2009 (8) TMI 979 - AT - Central Excise

Area based exemption - N/N. 39/2001 dated 31-7-2001 - Whether the benefit of exemption would be available to goods/product that unit starts manufacturing after the cut of date for the commencement of commercial production i.e. 31-12-2005? - Held that - Even though we are aware of the fact that Tribunal is not bound by the clarification issued by the Board, we find that in this case clarification issued by the Board is elaborate and expands the scope of Notification and makes intention clear. Basically what emerges from the clarification is that the purpose of the clarification is to ensure that plant and machinery is installed within the duty date, commercial production started and the value of the plant and machinery is as per the requirement of the Notification. The intention behind the Notification is to encourage investment and industrial growth in Kutchh area of Gujarat State and this development should take place within a particular date. Thus going by the intention behind the Notification read with clarification issued by the Board, we find that in this case, except for the fact that these two products produced were at a later date, all other conditions have been fulfilled. What is required to be considered is whether the products have been produced by using the same plant and machinery. We find that the appellants have fulfilled all the conditions of the Notification. Therefore, we do not find any merit in the appeal filed by the Revenue - appeal rejected - decided against Revenue.

Summary

Issues:
Refund claim rejection for duty paid on specific products manufactured after the cut-off date for commercial production under Notification No. 39/2001.

Analysis:
The judgment revolves around the assessee's refund claims for duty paid on products Bricks and Calcined Bauxite, which were rejected due to manufacturing post the cut-off date for commercial production. The Commissioner (Appeals) overturned the rejection, prompting the Revenue's appeal. The Revenue argued that no commercial production occurred before the cut-off date, emphasizing the products' dependency on machinery not utilized by then. The Board's clarification on exemption eligibility for products introduced after the cut-off date was referenced, highlighting distinctions between new and existing products based on machinery use.

The Respondent's representative contended that all conditions under Notification No. 39/2001 were met, including plant and machinery installation and commercial production commencement before the deadline. The department did not dispute the commercial production start date. The products in question were manufactured using pre-cut-off machinery, reinforcing eligibility for exemption. The Tribunal analyzed the Notification's conditions, emphasizing the importance of machinery installation by the due date and commercial production initiation. The Board's clarification, although not binding, clarified the Notification's intent to promote investment within a specified timeframe in a specific region.

Ultimately, the Tribunal found that, except for the products' post-cut-off manufacturing date, all Notification conditions were satisfied. The critical consideration was whether the products were made using the same machinery installed within the deadline. As all conditions were met, the appeal by the Revenue was dismissed, affirming the Commissioner (Appeals)'s decision. The judgment underscores the Notification's objective to encourage industrial growth within a set timeline, aligning with the Board's clarifications to interpret and apply the exemption criteria accurately.