2018 (6) TMI 579 - AT - Central Excise

Scope of remand order - it was the contention of the appellant that the remand order required the original authority to restrict itself to ascertainment of the genuineness of the certificate and not the veracity of the contents therein which was beyond the competence - Clandestine manufacture and removal - unit located in rural area - Held that - The terms of the remand order are very clear. Eligibility to manufacture branded goods under the exemption notification was available to such small scale units as are situated in a rural area. The definition of rural area does not envisage an interpretation on the part of the adjudicating authority or the appellate authority, the State Government alone is empowered to classify and segregate its territorial jurisdiction into urban and rural area for various purposes of administration The scope and work of the competent authority of the State Government cannot detract from the content of the certificate which, in this case, is categorical - the lower authority was misguided in denying the benefit of notification on the ground that the said area was urban and hence liable to duty - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Challenge to order-in-appeal regarding central excise duty liability, genuineness of rural area certificate, interpretation of exemption notification on branded goods manufactured in rural areas.

Analysis:

Central Excise Duty Liability:
The appellant challenged an order holding them liable for central excise duty on branded 'readymade garments' cleared without payment. The Tribunal had remanded the matter previously to verify the genuineness of a certificate claiming the place of manufacture was in a rural area. The jurisdictional officer argued that the area was not rural due to CIDCO's authority, but the Tribunal emphasized that the certificate's validity was crucial for exemption eligibility. The Tribunal found the certificate issued by the Gram Panchayat invalid as they were not competent to issue such certificates based on land revenue records. The Tribunal remanded the matter for further verification, emphasizing the importance of a valid certificate for exemption eligibility.

Interpretation of Exemption Notification:
The appellant contended that the remand order only required verifying the certificate's genuineness, not the contents within. However, the Tribunal examined the exemption notification, which allowed branded goods to be manufactured in rural areas for exemption benefits. The definition of 'rural area' excluded certain urban areas, and the Tribunal emphasized that the State Government alone could classify areas as urban or rural. The Tribunal held that the lower authority erred in denying the exemption based on the area being urban, as the certificate was categorical and valid for exemption eligibility.

Conclusion:
The Tribunal allowed the appeal, emphasizing the importance of a valid certificate for exemption eligibility under the exemption notification. The Tribunal clarified that the State Government's classification of areas as urban or rural was crucial, and the lower authority's denial of exemption based on the area being urban was misguided. The Tribunal's decision highlighted the significance of proper verification and interpretation of certificates for exemption benefits under the central excise laws.

Note: The judgment was pronounced on 01/05/2018 by Shri C J Mathew, Member (Technical) of the Appellate Tribunal CESTAT MUMBAI.