2019 (4) TMI 161 - AT - Central Excise

Area Based exemption - benefit of N/N. 50/03-CE dt.10.6.2003 - girder unit - new unit or Extension of existing unit? - it was alleged that the appellant did not itself consider the girder unit as a separate unit but merely an addition of plant and machinery to the already existing unit-II - benefit denied as the girder unit was not a new unit but an extension of the existing Unit-II, whose date of production continued to remain unchanged upto 30.8.2014. Held that - On going through the said certificate, it is found that it has been certified that girder unit is separate and independent production line. Moreover the letter issued by the Superintendent is also more relevant to the facts of this case and shows that on physical verification of the unit, they came to conclusion that girder unit is an independent and separate unit. In that circumstance, the notification is relevant to deal with the situation. Admittedly, the girder unit is a separate and independent unit and the finding of the Commissioner is contrary to the certificate issued by the DIC office as well as physical verification report submitted by the Superintendent, Kala Amb, Central Excise. As the adjudicating authority misinterpreted the certificate issued by the DIC office, District Sirmour, therefore, the whole of the finding of the adjudicating authority has gone wrong, in that circumstance, the impugned order deserves no merit. It has also been held in various decisions of this Tribunal that although there is one factory which could have different unit of the different unit and to be treated as separate unit - Therefore, the girder unit is a separate and independent unit which is capable of manufacturing the MS girder of their own shall be treated new industrial unit which is eligible for exemption under N/N. 50/03-CE dt.10.6.2003 which started their production from 20.03.2010. Therefore, the same is eligible for benefit of exemption notification for clearance of their goods without payment of duty till 19.03.2020. The appellant is entitled to area based exemption under N/N. 50/03-CE dt.10.6.2003 for their girder unit i.e. unit-II till 19.03.2020 - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:

1. Denial of exemption under Notification No. 50/03-CE dated 10.06.2003.
2. Classification of the girder unit as a new independent unit or an extension of an existing unit.
3. Eligibility of the appellant for area-based exemption.
4. Procedural compliance and its impact on exemption eligibility.
5. Recalculation of duty and entitlement to Cenvat credit.

Issue-wise Detailed Analysis:

1. Denial of Exemption under Notification No. 50/03-CE dated 10.06.2003:

The appellant's exemption under Notification No. 50/03-CE was denied, leading to a demand for duty along with interest and penalties for the period from 29.08.2014 to 30.06.2015. The core issue was whether the appellant's girder unit qualified as a new industrial unit eligible for exemption.

2. Classification of the Girder Unit as a New Independent Unit or an Extension of an Existing Unit:

The appellant argued that the girder unit was a new, independent unit, citing a chartered engineer's report and a certificate from the District Industries Centre (DIC) confirming its independent operational capability. However, the Revenue contended that the girder unit was merely an extension of the existing Unit-II, based on the appellant's failure to file separate statutory returns for the girder unit and the absence of a separate commencement of production certificate.

3. Eligibility of the Appellant for Area-Based Exemption:

The appellant claimed that the girder unit met the conditions specified in Notification No. 50/03-CE, which included being a new industrial unit set up in a specified area and commencing commercial production before 31.03.2010. The adjudicating authority, however, held that the girder unit was an extension of Unit-II, whose exemption period had expired on 29.08.2014.

4. Procedural Compliance and Its Impact on Exemption Eligibility:

The appellant argued that procedural non-compliance, such as not filing separate returns, should not lead to the denial of substantive benefits under the exemption notification. The adjudicating authority, however, emphasized the procedural lapses to support its conclusion that the girder unit was not a separate entity.

5. Recalculation of Duty and Entitlement to Cenvat Credit:

The appellant requested recalculation of duty, asserting entitlement to credit on inputs, input services, and capital goods. The adjudicating authority had already granted Cenvat credit but recalculated the duty payable, confirming a demand of ? 4,10,45,501.

Judgment:

The Tribunal found that the girder unit was indeed a separate and independent unit based on the certificate from the DIC and the physical verification report by the Superintendent of Central Excise. The Tribunal concluded that the adjudicating authority had misinterpreted the evidence, leading to incorrect findings. Consequently, the Tribunal held that the girder unit was eligible for exemption under Notification No. 50/03-CE until 19.03.2020.

The Tribunal set aside the impugned order, allowing the appeal with consequential relief, effectively ruling that the demand for duty was not sustainable given the appellant's entitlement to the area-based exemption.