2018 (7) TMI 778 - AT - Central Excise

Clandestine manufacture and removal - area based exemption - N/N. 50/2003-CE dt. 10.06.2003 - non-filing/late filing of declaration regarding first clearances - Extended period of limitation - Held that - The legal position with regard to acceptance of belated declaration for the purpose of availing exemption under N/N. 50/2003-CE dt. 10.06.2003 is already settled and filing of late declaration can not deprive them of the benefit of exemption in this regard especially since they have been found to be eligible for the said notification as evident from the fact that post 19.09.2004, benefit of notification is already being allowed to them by the Department. In a similar situation in the case of Indica Industries Pvt Ltd 2016 (11) TMI 696 - CESTAT NEW DELHI , wherein the assessee was otherwise eligible for benefit of N/N. 50/2003-CE, but did not give the prescribed declaration for their new unit (unit-III), this Tribunal took the following view that The department has been intimated about the existence of the unit, nature of products manufactured and the exemption claimed under Notification No. 50/2003-C.E., the same can be considered as adequate compliance of the condition of the notification. Extended period of limitation - case of Revenue is that the appellants would not have filed the declaration had the officers not visited the factory of the appellants - Held that - This is a presumptuous ground and cannot be said to be sufficient basis for alleging suppression - there was no suppression because the appellants had admittedly filed a late declaration and this Tribunal has taken a consistently benign view of belated filing of declaration in such cases. Besides, there is no dispute that the unit at plot no. 12 was also eligible for the same exemption - the intention to evade duty on the part of the appellants has not been clearly established - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:

1. Non-filing of mandatory declaration for availing exemption under Notification No. 50/2003-CE.
2. Applicability of extended period for demanding duty.
3. Eligibility for exemption despite belated filing of declaration.

Issue-wise Detailed Analysis:

1. Non-filing of Mandatory Declaration for Availing Exemption:

The appellants were engaged in manufacturing certain goods and availed exemption under Notification No. 50/2003-CE. They were required to file a mandatory declaration before the first clearance of excisable goods. The appellants filed a declaration on 21.09.2004, indicating that production commenced on 12.05.2004, which was considered a belated filing. The Revenue argued that the appellants manufactured and cleared goods without payment of duty from 12.05.2004 to 21.09.2004 due to the late declaration, resulting in a demand for duty along with interest and penalty.

2. Applicability of Extended Period for Demanding Duty:

The Revenue invoked the extended period under Section 11A(1) of the Central Excise Act, alleging suppression of facts by the appellants. The appellants contended that the extended period was not applicable as they had declared production and exemption in their ER-1 returns, and the Department was aware of the machinery shift to the new unit. The Tribunal found that the Department's presumption that the appellants would not have filed the declaration without the officers' visit was insufficient to establish suppression. Hence, the extended period could not be invoked.

3. Eligibility for Exemption Despite Belated Filing of Declaration:

The Tribunal examined whether the belated filing of the declaration disqualified the appellants from availing the exemption. It referenced several judgments, including Indica Industries Pvt Ltd, Veekay Surgicals Pvt Ltd, and M/s Forging Machinery Manufacturing Company, which held that late filing of a declaration does not disentitle an assessee from exemption if other substantive conditions are met. The Tribunal found that the appellants were eligible for the exemption post 19.09.2004, and the late declaration did not affect their eligibility. The Tribunal emphasized that procedural conditions like filing a declaration should not override substantive eligibility for exemption.

Conclusion:

The Tribunal concluded that the belated filing of the declaration did not disentitle the appellants from availing the exemption under Notification No. 50/2003-CE. The extended period for demanding duty was not applicable due to the lack of suppression. The impugned order was set aside, and the appeal was allowed.