2014 (6) TMI 553 - AT - Central Excise

Waiver of pre deposit - area based exemption - non filing of declaration / application exercising the option to avail the exemption - Notification No.50/2003-CE dated 10.6.2003 - Held that - Requirement of exercising the option and providing specified and mandated particulars enjoined by Notification No.76/2003-CE is intended to keep the Government informed of and to place on record relevant particulars enjoined by the Notification to be conditions precedent for availment of exemption benefits thereunder provided. It is in the nature of mandatory stipulation to ensure that there is no escapement or leakage of Excise Duty. This requirement is therefore prima facie mandatory and not discretionary. - This view flows from the decision of the Constitution Bench in Hari Chand Shri Gopal (2010 (11) TMI 13 - SUPREME COURT OF INDIA). Amount of duty demand with interest directed to be pre-deposited - stay granted in respect of penalty only - stay granted partly.

Summary

Issues Involved:
1. Availment of exemption under Notification No.50/2003-CE without filing the mandatory option.
2. Interpretation of the requirement to exercise the option before effecting the first clearance under Notification No.76/2003-CE.
3. Applicability of the doctrine of substantial compliance in exemption Notifications.
4. Legality of invoking the extended period of limitation in the adjudication order.

Analysis:
1. The case involves the appellant wrongly availing the exemption under Notification No.50/2003-CE without filing the mandatory option, leading to the initiation of proceedings by a show cause notice. The appellant failed to comply with the conditions for availing the exemption during a specific period, resulting in the imposition of excise duty, interest, and penalties by the adjudication order.

2. The appellant argued that the requirement to exercise the option before effecting the first clearance under Notification No.76/2003-CE is directory and not mandatory, citing a previous Tribunal order. However, the Tribunal emphasized the mandatory nature of this requirement to inform the jurisdictional authorities before availing the exemption, as mandated by the Notification.

3. The Tribunal discussed the doctrine of substantial compliance in exemption Notifications, as highlighted in a Supreme Court judgment. It clarified that while certain minor or inconsequential aspects may be forgiven under this doctrine, mandatory requirements must be strictly obeyed for invoking tax exemptions. The Court emphasized the importance of complying with conditions for claiming exemptions.

4. The issue of invoking the extended period of limitation in the adjudication order was raised by the appellant's counsel. However, the Tribunal deferred a decision on this matter, stating it as a mixed question of fact and law to be determined during the appeal hearing. The Tribunal granted waiver of pre-deposit of duty and interest, staying further proceedings subject to the petitioner complying with the assessed quantum within a specified timeline.

In conclusion, the judgment addresses the crucial aspects of compliance with exemption Notifications, emphasizing the mandatory nature of certain requirements and the importance of adhering to specified conditions for availing tax exemptions. The Tribunal's decision reflects a balanced approach towards the issues raised, ensuring a fair consideration of legal and factual aspects during the appeal process.