2014 (11) TMI 303 - AT - Central Excise

Waiver of pre deposit - Area based exemption - production of goods without using the declared plant and machinery - Benefit of the exemption notification no.50/03-CE dated 10.06.2003 - Non commencement of commercial production on or before 31.3.2010 - Held that - the fact that there was commercial production in the factory in March, 2010, is not denied. The Department also accepts that there was production in March 2010 but not by using the declared machinery and by using some alternate method. The reason given by the appellant for using the alternative method is that they were getting small orders for small quantity and, therefore, they had manufactured small quantity instead of using the main plant for large scale manufacture. When the fact of commencement of production of the final product and its sale stands accepted by the department, even if the production was by using the alternate method not declared to the department, the benefit of the exemption cannot be denied. - they have strong prima facie case in their favour - Stay granted.

Summary

Issues:
Claim of exemption under notification no. 50/03-CE for a unit manufacturing polymer-based soil stabilizer in Uttrakhand.

Analysis:
The appellant, engaged in manufacturing polymer-based soil stabilizer, claimed exemption under notification no. 50/03-CE for their unit in Uttrakhand. The exemption required commercial production to commence on or before 31.03.2010 for new units. The appellant declared commencement of production on 15.03.2010, but Central Excise Officers found the declared machinery unused during their visit on 17.04.2010. A show cause notice was issued for recovery of duty, interest, and penalty, alleging non-eligibility for exemption due to failure to start production by the specified date.

The Commissioner confirmed the duty demand and penalty, stating that if production commenced using an alternate method, the exemption would be denied. The appellant contended that actual production in March 2010, even through an alternate method, should qualify for exemption. The Department argued against waiving the pre-deposit requirement.

The Tribunal considered both arguments and reviewed the records. The Commissioner found that while there was production in March 2010, it was not with the declared machinery but through an alternate method. The appellant admitted using an alternate method due to small orders. Despite this, the Tribunal held that since production and sale of goods were acknowledged by the Department, the benefit of exemption could not be denied. The Tribunal concluded that the appellant had a strong prima facie case in their favor, waiving the pre-deposit requirement for the appeal and staying recovery. The stay application was allowed.