2020 (8) TMI 379 - AT - Central Excise

Area based exemption - benefit of N/N. 50/03-CE dated 10.06.2003 - benefit denied on the ground that while plant and machinery as declared on 15.03.2010 were installed in the factory premises, the same were not used by them till the date of their visit i.e. 17.04.2010 - recovery of the duty for the period from April, 2010 to September, 2011 along with interest thereon under Section 11 AB of the Central Excise Act and imposition of penalty under Section 11 AC of the Central Excise Act, 1944 - HELD THAT - We had directed both the parties to inform the status report, if any appeal has been filed by the Revenue against the aforementioned final order of this Tribunal, within a period of 10 days. As no such report is filed, it appears that Revenue has accepted the Tribunal s order and no further appeal has been filed. The appellant is entitled to area based exemption under Notification No.50/2003-CE. - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for area-based exemption under notification no.50/03-CE dated 10.06.2003 based on the commencement of commercial production before 31.03.2010.
2. Adjudication of duty demand, interest, and penalty under Section 11 AB and Section 11 AC of the Central Excise Act, 1944.

Issue 1:
The appellant, engaged in manufacturing polymer-based soil stabilizer, claimed area-based exemption under notification no.50/03-CE, asserting their unit's location within the specified area. The dispute arose when the Central Excise Officers found that although the machinery was installed as declared, the commercial production had not commenced by the stipulated date of 31.03.2010. A show cause notice was issued seeking recovery of duty, interest, and penalty. The Commissioner confirmed the duty demand, interest, and imposed a penalty, stating that using an alternative method for production would render the appellant ineligible for the exemption. The appellant appealed, citing a precedent order of the Tribunal where a similar issue was decided in favor of the assessee. The Tribunal, based on the precedent, allowed the appeal, setting aside the impugned order, and held that the appellant was entitled to the area-based exemption under the notification.

Issue 2:
The Commissioner, in the order-in-original, confirmed the duty demand against the appellant along with interest and imposed a penalty equal to the demand. The Commissioner's decision was based on the finding that the machinery was not used as declared for production, thus disqualifying the appellant from the exemption. However, the Tribunal, referring to a previous order where a similar issue was resolved in favor of the assessee, allowed the appeal, following the precedent. The Tribunal noted that the production had indeed started on 23.03.2010, even though initially, a smaller tank was used, later replaced by larger tanks as demand increased. Consequently, the Tribunal dismissed the appeal filed by the Department, upholding the area-based exemption for the appellant under the notification.

This judgment clarifies the eligibility criteria for area-based exemption under the specified notification and emphasizes the importance of commencing commercial production within the prescribed timeline to avail such benefits. The Tribunal's reliance on precedent and detailed analysis of the production process highlights the significance of factual evidence in determining exemption eligibility under excise laws.