2016 (12) TMI 1167 - AT - Central Excise

Area based exemption - Whether the duration of 10 years exemption to the appellant should be determined as per clause 4 of Notification No 32/1999-CE dt 8/7/1999 or the same should be calculated from 12/2/2002 when area of the appellant was included into Notification No. 32/99-CE by Notification No. 5/2002-CE dt 12/2/2012? - Held that - It is observed from clause 4 of Notification No. 32/99-CE that period of 10 years has to be calculated from the date of publication of this notification or from the date of commencement of commercial production of a unit, whichever is later. There is no provision in this exemption notification that for the areas added by subsequent notifications this period of 10 years has to commence from the date of any subsequent notification. It is a well accepted legal proposition that while granting the benefit of an exemption notification Rule of strict interpretation should be followed. In the absence of any provision, argument of the appellant that 10 years period of exemption should be counted from 12/2/2002, is required to be rejected as commercial production of the appellant started from 8/12/1998. The benefit of exemption notification with effect from 8/7/1999 has been correctly interpreted by the lower authorities. Appeal dismissed - decided against appellant.

Summary

Issues:
Interpretation of the duration of exemption under Notification No. 32/1999-CE.
Validity of eligibility certificate issued by the AC CE Bhangagarh.
Recovery of erroneously sanctioned refund.
Applicability of Apex Court's decision in Grasim Industries Ltd. Vs CCE Bhopal.

Interpretation of the duration of exemption under Notification No. 32/1999-CE:
The case revolved around determining whether the 10-year exemption period for the appellant should commence from the date of publication of Notification No. 32/1999-CE or from a subsequent date when the appellant's area was included in the notification. The Tribunal observed that as per clause 4 of the notification, the exemption period should be calculated from the date of publication or from the date of commencement of commercial production, whichever is later. The Tribunal emphasized the rule of strict interpretation for exemption notifications and rejected the appellant's argument that the period should start from the subsequent inclusion date, as the commercial production had started earlier. The lower authorities' interpretation of the exemption benefit from 8/7/1999 was deemed correct.

Validity of eligibility certificate issued by the AC CE Bhangagarh:
The appellant's claim that the AC CE Bhangagarh had allowed exemption until 12/2/2012 was dismissed by the Tribunal. It was noted that no eligibility certificate for 10 years was necessary under Notification No. 32/1999-CE. Additionally, the order passed by the AC CE Bhangagarh on 31/1/2003 was not endorsed to the reviewing authority as required. Each refund sanctioned under the notification was considered a separate order, as per the first appellate authority's decision.

Recovery of erroneously sanctioned refund:
The Revenue argued that erroneously sanctioned refunds could be recovered without filing an appeal, citing the Apex Court's decision in Grasim Industries Ltd. Vs CCE Bhopal. The Tribunal agreed with this argument, stating that the principles laid down by the Apex Court applied to refunds sanctioned under Notification No. 32/1999-CE. It was emphasized that Section 11A of the Central Excise Act provided the right to issue show cause notices for recovering erroneously refunded amounts.

Applicability of Apex Court's decision in Grasim Industries Ltd. Vs CCE Bhopal:
While the Apex Court's decision in Grasim Industries Ltd. Vs CCE Bhopal pertained to refunds sanctioned under Section 11B of the Central Excise Act, the Tribunal found its principles applicable to refunds under Notification No. 32/1999-CE. The Tribunal upheld the demands confirmed against the appellant, rejecting their appeals and stay applications.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT KOLKATA highlights the key issues, arguments presented by both parties, and the Tribunal's reasoning and decision on each issue.