2015 (7) TMI 264 - AT - Central Excise

Area based exemption - Exemption under Notification No. 50/03-CE dated 10/6/03 - whether or not the commercial production had commenced on or before 31/03/2010 - Held that - For being eligible for the exemption notification it is necessary that the commencing of the commercial production should have been taken place on or before 31/03/2010. Though the appellant had intimated the Jurisdictional Central Excise officers about availment of this exemption under their letter dated 23/03/2010 their unit was not visited by the Jurisdictional Central Excise Officers during the last week of March 2010 which was the crucial period for determining as to whether the plant was in position to commence commercial production or not. If the plant had been visited by the Jurisdictional Central Excise officers on 31/03/2010 and got surveyed by a Chartered Engineer and his opinion on the point of commissioning taken there would have been no scope for dispute on this point. In this regard the certificate dated 15/07/2010 given by the Member Secretary Single Window Clearance Agency Kala Amb H.P. is in the appellant s favour as it certifies that the commercial production had commenced on 31/03/2010. However it is not clear from this certificate that this certificate had been given after actually visiting the plant on 31/03/2010 or only on the basis of the records. As regards the allegation that sale of 3.48 MT of Aluminium Coils had been shown to M/s Shirdi Sales on 31/03/2010 who were only a dealer in Particle Boards and whose Director Shri Sanjay Bajaj on inquiry had stated that they had not placed any orders for these goods the statement dated 31/05/2010 of the Director Shri Sanjay Bajaj stating that he had not placed any orders for Aluminium Sheets is not an evidence in support of the allegation that the goods produced on 30/03/2010 were not of the desired quality and were of non-saleable and sub-standard quality. The crucial question to be decided for determining as to whether or not the commercial production had commenced on or before 31/03/2010 is whether the statement of Shri Dinesh Sharma is correct or whether the certificate given by the Board Secretary Single Window Clearance Agency Kala Amb H.P. is correct. For this purpose in our view Shri Dinesh Sharma and the person issuing the certificate regarding commencement of the commercial production on 31/03/2010 have to be examined as per the provisions of Section 9D (2) read with Section 9D (1) of the Central Excise Act 1944 which has not been done. - impugned order is set aside - Matter remanded back - Decided in favour of assessee.

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 50/03-CE dated 10/6/03.
2. Definition and commencement of "commercial production."
3. Validity of evidence supporting the claim of commercial production.
4. Examination and cross-examination of key witnesses.

Detailed Analysis:

1. Eligibility for Exemption under Notification No. 50/03-CE:
The appellant, a manufacturer of aluminium sheets and foils, claimed exemption under Notification No. 50/03-CE. The notification applies to new industrial units set up after 07/1/03 that commenced commercial production on or before 31/3/10. The appellant argued they met these criteria, having filed the necessary declaration on 23/3/10.

2. Definition and Commencement of "Commercial Production":
The core issue was whether the appellant's unit had commenced "commercial production" by 31/3/10. The term "commercial production" was not defined in the notification. The Tribunal interpreted it as production that is distinct from "trial production," implying the plant must be fully commissioned and capable of producing goods of the desired quality and quantity. The appellant claimed they started commercial production on 30/3/10, producing 5.5 MT of aluminium coils, although the goods were not sold due to quality issues.

3. Validity of Evidence Supporting the Claim of Commercial Production:
The appellant relied on:
- A certificate from the District Industry Centre stating the unit commenced commercial production before 31/3/10.
- A sale of 3.48 MT of aluminium sheets to M/s Shirdi Sales on 31/3/10.

The Department disputed this claim based on:
- Visits by Central Excise officers on 05/4/10, 06/4/10, and 17/5/10, which revealed incomplete installation of machinery, no electricity connection, and ongoing construction.
- Statements from Shri Dinesh Sharma, the unit's supervisor, indicating the production on 30/3/10 was not up to the mark and was essentially a trial run.
- Inquiry with M/s Shirdi Sales, which revealed they had not placed any orders for aluminium sheets, suggesting the sale was bogus.

4. Examination and Cross-Examination of Key Witnesses:
The Tribunal noted the importance of cross-examining Shri Dinesh Sharma and the issuer of the certificate from the District Industry Centre. The Department's reliance on Sharma's statement necessitated his cross-examination to verify its truthfulness, as per Section 9D of the Central Excise Act, 1944.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the original Adjudicating Authority for de novo adjudication. The Adjudicating Authority was instructed to:
- Examine and permit the cross-examination of Shri Dinesh Sharma and the Member Secretary, Single Window Clearance Agency, who issued the certificate.
- Decide the issue of whether the unit commenced commercial production on or before 31/3/10 based on the examination and cross-examination of these witnesses and other evidence on record.
- Complete the adjudication process preferably within 90 days of receiving the order.

The appeals were disposed of accordingly, with the judgment pronounced in open court on 24/06/2015.