2013 (9) TMI 577 - AT - Central Excise

Area based exemption - Delay in filing the declaration / option to avail benefit of Notification No.50/2003-CE - Appellant commenced their commercial production on 28.12.2004 and started clearance of their final product with effect from 27.1.2005, by claiming the benefit of Notification No.50/2003-CE. The said notification was duly mentioned in the invoices showing clearance of the goods without payment of duty - A formal application exercising option to avail benefit of Notification No.50/2003-CE was filed by the appellant on 27.6.2005 - The appellant was served with show cause notice proposing to deny the benefit of Notification for the period January 2005 to June 2005 on the ground that proper declaration was filed only on 27.6.2005 Held that - Relying upon the decisions in various cases such as Bombay Processors vs. C.C.E., Mumbai 2005 (3) TMI 206 - CESTAT, MUMBAI ; Super Plateck Pvt. Ltd. vs. C.C.E., Chandigarh 2004 (11) TMI 445 - CESTAT, NEW DELHI etc., it is held that once the assessee satisfies eligibility clause of the notification, exemption clause has to be construed liberally. Further, assessee is required to file option giving details, which already stand given by them in the first letter. Further, while issuing invoices, the appellant was claiming the benefit of notification in question. As such, there was enough intimation to the Revenue about availment of the benefit of the Notification in question. Merely because formal letter was filed subsequently, the same cannot be a ground for denial of the benefit prior to the said date in the absence of dispute about availability of the benefit of the Notification. Appeal allowed Decided in favor of Assessee.

Summary

Issues:
1. Exercise of option for availing exemption under Notification No.50/2003-CE before first clearance.
2. Denial of exemption benefit due to late filing of option by the appellant.
3. Interpretation of procedural requirements for availing exemption under the notification.
4. Precedents regarding late filing of option for availing exemption benefit.

Analysis:

1. The appellant had set up a new unit for manufacturing hairoil, shampoo, and face cream in Hardwar and applied for registration under Rule 9 of Central Excise Rules, 2002. They commenced commercial production and started clearing final products under Notification No.50/2003-CE. However, a show cause notice was issued proposing denial of the benefit for the period before the formal application was filed, citing non-exercise of option before the first clearance.

2. The main contention was the late filing of the formal application exercising the option to avail the notification benefit. The Revenue argued that since the option was exercised after the first clearance, the benefit should be denied for the period before the formal application. The appellant, on the other hand, argued that all necessary details were provided during registration, and the invoices reflected the benefit claimed, indicating their intention to avail the notification.

3. The Tribunal analyzed the requirements of Notification No.50/2003-CE, emphasizing the need to exercise the option in writing before the first clearance. The appellant's initial registration application included all the required details such as factory location, input description, and final product details. The Tribunal held that the purpose of the option letter was to notify the Revenue of the unit's existence in the specified area and the availability of the notification, which was achieved through the registration application.

4. Referring to various precedents, the Tribunal noted that delays in filing the option letter for availing notification benefits were not fatal to the claim of exemption. Decisions in similar cases highlighted that the late filing of the option was a procedural requirement and did not warrant denial of the substantive benefit of exemption. The Tribunal found that the appellant had sufficiently intimated the Revenue about availing the notification benefit through their registration application and subsequent invoicing, leading to the allowance of the appeal.

In conclusion, the Tribunal set aside the lower authorities' decision and allowed the appeal, emphasizing that the appellant's compliance with substantive conditions and the intimation of availing the notification benefit through registration and invoicing justified granting the exemption benefit despite the late formal application filing.