2016 (1) TMI 293 - AT - Central Excise

Area based Exemption under Notification No. 50/2003-CE - commencement of commercial production on or before 31.3.2010 - Whether or not the respondent had commenced commercial production on or before 31.3.2010, in order to be eligible for exemption under notification No. 50/03-CE - Held that - Concession under notification No. 50/03-CE is in pursuance of industrial policy notified through office memo No. 1(10)/2001-NER dated 7.1.2003. In pursuance of the said Central Government Policy, the State Government also commenced Industrial Policy 2004 to extend concession and facility for the industries in Himachal Pradesh. In terms of the said Policy commencement of commercial production means the date on which industrial enterprise actually commenced the commercial production as certified by Director etc. In the present case, the State authorities have certified commencement of commercial production as 31.3.2010. The respondents were also given the benefit under Income Tax Act and Sales Tax Act on the ground that they commenced production before 31.3.2010. AH these issues are apparently operational under the same Industrial Policy. It is apparent if the clearances made from 1.4.2010 are to be charged to duty as they are manufactured by the respondent, the commercial production would have certainly commenced prior to that date. Regarding non-availability of certain raw material with the respondent they have clarified that while most of the raw materials were procured by them some essential raw materials in small quantities were either taken from the samples given by the vendors and also supplied by vendors of capital machines as sales promotion - Revenue has not made out a case to interfere with the said findings - Decided against revenue.

Summary

Issues:
Interpretation of Notification No. 50/2003-CE regarding exemption for lead acid battery production commencement before 31.3.2010.

Analysis:

Issue 1: Interpretation of Notification No. 50/2003-CE
The dispute revolved around the eligibility of the respondents for exemption under Notification No. 50/2003-CE, as they were engaged in manufacturing lead acid batteries subject to Central Excise duty. The Revenue contended that the respondents did not commence commercial production before 31.3.2010, citing various reasons such as lack of power supply, incomplete installation of plant and machinery, and absence of necessary clearances. The Revenue argued that the respondents' claim of making saleable batteries before the deadline was not supported by facts. The respondents, on the other hand, defended their position by presenting evidence of power supply, raw material purchase, and operational processes, supported by certificates and statements. The key point of contention was whether the respondents had indeed commenced commercial production by the specified date to qualify for the exemption.

Issue 2: Commencement of Commercial Production
The original authority examined the evidence and concluded that the respondents had met the requirements for the exemption under the notification. The respondents provided documentation and explanations regarding power supply, machinery installation, raw material procurement, and operational processes. The State authorities had certified the commencement of commercial production as of 31.3.2010, and the respondents had also received benefits under other tax laws based on the same commencement date. The Tribunal noted that the notification focused on the commencement of commercial production, not the immediate availability of saleable finished products. The Tribunal agreed with the original authority's findings that the evidence presented established the commencement of commercial production before the deadline, as required by the notification. Therefore, the Tribunal dismissed the Revenue's appeal, as they failed to demonstrate grounds for overturning the original decision.

In conclusion, the judgment centered on the interpretation of Notification No. 50/2003-CE regarding the commencement of commercial production for lead acid battery manufacturers. The Tribunal upheld the original authority's decision, emphasizing that the evidence presented by the respondents supported their claim of meeting the requirements for exemption under the notification. The judgment highlighted the importance of demonstrating the commencement of commercial production as per the specified date, rather than focusing solely on the immediate availability of saleable products.