2014 (6) TMI 269 - AT - Central Excise

Area based exemption - State of Uttranchal - Non filing of declaration - exemption under Notification No. 50/2003-C.E. - Held that - The Notification No. 50/2003-C.E. exempts the goods specified in the first and second Schedule to the Central Excise Tariff Act, 1985, other than those specified in Annexure-I to this notification and manufactured in the industrial areas specified in Annexure-II to the notification from the whole of the duty of excise leviable under Section 3(1) of Central Excise Act, 1944 and the whole of the Additional Duty of Excise leviable under Additional Duty of Excise (Goods of Special Importance) Act, 1957 and also under the Additional Duty of Excise (Textiles and Textile Articles) Act, 1978 - there is no dispute about the fact that till 13-3-2008 there was absolutely no intimation from the appellant company to the Central Excise authorities about their activity. Though they had started making clearances since May 2006 by availing full duty exemption under this notification, no returns were filed regarding the goods manufactured and cleared by availing of this exemption. Had at least such returns been filed, the department would have been in a position to know about their activity. In view of this, we are of prima facie view that the appellant s plea that they had acted bona fide is difficult to accept. In any case, the question of limitation being a mixed question of fact and the law can be examined in depth only at the time of final disposal. - Conditional stay granted.

Summary

Issues:
- Availment of duty exemption under Notification No. 50/2003-C.E.
- Failure to file necessary declaration for exemption
- Time limitation for duty demand
- Allegation of wilful suppression of facts
- Requirement of pre-deposit of duty demand, interest, and penalty

Analysis:

Availment of duty exemption under Notification No. 50/2003-C.E.:
The appellant company manufactured multi-layer poly films chargeable to Central Excise duty under a specific sub-heading. They claimed duty exemption under Notification No. 50/2003-C.E. for the period in dispute. The dispute arose as the company failed to file the necessary declaration as required by the notification before effecting the first clearances. The company argued that the exemption should not be denied solely for not filing the declaration, considering it a procedural requirement. However, the Tribunal noted that fulfilling conditions, including filing the declaration, is essential for availing of any exemption.

Failure to file necessary declaration for exemption:
The Tribunal emphasized the significance of filing the declaration for availing the exemption under Notification No. 50/2003-C.E. The failure to file the declaration prevented the authorities from verifying the eligibility of the appellant for the exemption. The Tribunal cited legal precedents to support the mandatory nature of such procedural requirements, highlighting that non-observance of these conditions could lead to administrative inefficiency and potential fraud.

Time limitation for duty demand:
Regarding the question of limitation, the Tribunal observed that until a certain date, there was no intimation from the appellant to the Central Excise authorities about their activities. The lack of filing returns further complicated the situation. The Tribunal indicated that a thorough examination of the limitation issue would be necessary during the final disposal of the case.

Allegation of wilful suppression of facts:
The Commissioner had invoked the extended period under the proviso to Section 11A(1) of the Central Excise Act, 1944, alleging wilful suppression of facts by the appellant. The Tribunal noted that the appellant's plea of acting bona fide was challenging to accept, given the lack of communication with the authorities about their activities.

Requirement of pre-deposit of duty demand, interest, and penalty:
The Tribunal directed the appellant company to deposit a specified amount within a stipulated period. Upon compliance, the pre-deposit requirement for the balance amount would be waived, and recovery stayed until the appeal's disposal. The pre-deposit of the penalty imposed on the General Manager of the appellant company was waived for the appeal's hearing, with recovery stayed until the appeal's conclusion.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the Tribunal's findings and directives concerning duty exemption, declaration requirements, time limitations, wilful suppression of facts, and pre-deposit obligations.