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2019 (11) TMI 1615 - AT - Central ExciseArea Based Exemption - requirement of exemption notification for a new industrial unit to claim exemption from payment of the whole of the duty of excise is that it should have commenced commercial production on or after 7 January 2003 but not later than 31 March 2010 - the condition of commencement of commercial production has not been found to have been satisfied by the Appellants by the Adjudicating Authority as also the Appellate Authority - contention of the Appellant that it had kept the raw material in a locked store room was not accepted and a finding was recorded that the Appellant had been bringing manufacturing goods from the Delhi unit - HELD THAT - It is not in dispute that the main unit of the Appellant for manufacture of the four items declared by the Appellant is situated at Naraina New Delhi. According to the Appellant it purchased the plant/machinery at Roorkee sometimes in February/March 2010. At Roorkee admittedly two units namely M/s SKN Bentex Lighting and M/s Bentex Control Switchgear Company are running from the premises. In the present Appeals the issues are only with M/s Bentex Control Switchgear Company. The declaration submitted by the Appellant on 17 March 2010 for claiming exemption from excise duty in terms of the exemption notification mentions that the Appellant intends to manufacture four items namely Motor Starters KWH Meters Miniature Circuit Breakers and Change Over Switches. The Appellant however claims that it started commercial production of Motor Starters only prior to 31 March 2010 and it did not start commercial production of KWH Meters. Miniature Circuit Breakers and Change Over Switches. To claim the benefit of the exemption notification it was imperative for the Appellant to have substantiated that the new industrial unit set up by the Appellant had commenced commercial production on or after 7 January 2003 but not later than 31 March 2010. The main submission of the Appellant to substantiate that the commercial production started before 31 March 2010 is issuance of the invoices on 19 March 2010 and the courier receipts. According to the Appellant this fact is sufficient to prove that the commercial production started prior to 19 March 2010 because in that case the invoices would not have been issued on 19 March 2010 and nor the goods could have been dispatched by courier before 31 March 2010. This factual position cannot conclusively prove that the production of Motor Starters in the Roorkee unit started before 31 March 2010 - According to the Appellant it was for the Department to have interrogated the persons in whose favour the invoices had been raised. This submission cannot be accepted for the simple reason that it was for the Appellant to substantiate its claim that it had started commercial production on or before 31 March 2010 and for this purpose it was for the Appellant to submit all the relevant documents as evidence and it cannot be permitted to urge that it was for the Department to have interrogated such persons. The explanation offered by the Appellant that it was because of illiteracy of the labours engaged by the Appellant did not appeal either to the adjudicating authority or to the appellate authority nor does it appeal to us. When the basis for claiming exemption is that the commercial production at Roorkee unit should have started on or before 31 March 2010 it is difficult to believe that senior officers of the unit at Roorkee unit would have overlooked this most important aspect if the goods were actually manufactured at the Roorkee unit. The submission that raw material was brought from the main unit at New Delhi also does not help the Appellant. The position as it emerges and which has also been recorded both by the Adjudicating Authority and the Appellate Authority is that in order to claim the benefit of the exemption notification the Appellant was bringing the final product from its main unit at Delhi to the unit at Roorkee to claim benefit exemption notification. The absence of any raw material in the Roorkee unit at the time of inspection does support this finding. If the Appellant was actually manufacturing Motor Starters the electricity bill also would have given some indication but they also do support the case of the Appellant. The finding recorded by the Appellate Authority on this aspect cannot be said to be perverse. The claim for Cenvat credit on inputs capital goods and input services has also rightly been denied to the Appellant by the Commissioner (Appeals) as the procedure laid down in the 2004 Rules had not been complied with by the Appellant. Learned Counsel for the Appellant could not satisfy that the requirement of the 2004 Rules had been satisfied. Penalty - suppression of facts or not - HELD THAT - Penalty that has been imposed upon the Appellant has also been assailed by learned Counsel for the Appellant. The Commissioner (Appeals) has recorded a categorical finding that there was suppression of vital facts with an intention to evade payment of central excise duty by availing the benefit of the exemption notification even though it had not started commercial production prior to 31 March 2010 and it is only when a verification was carried out that the correct facts came to the light of the Department - This finding is based on a report submitted by the inspecting team that went for verification of the declaration made by the Appellant. The declaration was found to be false. It cannot be therefore be urged that the Appellant had no intention of evading payment of duty as a false declaration was deliberately made. Appeal dismissed.
