2015 (11) TMI 1339 - AT - Central Excise

Claiming area based exemption after availing full duty exemption under SSI exemption Notification No. 8/03-CE - Initially Assessee had not opted for Notification No. 50/03-CE - appellant crossed the SSI exemption limit on 3/11/09 and immediately thereafter, they started availing of full duty exemption under 50/03-CE. However, there is no dispute that at that stage, the appellant did not file any declaration or submitted any intimation to the Department, and that they have started availing of this exemption without filing the declaration - whether the benefit of this notification would be available only w.e.f. 28/6/10 or would be available from 04/11/09 - Held that - In view of the Circular of the Board, we hold that the basis for denying the exemption on the ground that the declaration was filed after 31/3/10, is not correct. Exemption would be available only from the date from which the declaration is filed and, therefore, the exemption cannot be extended for the period prior to filing of this declaration. Moreover, the condition of filing declaration is designed to prevent the misuse of the exemption notification and to enable the Jurisdictional Assessing Officer to examine as to whether the assessee is eligible for benefit of this exemption notification or not. Therefore, the filing of this declaration cannot be said to be a pure procedural or technical requirement. It is well settled law that when a notification subject to some condition and that condition has been put to prevent the misuse of the exemption notification, non fulfilling of that condition cannot be treated as a mere procedural or mere technical violation and would result in denial of exemption. - exemption Notification No. 50/03-CE would be available to the appellant only w.e.f. 28/06/2010 and not for the period prior to 28/06/2010. The appeal is thus partly allowed. - Decided partly in favour of assessee.

Summary

Issues:
1. Eligibility for exemption under Notification No. 50/03-CE based on declaration filing date.
2. Availability of exemption benefits from a specific date.

Issue 1: Eligibility for exemption under Notification No. 50/03-CE based on declaration filing date:

The case involved a dispute regarding the eligibility of the appellant for exemption under Notification No. 50/03-CE due to the timing of filing the required declaration. The appellant, a manufacturer of Corrugated Board Boxes, had initially availed the SSI exemption under Notification No. 8/03-CE. When the appellant crossed the SSI exemption limit, they switched to availing full duty exemption under Notification No. 50/03-CE. However, the appellant failed to file the required declaration for availing this exemption until 28/6/10, which was after the sunset date of 31/3/10 as per the notification. The Department contended that the late filing of the declaration rendered the appellant ineligible for the exemption. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

The appellant argued that the sunset clause in the notification was only relevant for determining eligibility and did not restrict the option to exercise the exemption after the sunset date. The appellant relied on a circular by the Board to support their claim that the exemption should be granted based on fulfilling the eligibility criteria, regardless of the declaration filing date. The Tribunal reviewed the circular and concluded that the denial of exemption based on the declaration filing date was incorrect. The Tribunal emphasized that the condition of filing the declaration was to prevent misuse and enable verification of eligibility, but non-compliance should not be considered a mere procedural violation. The Tribunal cited a Supreme Court judgment to support this interpretation, ultimately allowing the appeal in part.

Issue 2: Availability of exemption benefits from a specific date:

Another point of contention was whether the benefit of the exemption under Notification No. 50/03-CE should be available from the date of filing the declaration (28/6/10) or from an earlier date (04/11/09). The Tribunal noted that the appellant had not informed the Department through any other means or mentioned the exemption in their returns prior to filing the declaration. The notification specified that the exemption would be effective from the date of filing the declaration, and the Tribunal emphasized that this condition was crucial to prevent misuse of the exemption. Referring to a Supreme Court judgment, the Tribunal held that non-compliance with such a condition should result in the denial of exemption. Therefore, the Tribunal ruled that the exemption benefits should only be available from the date of filing the declaration (28/6/10) and not retroactively, thereby partly allowing the appeal.

In conclusion, the Tribunal clarified the eligibility criteria for exemption under Notification No. 50/03-CE, emphasizing the significance of timely compliance with declaration requirements and the effective date of exemption benefits based on declaration filing. The appeal was partly allowed based on these considerations.