2023 (12) TMI 563 - AT - Central Excise

Area Based exemption - new unit in the state of Himachal Pradesh - late filing of declaration - exemption under N/N. 50/2003-CE dated 10.06.2003 denied on the ground that the appellant had filed the declaration for availing the exemption on 22.03.2010 whereas exemption was claimed with effect from 20.06.2009 - period of 20.06.2009 to 21.03.2010 - HELD THAT - The appellant vide his letter dated 25.08.2012 informed the Commissioner of Central Excise, Chandigarh that if the department has got any doubt regarding the genuineness of the declaration then the same can be verified from the relevant post office and the complete address of the post office was also supplied to the officer. But the department did not make any effort to verify the same and simply ignored the request of the appellant and has denied the exemption for the relevant period only on the ground of non receipt of declaration. Further, it is found that subsequently, the appellant filed declaration on 23.03.2010 under the belief that every year declaration is required to be filed. This issue of non filing/late filing of declaration to avail exemption under Notification No. 50/2003-CE dated 10.06.2003 has come up before this Tribunal in the case of Controls and Switchgears company Ltd. Vs. Commissioner of Central excise Meerut and Vice-versa 2017 (4) TMI 847 - CESTAT NEW DELHI wherein also the exemption was denied to the assessee on the ground that assessee did not file the option for claiming benefit of exemption notification. It was held by the Tribunal that intimation to the department about the option for claiming benefit of exemption appears to be only a procedural requirement, and a liberal attitude, therefore as to be taken in this regard when the assessee otherwise is entitled to the benefit of exemption notification with effect from the date when the department was informed by the assessee on their claim of benefit of the notification. Further, in the case of Vasantham Enterprises Vs. Commissioenr of C. Ex. Chandigarh 2014 (12) TMI 953 - CESTAT NEW DELHI it was held by the Tribunal that it is a settled law that though exemption notification generally should be strictly interpreted but beneficial exemption for encouragement or promotion of certain activities should be liberally interpreted once eligibility criteria is satisfied. We find that in the present case the appellant is entitled to area based exemption being located in specified area, and incomplete declaration does not totally debar him from eligibility to above exemption otherwise it would defeat the object of area based exemption. The denial of benefit of notification 50/2003-CE dated 10.06.2003 for the period from 20.06.2009 to 21.03.2010 is not sustainable in law - Appeal allowed.

Summary

Issues Involved
1. Eligibility for Exemption under Notification No. 50/2003-CE
2. Filing of Declaration through Under Postal Certificate (UPC)
3. Procedural Compliance versus Substantive Eligibility

Summary of Judgment

Issue 1: Eligibility for Exemption under Notification No. 50/2003-CE
The appellant is engaged in manufacturing products falling under various chapters of the Central Excise Tariff and claimed exemption under Notification No. 50/2003-CE, starting production on 20.06.2009. The original authority denied the exemption for the period from 20.06.2009 to 21.03.2010, stating that the declaration for availing the exemption was filed late on 22.03.2010. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

Issue 2: Filing of Declaration through Under Postal Certificate (UPC)
The appellant contended that they sent the declaration via UPC on 18.06.2009, which the department did not acknowledge. The appellant argued that the department ignored their request to verify the declaration from the post office. The Tribunal noted that the appellant had provided the necessary details for verification, which the department did not pursue. Previous Tribunal decisions, such as KEI Indus Ltd. and Decent Aluminum Indus, supported the validity of declarations sent through UPC when their genuineness is not disputed.

Issue 3: Procedural Compliance versus Substantive Eligibility
The Tribunal emphasized that the appellant was eligible for the exemption and that procedural lapses should not negate substantive benefits. Citing various cases, including Controls and Switchgears Company Ltd. and Vasantham Enterprises, the Tribunal held that procedural requirements should be interpreted liberally when substantive eligibility is met. The Tribunal found that the appellant's subsequent filing of the declaration on 23.03.2010 was under the mistaken belief that annual declarations were required. It concluded that the denial of exemption for procedural reasons alone was not justified.

Conclusion
The Tribunal set aside the denial of exemption under Notification No. 50/2003-CE for the period from 20.06.2009 to 21.03.2010, allowing the appeal with consequential relief as per law. The judgment emphasized that procedural lapses should not override substantive eligibility for exemptions.

(Order pronounced in the open court on 11.12.2023)