2017 (4) TMI 847 - AT - Central Excise

Benefit of N/N. 50/2003-CE dated 10.06.2003 - denial on the ground that assessee filed the option for claiming benefit of exemption notification, two months later. Revenue claims that the assessee is entitled to the benefit of notification only with effect from the date when department was informed by the assessee on their claim of benefit of the notification - Held that - Hon ble Supreme Court in the case of Commissioner of C. Ex. New Delhi Vs Hari Chand Shri Gopal 2010 (11) TMI 13 - SUPREME COURT OF INDIA has held that though exemption provisions have to be complied with strictly some latitude may be shown in case of some requirements which are directory in nature, the non-compliance of such requirements would not affect the substance of notification granting exemption - The liberal attitude, therefore, has to be taken in this regard, when the assessee otherwise is entitled to the benefit of exemption N/N. 50/2003 - appeal allowed - decided in favor of assessee.

Summary

Issues involved:
1. Denial of exemption under notification No.50/2003-CE to the appellant.
2. Revenue's cross-appeal against allowing CENVAT credit to the assessee.

Analysis:

Issue 1: Denial of exemption under notification No.50/2003-CE to the appellant:
The case involved an appeal by M/s Controls & Switchgears Co. Ltd. against the denial of exemption under notification No.50/2003-CE by the Commissioner, Central Excise, Meerut-I. The appellant had started a new manufacturing unit in Hardwar and commenced clearance of goods without paying central excise duty. The dispute arose when the appellant filed a declaration under the notification two months later, stating that they had exercised the option under the notification earlier. The impugned order denied the exemption for clearances made before the declaration date. The Revenue's objection was based on the delay in informing the department about the claim for exemption. The Tribunal, after considering the facts and submissions, held that the appellant was entitled to the exemption under the notification. Citing the Supreme Court's decision in Commissioner of C. Ex. New Delhi Vs Hari Chand Shri Gopal, the Tribunal emphasized that exemption provisions must be strictly complied with, but some leniency could be shown for procedural requirements. The Tribunal ruled in favor of the appellant, stating that the delay in informing the department about the exemption claim was a procedural matter and did not affect the substance of the notification. Consequently, the impugned order was set aside, and the appellant's appeal was allowed.

Issue 2: Revenue's cross-appeal against allowing CENVAT credit to the assessee:
The Revenue had filed a cross-appeal against the same Order-in-Original, contending that the order wrongly allowed CENVAT credit to the assessee. The Revenue's main argument was that the order exceeded the show cause notice (SCN) and erroneously granted the benefit of CENVAT credit to the assessee. However, the Tribunal, after hearing both parties, found in favor of the appellant regarding the exemption notification. As a result, the Revenue's appeal was also disposed of accordingly, aligning with the decision on the main issue of exemption. The Tribunal's decision was based on the strict interpretation of exemption provisions, balancing the mandatory requirements with the procedural aspects, as highlighted in the Supreme Court's ruling cited during the analysis of the first issue.

In conclusion, the Tribunal's detailed analysis and application of legal principles, along with referencing relevant case law, led to the allowance of the appellant's appeal and the disposal of the Revenue's cross-appeal in this matter.

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