2016 (2) TMI 249 - AT - Central Excise

Area based exemption - notification No. 50/03-CE dated 10.6.2003 - denial of benefit as the appellant was not having electricity connection or DG set installed at the time of investigation - demanding duty along with interest and imposing penalty - Held that - From the perusal of various documents, we find that appellants have installed machines which are evidence of manufacture of final products and they have license to manufacture from Drugs Controller. All the drugs manufactured also bears batch, year of manufacture. Admittedly, the appellant has cleared some drugs before when DG sets was there and drugs were manufactured before cut of date for availing exemption under the notification in question. The electricity connection was also released on 31.3.2010. This fact is verified from the electricity bill issued to the appellant dated 7.5.2010. Further, during the course of hearing, the appellant has produced a certificate issued by the Department of Industries certifying that commercial production started with effect from 30.3.2010. The supplier of DG set (on rental basis) has also gave the statement that he has given DG set on rental basis to the appellant. On the basis of this statement of supplier, the appellant has filed the affidavit and same has not been controverted by the adjudicating authority with cogent evidence. In the absence of any contrary evidence, the statement of supplier of DG sets (on rental basis) is having evidential value. Further, in this case the Range officer of Central Excise has inspected the factory premises of the appellant and held that appellant is entitled for benefit of exemption notification in question. In these circumstances, we hold that the appellant has rightly availed the exemption under Notification No. 49-50/2003 CE dated 10.6.2003. Demand of duty against the appellant is not sustainable - Decided in favour of assessee.

Summary

Issues:
Appeal against duty demand, interest, and penalty under exemption notification No. 50/03-CE dated 10.6.2003.

Analysis:
The appellant, a pharmaceutical manufacturer, appealed against orders demanding duty, interest, and penalty by denying exemption benefits. The appellant claimed to have started commercial production before 31.3.2010, thus entitled to the exemption under notification No. 49-50/2003-CE dated 10.6.2003. The dispute arose when Preventive officers sought to deny the exemption based on the absence of electricity connection or DG set during investigation. The appellant's counsel argued that the appellant had met the necessary requirements for exemption, citing reports and documents supporting their claim. The adjudicating authority's main ground for denial was the lack of electricity connection or DG set at the time of investigation. The appellant presented evidence of machine installation, drug manufacturing licenses, and batch details to prove commercial production before the cutoff date. The electricity connection was confirmed through an electricity bill, and a certificate from the Department of Industries supported the start of commercial production. The supplier of the DG set provided a statement confirming rental to the appellant, supported by an affidavit. The Range officer also inspected and confirmed the appellant's eligibility for the exemption. Consequently, the Tribunal held that the appellant rightfully availed the exemption and set aside the duty demand, finding the impugned order lacking merit.

Conclusion:
The Tribunal ruled in favor of the appellant, setting aside the demand of duty and allowing the appeals with consequential relief. The decision was based on the appellant's compliance with the exemption requirements, supported by documentation and statements from relevant parties.