2021 (11) TMI 596 - AT - Central Excise

Area Based exemption - benefit of the exemption N/N. 50/2003-CE - opportunity of personal hearing was not given - violation of principles of natural justice - HELD THAT - In the show cause notice itself the appellant was asked to submit a reply and also indicate if it wished to be heard in person. This is not a case of the principles of natural justice being violated but is a case where the appellant chose not to utilise the opportunity of defending its own case and then trying to benefit from its own decision by accusing the original authority of not giving an opportunity of personal hearing. There are no force in this submission. The appellant tried to counter the Panchnama recorded by the officers by relying on various documents which it had submitted to various state and other authorities. A perusal of the documents listed shows that these are either licences or registrations obtained by the appellant or applications or declarations filed by it to various authorities. None of these is a document establishing that the commercial manufacture had commenced before 31 March 2010 - None of the documents which are said to have been produced before the Commissioner (Appeals) pertain to physical verification and finding of any authority to show that the factory was set up and commercial production commenced before 31 March 2010. Therefore, there are no force in this ground of appeal also. Commencement of commercial production prior to 31 March 2010 - HELD THAT - It is hard to believe this assertion when the plant itself was not set up before 31 March 2010 as per the Panchnama drawn on physical verification. The Panchnama mentions that in a room only a few hand presses and one grinder bench were lying at the time of verification. There are no force in this ground of appeal of the appellant also. The appellant is not entitled to the benefit of exemption N/N. 50/2003-CE dated 10.06.2003 and the impugned order needs to be upheld - Appeal dismissed.

Summary

Issues:
- Eligibility for area-based exemption under Notification No. 50/2003-CE dated 10.06.2003
- Violation of principles of natural justice by the original authority
- Contradictory observations of the Commissioner (Appeals) with respect to the facts
- Commencement of commercial production before 31 March 2010

Eligibility for Area-Based Exemption:
The appellant, a manufacturer of auto parts, claimed the benefit of area-based exemption under Notification No. 50/2003-CE dated 10.06.2003. However, a departmental verification revealed that the factory was not set up by the cut-off date of 31 March 2010. The Assistant Commissioner, in his order, denied the benefit of the exemption, imposing duty, interest, and penalty. The Commissioner (Appeals) modified the order, granting the appellant the benefit of a different exemption notification but upholding the denial of the benefit under Notification No. 50/2003. The Tribunal, citing the strict construction of exemption notifications in favor of Revenue, found that the appellant failed to establish the commencement of commercial production before the specified date, thus dismissing the appeal and upholding the impugned order.

Violation of Principles of Natural Justice:
The appellant contended that the original authority violated principles of natural justice by not providing an opportunity for a personal hearing. However, the Tribunal noted that the appellant had been given multiple chances to respond and request a personal hearing but failed to do so. Therefore, the Tribunal found no merit in the appellant's argument regarding the violation of natural justice principles.

Contradictory Observations of the Commissioner (Appeals):
The appellant argued that the observations of the Commissioner (Appeals) were contrary to the facts presented. The Tribunal analyzed the documents submitted by the appellant, noting that they primarily consisted of licenses, registrations, and applications to various authorities, none of which conclusively proved the commencement of commercial production before the specified date. The Tribunal emphasized that the physical verification report by Central Excise officers was a crucial piece of evidence, and the appellant's failure to challenge it undermined their case. Consequently, the Tribunal rejected this ground of appeal.

Commencement of Commercial Production:
The appellant asserted that commercial production had commenced before 31 March 2010. However, the Tribunal highlighted that the physical verification report indicated an incomplete factory setup with minimal equipment, casting doubt on the appellant's claim. Given the lack of substantial evidence supporting the appellant's assertion, the Tribunal found no merit in this argument. Additionally, the Tribunal reiterated the principle of construing exemption notifications strictly against the claimant and in favor of Revenue, ultimately upholding the denial of the exemption under Notification No. 50/2003-CE.

In conclusion, the Tribunal dismissed the appeal, upholding the impugned order that denied the appellant the benefit of area-based exemption under Notification No. 50/2003-CE dated 10.06.2003.