2015 (10) TMI 512 - AT - Central Excise

Area based exemption - Denial of benefit under Notification No. 50/2003-CE - Imposition of interest and penalty - Invocation of extended period of limitation - Held that - In this case it is admitted fact that on 15th July, 2009 the appellant filed a declaration for claiming of benefit of exemption Notification No. 50/2003-CE with effect from 27th February 2008 onwards and thereafter show cause notice has been issued by invoking extended period of limitation on 19th July, 2011 - in this case extended period of limitation is not invokable as show cause notice has been issued by invoking extended period of limitation, therefore, impugned order is set aside. - Decision in the case of Surya Polypack Pvt. Ltd. vs. CCE 2014 (10) TMI 559 - CESTAT NEW DELHI (LB) - Decided in favour of assessee.

Summary

Issues:
- Benefit denial under Notification No. 50/2003-CE
- Filing of declaration for exemption
- Invoking extended period of limitation

Issue 1: Benefit denial under Notification No. 50/2003-CE
The appellant appealed against the denial of benefit under Notification No. 50/2003-CE during the period from February 27, 2008, to July 14, 2009. The appellant had set up a New Industrial Unit in Nalagarh, Himachal Pradesh, and commenced commercial production on February 27, 2008. It was noted that the appellant had not filed any declaration under the said notification before commencing commercial production. The Revenue contended that as no declaration was filed before the specified period, the appellant was not entitled to the benefit of the notification. A show cause notice was issued to the appellant, and the Adjudicating Authority denied the exemption, demanding excise duty along with interest and penalty. The appellant challenged this decision before the Tribunal.

Issue 2: Filing of declaration for exemption
The appellant argued that they had informed the Directorate of Industries in October 2007 about their intention to start an Industrial Unit, with commercial production scheduled for November 2007. Although production did not start in November 2007, the Department was aware of the appellant's plans. The appellant filed a declaration for claiming exemption under Notification No. 50/2003-CE on July 15, 2009. The appellant contended that the show cause notice issued later was not sustainable as per precedents set by the Tribunal in similar cases. The Revenue, however, maintained that since the mandatory declaration was not filed initially, the appellant could not claim the exemption.

Issue 3: Invoking extended period of limitation
The Tribunal considered the timeline of events and the invocation of the extended period of limitation in issuing the show cause notice. Citing precedents, the Tribunal noted that the demand was time-barred as the appellant had filed the declaration correctly on July 15, 2009, and the show cause notice was issued later, invoking the extended period of limitation. The Tribunal emphasized that the Revenue's delay in acting on the declaration could not be attributed to the appellant, and the duty demand was deemed time-barred. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the appeal with consequential relief.

In conclusion, the Tribunal held that the appellant was entitled to the benefit under Notification No. 50/2003-CE, as the denial based on the failure to file a declaration before the specified period was not justified. The Tribunal also emphasized that the show cause notice issued invoking the extended period of limitation was not sustainable, as the appellant had filed the declaration correctly within the required timeline. The impugned order was set aside, and the appeal was allowed with consequential relief.