2018 (5) TMI 1341 - AT - Central Excise

Area Based Exemption - N/N. 50/2003-CE dated 10.6.2003 - manufacturer of the combo back in terms of section 2 (f) of Central Excise Act, 1944 and Note 6 of Chapter 34 of Central Excise Act - extended period of limitation - Held that - the SCN has been issued on 8.12.2010 by invoking the extended period of limitation for the period June, 2007 to April, 2009 whereas the appellant was paying service tax to the department for their activity. In that circumstance, the extended period of limitation is not invokable - the respondent has filed declaration to the department on 20.4.2009 and thereafter the Revenue did not take any steps to initiate proceedings against the respondent. In that circumstance, the extended period of limitation is not invokable - appeal dismissed - decided against appellant-Revenue.

Summary

Issues:
Appeal against impugned order regarding wrong availment of benefit of area based exemption under Notification No.50/2003-CE dated 10.6.2003 by non-payment of Central Excise duty on finished goods. Allegation of respondent being an independent manufacturer and not complying with Notification conditions. Extended period of limitation invoked. Adjudication authority dropping the demand against the respondent. Revenue's appeal on grounds of respondent being a manufacturer and not entitled to exemption.

Analysis:
The case involved an appeal by the Revenue against an impugned order regarding the alleged wrong availment of the benefit of area-based exemption under Notification No.50/2003-CE dated 10.6.2003 by a respondent. The respondent, engaged in job work for a company, was accused of not paying Central Excise duty on finished goods and belatedly filing for exemption. The Revenue contended that the respondent was an independent manufacturer and therefore liable to pay duty at the time of clearance of goods. The adjudication authority had initially dropped the demand against the respondent, leading to the Revenue's appeal.

Upon hearing the parties, the Tribunal considered a similar case involving M/s. Vasantham Enterprises, where it was held that the activity of banding combo packs amounted to manufacturing. However, the matter was remanded to consider if the respondent was paying service tax on the activity and if the extended period of limitation was applicable. The Tribunal noted that the respondent had been paying service tax and had filed the necessary declaration for exemption under the Notification. As the Revenue did not take action after the respondent's declaration, the Tribunal held that the extended period of limitation was not invokable in this case. Consequently, the proceedings against the respondent were set aside, and the appeal by the Revenue was dismissed.

In conclusion, the Tribunal ruled in favor of the respondent, finding that the extended period of limitation was not applicable due to the respondent's compliance with service tax payment and filing of necessary declarations. The decision highlighted the importance of timely actions by the Revenue and upheld the setting aside of proceedings against the respondent.