2018 (1) TMI 1569 - AT - Central Excise

SSI Exemption - benefit denied on the ground that the goods were not manufactured in rural area - HELD THAT - The respondent has produced the certificate issued by the local land revenue officer i.e., Tehsildar on the basis of land revenue records. The appropriate authority in the land revenue matters is Tehsildar who is gazetted rank officer of the State Government and is competent to certify the status of the area. In terms of notification the certificate must be issued by the authority of the State Government. The revenue has not brought any evidence that the Notified Area Committee is controlling the area in question and that the Tehsildar is not competent to issue such certificate. There are no infirmity in the order passed by the Commissioner (Appeals) - the respondent is eligible for the benefit of exemption notification in question. Hence the appeal filed by the revenue does not survive on merits - appeal dismissed - decided against Revenue.

Issues:
1. Eligibility for SSI exemption under exemption notification.
2. Validity of certificate for rural area classification.
3. Applicability of extended period for show cause notice.

Analysis:
1. Eligibility for SSI exemption under exemption notification:
The appeal was filed against the Order-in-Appeal by the Commissioner, Central Excise, Aurangabad, challenging the disallowance of exemption notification benefits to M/s. Navketan Pharma Pvt. Ltd for manufacturing P.P. Medicaments under another brand name. The issue revolved around whether the unit qualified for SSI exemption under the relevant notifications. The adjudicating authority had initially confirmed the demand, but the Commissioner (Appeals) set it aside. The tribunal found that the respondent had produced a certificate from the Tehsildar, a competent authority of the State Government, certifying the rural area status. As per the notification, the certificate must be issued by a state government authority, and the revenue failed to prove that the Notified Area Committee controlled the area. Consequently, the tribunal held that the respondent was eligible for the exemption notification, and the appeal by the revenue was rejected.

2. Validity of certificate for rural area classification:
The crux of the issue lay in the validity of the certificate issued by the Tehsildar for certifying the area as rural. The revenue contended that since the certificate was not issued by the Notified Area Committee, the factory could not be considered situated in a rural area. However, the tribunal emphasized that the Tehsildar, being a gazetted rank officer of the State Government, was competent to issue such a certificate based on land revenue records. The tribunal highlighted the lack of evidence from the revenue proving the control of the area by the Notified Area Committee. Consequently, the tribunal upheld the order of the Commissioner (Appeals) and affirmed the eligibility of the respondent for the exemption notification.

3. Applicability of extended period for show cause notice:
Additionally, the tribunal addressed the issue of the extended period for issuing the show cause notice. Despite the revenue invoking the extended period, the tribunal noted the absence of any mala fide intention on the part of the respondent. As a result, the tribunal held that the demands were time-barred. Based on this observation, the tribunal upheld the impugned order and dismissed the appeal filed by the revenue.

In conclusion, the tribunal ruled in favor of the respondent, affirming their eligibility for the exemption notification, highlighting the validity of the certificate issued by the Tehsildar, and determining the demands to be time-barred due to the absence of mala fide intention.

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