2011 (8) TMI 930 - AT - Central Excise

Notification No. 56/2002-C.E., dated 14-11-2002 - The exemption available under this notification is the amount of duty paid by the assessee other than the amount paid by utilization of Cenvat credit under the Cenvat Credit Rules, 2002 - In this case, the respondent on 11-12-2006 produced a certificate from the designated authority certifying that they have undertaken substantial expansion resulting in 25% increase in regular employment - In terms of para 3 of the Notification No. 56/2002-C.E., the exemption under this notification is also applicable to the existing units, which have undertaken substantial expansion by the way of increase in installed capacity by not less than 25% substantial expansion, resulting in not less than 25% increase in regular employment on or after 14-6-2002 - When the duty in respect of clearances made during whole of December 2006 was payable only in the next month and during December 2006, the respondent was eligible for benefit of Notification No. 56/2002-C.E., in our view the benefit of this exemption cannot be restricted only to the clearances made from 11-12-2006 - Decided in favor of the assessee

Summary

Issues:
1. Eligibility for duty exemption under Notification No. 56/2002-C.E.
2. Interpretation of effective rate of duty and period for exemption claim.
3. Appeal against Commissioner (Appeals) order regarding exemption benefit.

Analysis:

Issue 1: Eligibility for duty exemption under Notification No. 56/2002-C.E.
The case involves manufacturers of plywood subject to Central Excise duty seeking exemption under Notification No. 56/2002-C.E. The notification grants exemption to new industrial units or existing units with substantial expansion resulting in a 25% increase in regular employment. The exemption is based on new investments made after a specified date, directly linked to employment generation. To avail the exemption based on new investment, a certificate from the District Industries Centre is required. The exemption amount excludes duty paid through Cenvat credit. The process for availing the exemption involves paying duty through Cenvat credit first and then through PLA, with cash refund for the latter.

Issue 2: Interpretation of effective rate of duty and period for exemption claim
The dispute arose when the Jurisdictional Assistant Commissioner partially rejected the claim, citing that the effective duty rate was 8% and not 16% during the period in question. The Commissioner (Appeals) later clarified that the correct duty rate was 16% and allowed exemption for the entire month of December, not just from a specific date. The department appealed this decision, arguing that the exemption should only apply from the date the claim was filed based on substantial expansion.

Issue 3: Appeal against Commissioner (Appeals) order regarding exemption benefit
In the appeal, the department contended that the exemption should not cover the period before the claim date. The respondent argued that their substantial expansion was completed earlier, making them eligible for the exemption for the entire month of December. The Tribunal analyzed the provisions of the notification and concluded that since the expansion criteria were met before December, the exemption should apply for the entire month, not just from the claim date. The Tribunal dismissed the Revenue's appeal, upholding the Commissioner (Appeals) decision.

In conclusion, the Tribunal upheld the benefit of duty exemption for the entire month of December 2006, rejecting the department's appeal. The judgment clarified the application of the exemption provisions under Notification No. 56/2002-C.E. and emphasized the importance of meeting the expansion criteria for eligibility.