2023 (2) TMI 41 - HC - Central Excise

Area Based Exemption - Denial of budgetary support under the Scheme of Budgetary Support under Goods and Services Tax (GST) Regime to units located in State of Jammu Kashmir, Uttarakhand, Himachal Pradesh and North-Eastern States including Sikkim - Denial on the ground that it did not fulfil the criteria of an Eligible unit under the Scheme as it was not availing the Area Based Exemption under the Notification - applicability of N/N. 50/2003-CE dated 10.06.2003 as amended from time to time. Whether the petitioner s unit was entitled to the benefit of the Notification, and was availing the exemption immediately before the first date of July 2017? HELD THAT - In terms of paragraph 4.1 of the Scheme, a unit, which was eligible before the first day of July 2017 to avail the exemption under the Notification as specified in paragraph 2 of the Scheme and was availing such exemption before the cut-off date of first July 2017, would fall within the definition of the term eligible unit . In view of the orders dated 23.12.2011 passed by the Commissioner (Appeals) and the order dated 07.11.2017 passed by the learned CESTAT, it cannot be disputed that the petitioner was eligible for benefit under the Notifications ab-initio. There is no doubt that in the facts as obtaining in the present case, it is clear that the petitioner had from inception indicated its intention to avail of the benefits of the Notification. It had further pursued its right to such exemption. The petitioner had prevailed before the Commissioner (Appeals) prior to the roll out of the GST Regime. The fact that the respondents had carried the matter to learned CESTAT and in the meantime, had insisted on collecting the central excise duty, which was paid by the petitioner under protest, cannot be construed to hold that the petitioner had not availed of the benefits immediately prior to 01.07.2017. It is material to note that it is not disputed that but for the controversy whether the petitioner was availing the benefit of the Notification, there is no other reason for denying the petitioner s claim for budgetary support under the Scheme. The respondents are directed to release the budgetary support amount as assessed to the petitioner in terms of the Scheme as expeditiously as possible but in any event within a period of six weeks from today. Respondent no.3 is also directed to grant registration to the petitioner to enable it to file online claims as prayed for by the petitioner. Appeal allowed.

Issues Involved:
1. Eligibility for budgetary support under the "Scheme of Budgetary Support under Goods and Services Tax (GST) Regime."
2. Compliance with Area Based Exemption from Central Excise.
3. Availing exemption immediately before the cut-off date of 01.07.2017.
4. Dispute regarding the receipt of intimation and subsequent denial of exemption.
5. Entitlement to refund of excise duty paid under protest.

Issue-wise Detailed Analysis:

1. Eligibility for Budgetary Support under the Scheme:
The petitioner was aggrieved by the denial of budgetary support under the "Scheme of Budgetary Support under Goods and Services Tax (GST) Regime" for units located in specific states. The Scheme, notified on 05.10.2017, provided budgetary support to units eligible under erstwhile schemes. The principal question was whether the petitioner fulfilled the criteria under the Scheme for budgetary support.

2. Compliance with Area Based Exemption from Central Excise:
The petitioner claimed entitlement to budgetary support based on its eligibility for Area Based Exemption from Central Excise under Notification No.50/2003-CE dated 10.06.2003. The petitioner had informed the Jurisdictional Commissioner about its entitlement and commenced commercial production on 27.03.2010. However, there was a dispute regarding the receipt of the intimation, resulting in the denial of exemption by the Assistant Commissioner.

3. Availing Exemption Immediately Before the Cut-off Date of 01.07.2017:
Paragraph 4.1 of the Scheme required units to be eligible and availing the exemption immediately before 01.07.2017. The petitioner's eligibility was confirmed by the Commissioner (Appeals) and CESTAT, which found the petitioner entitled to the exemption ab initio. Despite the petitioner paying excise duty under protest, it pursued its right to exemption and secured a refund order, albeit directed to the Consumer Welfare Fund.

4. Dispute Regarding the Receipt of Intimation and Subsequent Denial of Exemption:
The petitioner's intimation dated 09.10.2009 was allegedly not received by the authorities, leading to a Show Cause Notice and denial of exemption. The petitioner responded and pursued the matter legally, resulting in a favorable order from the Commissioner (Appeals) on 23.12.2011, which was upheld by CESTAT on 07.11.2017. The Revenue's subsequent show cause notices were dropped, and the petitioner sought a refund of the excise duty paid under protest.

5. Entitlement to Refund of Excise Duty Paid Under Protest:
The petitioner's application for refund of Rs. 84,79,750/- was allowed, but the amount was directed to be credited to the Consumer Welfare Fund. The petitioner contested this decision. The court noted that the petitioner had availed the benefit of the Notification and was entitled to budgetary support under the Scheme. The court directed the respondents to release the budgetary support amount and grant registration for online claims within six weeks.

Conclusion:
The court concluded that the petitioner was eligible for budgetary support under the Scheme, having fulfilled the criteria of being eligible and availing the exemption before 01.07.2017. The court directed the respondents to release the budgetary support amount and grant necessary registration for online claims, allowing the appeal in favor of the petitioner. The parties were left to bear their own costs.

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