Issues Involved:
1. Denial of exemption under Notification No. 50/2003-CE dated 10 June 2003. 2. Commencement of commercial production before the cutoff date of 31 March 2010. 3. Validity of the evidence provided by the appellant. 4. Entitlement to Cenvat credit on inputs, capital goods, and input services. 5. Claim for SSI exemption and cum duty price. 6. Imposition of penalty on the appellant. Detailed Analysis: 1. Denial of Exemption Under Notification No. 50/2003-CE: The core issue was whether the appellant, M/s Bentex Control and Switchgear Company, was entitled to the benefit of the exemption notification, which required that a new industrial unit must have commenced commercial production on or after 7 January 2003 but not later than 31 March 2010. Both the Additional Commissioner and the Joint Commissioner denied this benefit, asserting that the appellant did not meet the essential condition of starting commercial production within the stipulated timeframe. The Commissioner (Appeals) upheld these findings, leading to the dismissal of the appellant's appeals. 2. Commencement of Commercial Production Before the Cutoff Date: The appellant claimed to have started commercial production before 31 March 2010, substantiated by invoices dated 19 March 2010 and courier receipts. However, the adjudicating authority and appellate authority found this evidence insufficient. The authorities noted that the appellant failed to provide documents showing receipt of goods by customers or receipt of payment, which were crucial for substantiating the claim of commercial production. Additionally, the inspection team found packed cartons marked with the Delhi unit's address, suggesting that the goods were manufactured in Delhi and not at the Roorkee unit. The explanation that this was due to the illiteracy of laborers was not accepted. 3. Validity of the Evidence Provided by the Appellant: The appellant presented various documents, including electricity bills and wage registers, to support their claim of commercial production. However, the authorities found these documents unconvincing. The electricity consumption was deemed too low for an industrial unit, and the wage register was not corroborated by records from the Uttarakhand Labour Provident Fund Employees or State Insurance. Additionally, no raw material was found during the inspection, contradicting the appellant's claim of ongoing production. 4. Entitlement to Cenvat Credit on Inputs, Capital Goods, and Input Services: The appellant's claim for Cenvat credit was denied because they did not comply with the procedural requirements laid down in the 2004 Rules. The Commissioner (Appeals) found that the appellant had not followed the necessary procedures to avail of this benefit. 5. Claim for SSI Exemption and Cum Duty Price: The appellant also sought the benefit of SSI exemption and cum duty price. The SSI exemption was denied because the appellant did not exercise the option before the first clearance, a mandatory requirement. The cum duty price benefit was also denied as the appellant did not demonstrate that the duty element was included in the wholesale price charged from buyers. No evidence was provided to show that the gross value charged was inclusive of duty. 6. Imposition of Penalty on the Appellant: The penalty was imposed on the appellant for suppressing facts with the intent to evade payment of central excise duty. The Commissioner (Appeals) found that the appellant had deliberately made a false declaration to claim the exemption benefit. This finding was based on the inspection report, which revealed that the appellant had not started commercial production before 31 March 2010 and had brought finished goods from their Delhi unit to the Roorkee unit to claim the exemption. Conclusion: The Tribunal dismissed all six appeals filed by the appellant, upholding the denial of the exemption benefit, the rejection of the claims for Cenvat credit, SSI exemption, and cum duty price, and the imposition of penalties. The findings were based on substantial evidence and proper consideration of the inspection reports and documents submitted by the appellant.
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