit has fulfilled the criteria for availing the benefit of exemption, the same has to be allowed, that the sunset date of 31st March 2010 is for commencing commercial production by a new unit or by an existing unit from expanded capacity and there is no provision in the notification which stipulates that to avail of this exemption, the option must be exercised before the sun set date and that are eligible unit even after the 31/3/2010 can exercise the option for this exemption, that in view of this, the very basis on which the exemption is sought to be denied is totally wrong, that Tribunal in a series of judgment has held that filing of declaration is only a procedural requirement and the substantive benefit of exemption cannot be denied for non filing of declaration and in this regard he relies upon the Tribunals judgment in the cases of Herbal Concepts Healthcare Pvt. Ltd. vs. CCE, Meerut I reported in 2013 (294) E.L.T. 570 (Tri. Del.) and Packaging India Pvt. Ltd. vs. CCE, Meerut reported in 2013 (294) E.L.T. 246 (Tri. Del.). He therefore pleaded that the impugned order is not correct.
4. Shri R.K. Grover, learned DR, defended the impugned order by reiterating the findings of the Commissioner (Appeals). He pleaded that in any case, the benefit cannot be given for the period prior to the date of filing of declaration 28/5/10, as the notification itself states that the option for this exemption notification shall be effective from the date of exercise of option and since the option has been itself was exercised by filing the required declaration on 28/6/2010, the benefit of this exemption cannot be extended for period prior to 28/6/10.
5. We have considered the submissions from both the sides and perused the records.
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. 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 (ii) of the first para of the exemption notification was filed only on 28/6/10. The Departments 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 :-
To, All Director General All Chief Commissioner of Central Excise and Customs, All Chief Commissionerate of Central Excise.
Sir/Madam Subject : Availability of benefit of exemption on goods on which an excise duty has been imposed after the expiry of sunset clause under area based exemption scheme Reg.
Board has received representations from trade and industry seeking clarification on the issue of availability of excise duty exemption benefit under Notification No. 49/2003-CE and Notification No. 50/2003-CE both dated 10/06/2003 to new units or substantially expanded units which commenced commercial production, on or before the sunset date of 31/03/2010 but did not claim exemption at the time of commencement as the goods earlier attracted nil rate of duty or were optionally exempt at that time. The issue has arisen because excise duty has either been imposed or made mandatory on goods manufactured by them units subsequent to the sunset date.
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 fulfil for availing the benefit of exemption under the said Notifications 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 formation may 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 no where 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. For the goods on which an excise duty or a mandatory excise duty levy was imposed w.e.f. 01/3/2011, the benefit of exemption would be available to an eligible unit during the month of March, 2011 but for the period from the date on which the option was exercised till 31st March, 2011. It may be noted, however, that the ten year period for such unit would also be computed from the date of commencement of commercial production from new or expanded capacity as prescribed in the notification and not from the date on which option has been exercised.
4. I am directed to say that the above position may be brought to the notice of Commissioners under your charge so that pending disputes, if any may be decided accordingly after due verification of the eligibility of such units.
Yours sincerely, (Vivek Johri) JS (TRU) 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 31/3/10, is not correct.
7. Next point of dispute is as to whether the benefit of this notification would be available only w.e.f. 28/6/10 or would be available from 04/11/09. In this regard there is no dispute that the appellant had not filed the required declaration. There is also no evidence that they had informed to the Department by any other communication or had mentioned the availment of this exemption in the ER-1 returns filed by them. In terms of Condition (i) of the exemption notification the manufacturer who intends to avail of this exemption under this notification, shall exercise his option in writing before effecting the first clearance of such option before effecting the first clearance and such option shall be effective from the date of exercise of this option and shall not be withdrawn during the remaining part of the financial year. Condition (ii) prescribes the manner of filing declaration and also the information which the declaration should contain. In our view from the wordings of the notification it is clear that the exemption would be available only from the date from which the declaration is filed and, therefore, the exemption cannot be extended for the period prior to filing of this declaration. Moreover, the condition of filing declaration is designed to prevent the misuse of the exemption notification and to enable the Jurisdictional Assessing Officer to examine as to whether the assessee is eligible for benefit of this exemption notification or not. Therefore, the filing of this declaration cannot be said to be a pure procedural or technical requirement. It is well settled law that when a notification subject to some condition and that condition has been put to prevent the misuse of the exemption notification, non fulfilling of that condition cannot be treated as a mere procedural or mere technical violation and would result in denial of exemption. In this regard, we supported by the Apex Courts judgment in the case of CCE vs. Harichand Shri Gopal reported in 2010 (250) E.L.T. 3 (S.C.). In view of this we hold that the exemption Notification No. 50/03-CE would be available to the appellant only w.e.f. 28/06/2010 and not for the period prior to 28/06/2010. The appeal is thus partly allowed. Since the matter has been disposed of, the miscellaneous application for listing of this matter for early hearing is dismissed as infructuous.
(Dictated and pronounced in open court.) (Rakesh Kumar) Member (Technical) (S.K. Mohanty) Member (Judicial) PK ??
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