2009 (3) TMI 301 - AT - Central Excise

Appellant filed this Appeal against the impugned order whereby benefit of Notification No. 20/07-C.E., dated 25-4-2007 was denied. As per the condition of the Notification the exemption from payment of Central Excise duty is only in respect of a new industrial unit which commenced commercial production on or after 1st day of April, 2007, but not later on 31st day of March, 2017. - Appellant manufactured 4900 railway sleepers valued at Rs. 28.5 lakhs, in the month of January 2007 and cleared to Railways. This production quantity was reflected in RG-1 record and ER-1 returns. There is no evidence on record to show that the sleepers were cleared for non-commercial consideration. As the appellant commenced commercial production prior to that mentioned in the notification hence are not entitled for the benefit of Notification No. 20/07-C.E. appeal is dismissed

Summary

Issues:
1. Denial of benefit under Notification No. 20/07-C.E. for a new industrial unit.
2. Classification of production of railway sleepers in January 2007 as trial production or commercial production.
3. Interpretation of the conditions of the notification regarding the commencement of commercial production.

Analysis:
1. The appellant filed an appeal against the denial of the benefit of Notification No. 20/07-C.E., which exempts Central Excise duty for new industrial units commencing commercial production between April 1, 2007, and March 31, 2017. The impugned order stated that the appellant's unit commenced commercial production in January 2007 by manufacturing and clearing 4900 railway sleepers valued at Rs. 28.5 lakhs to Railways. The appellant claimed this production was for trial purposes, supported by letters and tender conditions indicating Railway inspection of the first consignment. However, the Revenue argued that the production was commercial as reflected in RG-1 and ER-1 returns.

2. The appellant contended that the production of railway sleepers in January 2007 should be considered trial production since the sleepers were yet to be inspected by Railways for final approval. The appellant also highlighted the recovery of Central Excise duty on clearances made under the contract. Conversely, the Revenue maintained that the production was commercial, evidenced by entries in RG-1 and ER-1 returns. The Tribunal noted that the Notification required commercial production after April 1, 2007, and since the appellant commenced production earlier and there was no evidence of non-commercial consideration, the benefit was rightly denied.

3. The Tribunal analyzed the Notification's condition specifying the commencement of commercial production between April 1, 2007, and March 31, 2017, for exemption from Central Excise duty. Considering the appellant's production of 4900 railway sleepers in January 2007, which was reflected in official records and cleared to Railways without evidence of non-commercial intent, the Tribunal upheld the denial of benefits under the Notification. The Tribunal concluded that since the appellant had already recovered excise duty from Railways, the appellant was not entitled to the exemption. Consequently, the appeal was dismissed, and the miscellaneous application was disposed of accordingly.