2024 (8) TMI 783 - AT - Central Excise

Recovery of Central Excise Duty - Job Work - re-packing activity - recovery sought on the grounds that the activity undertaken by the appellants amounted to manufacture and exemption under N/N. 50/2003 was not applicable to them as they did not fulfill the conditions therein - HELD THAT - In the instant case, the appellants have filed a declaration on 20.02.2009 as required by the Department. It is found that thus the appellants have fulfilled the conditions of the notification making themselves eligible for availing the benefit thereof. Support found from the observation of Allahabad Bench of the Tribunal in the case of M/S. KRSNA URJA PROJECTS LTD., SHRI SHANTANU SANGHI, DIRECTOR VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I 2017 (12) TMI 1076 - CESTAT ALLAHABAD wherein it is held ' A liberal attitude, therefore, has to be taken in this regard, when the assessees otherwise are entitled to the benefit of exemption notification. It was also observed that exemption provisions have to be complied with strictly, but some latitude may be shown in case of some requirements which are directory in nature, the non-compliance of such requirements would not affect the substantive benefit of notification, granting exemption.' CESTAT, New Delhi in the case of M/S. GILLETE INDIA LTD. VERSUS CCE, CHANDIGARH 2011 (1) TMI 859 - CESTAT, DELHI held that the declaration filed by the principal manufacturer should be treated as the declaration filed by the job-worker. Thus, as long as the appellants are eligible to avail the benefit of a notification, the same cannot be denied for procedural violations - as the appellants have given a declaration though belatedly, the same must be treated as a valid declaration in view of the Tribunal s order in the case of M/S VASANTHAM ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH 2014 (12) TMI 953 - CESTAT NEW DELHI . The impugned order is liable to be set aside - Appeal allowed.

Summary

Issues:
Central Excise Duty liability on re-packing activity; Applicability of Notification No.50/2003; Previous judgments in favor of the appellant; Procedural compliance for availing exemption; Validity of belated declaration.

Analysis:

The judgment by the Appellate Tribunal CESTAT CHANDIGARH involved a dispute regarding the Central Excise Duty liability on the re-packing activity of M/s Vasantham Enterprises, engaged in job-work for M/s Hindustan Unilever. The Department contended that the activity amounted to manufacture and sought recovery of duty. The appellants believed the activity did not constitute manufacture and operated under Notification No.50/2003. The Commissioner and Commissioner (Appeals) upheld the duty demand, leading to the current appeal.

The appellant argued that their belief was genuine as M/s Hindustan Unilever informed the Department about the job-work arrangement. They referenced a previous case where CESTAT ruled in their favor, supported by the Supreme Court's dismissal of the Revenue's appeal. The appellant contended that the settled issue in their favor precluded the current proceedings initiated by the Revenue.

After hearing both sides, the Tribunal found in favor of the appellants based on previous rulings. The Tribunal emphasized the appellant's bona fide belief, lack of mala fide intent, and the need for a declaration under Notification No.50/2003 for availing the exemption. The Tribunal ordered a remand for scrutiny of the eligibility for exemption, emphasizing the liberal construction of taxing statutes for concessional rates.

Additionally, the Tribunal referred to a similar case involving Pearl Enterprises, where the benefit of notification was allowed based on a declaration submitted by the appellants. The Tribunal highlighted the importance of the declaration filed by the principal manufacturer and the job-worker's compliance with exemption provisions, even if belatedly. The Tribunal set aside the impugned order, emphasizing that procedural violations should not deny eligible entities the benefit of exemptions.

In conclusion, the Tribunal allowed the appeal, granting consequential relief as per law, based on the appellants' fulfillment of conditions for availing the exemption under Notification No.50/2003. The judgment emphasized the importance of procedural compliance and the liberal interpretation of tax statutes to advance the objective of providing exemptions for promoting economic growth.