2017 (10) TMI 1030 - AT - Central Excise

Area Based Exemption - N/N. 50/2003 dated 10.06.2003 - Extended period of limitation - non-intimation of labelling process to the jurisdictional officer - Held that - the goods have been manufactured in Himachal Pradesh and labelling was done in the godown in terms of statutory requirement, before marketing. The appellants apparently could not have gained anything by having labelling in godown and there by intending to evade duty on a product, which is manufactured at Himachal Pradesh, eligible for area based exemption - the lower authorities have failed to substantiate the ground for invoking extended period - appeal allowed on the ground of limitation.

Summary

Issues: Applicability of area-based exemption, deemed manufacture due to labeling, demand on limitation, failure to intimate jurisdictional authorities.

Analysis:

1. Area-Based Exemption: The main appellant, engaged in manufacturing Ayurvedic and cosmetic goods in Himachal Pradesh, availed area-based exemption under Notification No.50/2003. The Revenue contended that labeling in New Delhi constituted actual manufacture, thereby disqualifying the appellant from the exemption. The appellant argued that labeling was a statutory requirement fulfilled in the godown without altering the manufactured status of goods eligible for exemption.

2. Deemed Manufacture and Jurisdictional Intimation: The Revenue asserted that labeling amounted to manufacture, necessitating intimation to Central Excise Authorities, which the appellant allegedly failed to provide. The appellant maintained that the goods were fully manufactured in Himachal Pradesh, with labeling done in compliance with statutory obligations in the New Delhi godown before market distribution.

3. Demand on Limitation: The demand notice was issued beyond the normal period, invoking the extended period under Section 11A(1). The crux of the dispute lay in whether the extended period was justified due to the non-intimation of the labeling process to the jurisdictional officer. The Tribunal found that the appellant's actions did not indicate an intent to evade duty, as the goods were legitimately manufactured in Himachal Pradesh and labeled in accordance with legal requirements.

4. Judgment: After considering submissions and records, the Tribunal concluded that the demand based on limitation alone was unsustainable. The failure to intimate the labeling process to authorities did not establish an intention to evade duty, as the goods were legitimately eligible for the area-based exemption. Consequently, the impugned order was set aside solely on the question of limitation, and the appeal was allowed in favor of the appellant.

This detailed analysis highlights the core legal issues surrounding the judgment, focusing on the interpretation of statutory provisions, compliance with procedural requirements, and the justification for invoking the extended period for demand.