2016 (9) TMI 1232 - AT - Central Excise

Notification No.167/71-CE dated 11.09.1971 - eligibility for exemption - carrying out research and development in the area of polymers, resins, adhesives, bulk drugs and drug intermediates - Held that - the said Notification dated 11.09.1971 provides for full exemption to all excisable goods produced in a research Institute during the course of carrying out research. The condition of the said notification is that the Assistant Commissioner of Central Excise is satisfied that the goods produced in such research institute are produced during the course of carrying out research. It further provided that further condition for availing notification is that the manufacturer has to produce such certificate as may be required by said Assistant Commissioner of Central Excise for verifying that the goods have been produced during the course of carrying out research. Appellant have produced the said certificate which is in the form of letter issued by authority in the Ministry of Science and Technology, Department of Scientific and Industrial Research, New Delhi on 18th December, 2003 referring to the subject of recognition of appellant s In-House R&D unit by department of Scientific and Industrial Research and informs that it has been decided to accord recognition to the In-House R&D unit of appellant s firm. We find that the said certificate is sufficient evidence to establish that the goods produced by the appellant are produced during the course of carrying out research. - Decided in favour of appellant

Summary

Issues:
- Eligibility for exemption under Notification No. 167/71-CE dated 11/09/1971 for research and development activities.
- Interpretation of conditions for availing exemption under the said notification.

Analysis:

Issue 1: Eligibility for exemption under Notification No. 167/71-CE
The appellant established a research and development center for work in polymers, resins, adhesives, bulk drugs, and drug intermediates. They applied for exemption from Excise duty under Notification No. 167/71-CE. The Revenue contended that the appellant's research was for commercial purposes, making them ineligible for the exemption. The Commissioner (Appeals) upheld this view. However, the appellant argued that they were engaged in research activities and had a recognition certificate from the Department of Scientific and Industrial Research, designating them as an In-House R&D unit. The Tribunal noted that the notification provides full exemption for goods produced during research, subject to the satisfaction of the Assistant Commissioner of Central Excise. The certificate from the Department of Scientific and Industrial Research confirmed the appellant's research activities, leading the Tribunal to conclude that the goods were indeed produced during research. Consequently, the Tribunal set aside the Order-in-Appeal and allowed the appeal.

Issue 2: Interpretation of conditions for availing exemption
The Tribunal carefully examined the conditions laid down in Notification No. 167/71-CE. It emphasized that goods must be produced during research at a recognized institute to qualify for exemption. The Assistant Commissioner of Central Excise must be satisfied that the goods were indeed produced during research. The appellant submitted a certificate from the Department of Scientific and Industrial Research, recognizing their In-House R&D unit. This certificate was deemed sufficient evidence by the Tribunal to establish that the goods were produced during the course of carrying out research. By fulfilling this crucial condition, the appellant met the requirements for availing the exemption under the notification. As a result, the Tribunal set aside the impugned order and ruled in favor of the appellant.

In conclusion, the Tribunal's decision hinged on the fulfillment of conditions stipulated in Notification No. 167/71-CE, emphasizing the importance of producing goods during research activities at a recognized institute. The recognition certificate provided by the Department of Scientific and Industrial Research played a pivotal role in establishing the appellant's eligibility for the exemption.