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2014 (10) TMI 809 - AT - Central ExciseExemption Notification No.30/2004-CE - Whether the appellants are eligible to the benefit of exemption under Sr.No.6 of the Notification No.30/2004-CE, dt.09.07.2004, as amended, when the appellants are having more than one factories and also have the facilities of manufacturing POY in a factory other than the factory of the appellants where the benefit of Notification No.30/2004-CE, dt.09.07.2004 is being availed - Held that - The act of manufacture is being undertaken by the appellants factory to whom demand show cause notices are issued and each factory will make the person carrying out the activity of manufacture as the manufacturer . There is nothing in the definition of Section-2(f) to indicate that a legal entity only has to be considered as a manufacturer . Rather each assessee has to be treated as a manufacturer and not the entire group of companies as claimed by the Revenue. In the present proceedings also even the demands have been issued by the Revenue to the individual assessee carrying out the exempted processes and not to the head offices of the group companies as a legal entity. Therefore, we are of the considered view that the word manufacturer used in Sr.No.6 of the Notification No.30/2004-CE has to be interpreted as a unit where the act of manufacture is being undertaken which is the individual factory and not all the factories of a group of companies. As appellants were filing periodical ER-1 returns claiming exemption under Notification No.6/2000-CE. As the words used in both the Notification No.30/2004-CE and Notification No.6/2000-CE are in his factory , therefore, appellants could have entertained a bonafide belief that words in his factory used in Notification No.30/2004-CE means the same factory and thus cannot be fastened with the tag of with intent to evade duty for invoking extended period. Appellants obtained separate registrations for the manufacturing activity in each factory and were paying duty on POY which will definitely involve captive consumption valuation, under Rule-8/9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000, while sending POY from the factory manufacturing POY to factory undertaking texturising/draw twisting etc. In view of the above observations demands raised beyond a period of one year are also time barred. - admissibility of CENVAT Credit on duty paid on POY as on merits it is held that appellants are eligible to exemption under Notification No.30/2004-CE dt.9.7.2004 as amended - Decided in favour of assessee.
Issues Involved:
1. Eligibility for exemption under Sr.No.6 of Notification No.30/2004-CE. 2. Invocation of the extended period of limitation. 3. Imposition of penalties on the appellants. Issue-wise Detailed Analysis: 1. Eligibility for exemption under Sr.No.6 of Notification No.30/2004-CE: The appellants argued that the term "his factory" in Sr.No.6 of Notification No.30/2004-CE should be interpreted as "the same factory" where exempted processes are carried out, not any other factory of the manufacturer. They cited various notifications and circulars to support their interpretation. The Revenue, however, contended that "his factory" should include all factories of the manufacturer as a legal entity, emphasizing the legislative intention and historical context of similar exemptions. The tribunal noted that the exemption notification did not define "his factory" and found that the word "manufacturer" should be interpreted as the unit where the act of manufacture is undertaken, i.e., the individual factory, not the entire group of companies. The tribunal also observed that the exemption was for the same factory where the processes were carried out, and not for all factories owned by the manufacturer. This interpretation was supported by previous notifications and circulars, which clearly distinguished between different factories of a manufacturer. 2. Invocation of the extended period of limitation: The appellants claimed that they were under a bona fide belief that the words "his factory" meant the same factory, based on their previous experience with Notification No.6/2000-CE, which used similar wording. They argued that they had been transparent with the Revenue about their manufacturing processes and had filed regular returns. The tribunal agreed with the appellants, noting that the words "in his factory" in both Notification No.30/2004-CE and Notification No.6/2000-CE were similar. Given the appellants' consistent practice and transparency, the tribunal found no intent to evade duty and held that the extended period of limitation could not be invoked. Thus, demands raised beyond one year were time-barred. 3. Imposition of penalties on the appellants: Given the tribunal's findings on the merits and the time-barred nature of the demands, it concluded that there was no justification for imposing penalties on the appellants. The tribunal emphasized that the appellants had acted in good faith and had a reasonable interpretation of the exemption notification. Conclusion: The tribunal allowed the appeals, holding that the appellants were eligible for the exemption under Notification No.30/2004-CE, the extended period of limitation was not applicable, and no penalties were warranted. The decision was pronounced in court on 27.10.2014.
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