2018 (11) TMI 726 - AT - Central Excise

SSI Exemption - scope of rural area - Revenue has pleaded that as the assessee was situated in Bhugaon Village, which is notified under Urban Land Ceiling Act, the said area cannot be considered to be rural area and as such benefit of exemption notification has been wrongly extended - Held that - The Commissioner has given a detailed findings by referring to the definition of rural area and has observed that the assessee was paying property tax to the local Gram Panchayat under Section 129 (1) of the Bombay Village Panchayat Act and as such has to be considered as a unit located in rural area - Revenue has not advanced any evidence so as to establish that the said village did not fall under the rural area so as to rebut the findings of Commissioner - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of rural area for SSI exemption benefits under Notification 8/2003.

Analysis:
The case involved a dispute where the Revenue filed an appeal against the Commissioner's decision to vacate a show-cause notice issued to the respondents, dropping the proceedings. The respondents were engaged in manufacturing excisable goods under a specific brand name. The Revenue initiated investigations as they believed that goods manufactured under another brand name were not entitled to Small Scale Industry (SSI) exemption benefits. Statements were recorded to establish that the respondents were indeed manufacturing goods under a different brand name. Subsequently, a show-cause notice was issued raising duty demands for clearances made by the respondents during a specific period.

Upon adjudication, the Commissioner vacated the show-cause notice, citing various reasons. The Commissioner noted that the goods were alleged to have borne a brand name different from the customer's, thus excluding them from SSI exemption benefits. Additionally, the Commissioner analyzed the definition of "rural area" as per the Notification and the Bombay Village Panchayat Act, 1958, concluding that the factory's location qualified as a rural area. The Commissioner's decision was based on the fact that the property tax was paid to the local Gram Panchayat under the Act, despite the village being covered under the Urban Land Ceiling Act.

The Revenue contended that since the factory was situated in an area notified under the Urban Land Ceiling Act, it should not be considered a rural area, and the exemption benefits were wrongly extended. However, the Tribunal found no fault in the Commissioner's detailed findings. The Tribunal agreed with the Commissioner's analysis, emphasizing that the Revenue failed to provide evidence to refute the Commissioner's determination that the village fell within the definition of a rural area as per the relevant Notification. Consequently, the Tribunal rejected the Revenue's appeal and disposed of the respondent's cross objection.

In conclusion, the Tribunal upheld the Commissioner's decision, emphasizing the importance of analyzing the specific definitions and legal provisions to determine eligibility for SSI exemption benefits under Notification 8/2003. The case highlights the significance of providing substantial evidence to challenge established findings in tax disputes.