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TMI Blog2022 (9) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... roduction - appeal is answered in favour of the Revenue and against the assessee. Levy of penalty - HELD THAT:- Raghuveer Beti and C S Rao were the persons concerned who had abetted the wrong. Important documents in the form of Slump sale agreement and the MOU between the two Units which enables the assessee to obtain and transfer the benefit of exemption Notification No. 49/2003 from Balaji to the assessee were in their knowledge. There is, therefore, no reason to interfere with the penalties imposed on them. Appeal dismissed. - EXCISE APPEAL NO. 50093/2020, 52893 OF 2019 and 52716 OF 2019 - FINAL ORDER No. 50813-50815/2022 - Dated:- 5-9-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Rajesh Gupta, Advocate for the appellant. Shri Sanjay Kumar Singh, Authorised Representative for the respondent ORDER These three appeals have been filed assailing the same Order-in-Original [the impugned order] dated May 01, 2019 passed by the Commissioner of Central Goods and Service Tax, Dehradun and are therefore being disposed of together. Appeal No. 50093/2020 is filed by the assessee Pegasus Pharmaco India, while appeal No. 52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee also inasmuch as it continued to manufacture pharmaceutical products which it was manufacturing earlier. No separate legal entity was created with the name of Unit II and both Unit I and II are part of same legal entity namely M/s. Pegasus Pharmaco India Pvt Ltd., the assessee. Both were located in the same premises. Initially, for 20 days after acquisition of Balaji, Unit No. II is said to have operated from the original premises of M/s. Balaji. Further, the same machinery which were being used to manufacture pharmaceutical in the name of Unit No. 1 were used to manufacture the same pharmaceutical products in the name of Unit II. A Memorandum of Understanding [MOU] was signed between the so called Units I and II whereby the land and machinery of Unit No. I were leased to Unit No. II. In other words, there was an agreement between two arms of the same legal entity effectively operating from the same premises and using the same machinery to manufacture the pharmaceutical products. This MOU was signed between Mr Raghuveer Beti, Managing Director of M/s. Pegasus Pharmaco India Pvt Ltd. representing its unit No. I and Shri C S Rao, General Manager of the same company represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83/- (Rupees Twenty Three Crore Four Lakh Seventy Five Thousand Nine Hundred and Eighty Three Only) as detailed in Annexure-A to this notice on excisable goods namely pharmaceutical goods/P.P. Products (Tablets and capsules) falling under CETSH 3004 of the Central Excise Tariff Act 1985 manufactured and cleared, for the period 20.04.2016 to 30.06.2017, should not be demanded and recovered from them under provisions of Section 11A(4) of Central Excise Act, 1944; c) Applicable interest on above duty should not be demanded and recovered from them under Section 11AA of Central Excise Act, 1944; and d) Penalty should not be imposed upon them under Section 11 AC (1)(a) of Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002. 14. Whereas, Sh. Raghuveer Beti, Director of the noticee, Shri C. S. Rao, Plant Head of the noticee, Shri Yogesh Kumar Sharma, Proprietor of M/s Shri Balaji Packing Industries M/s Shri Ram Packing Industries and Shri Pramod Kumar Sharma, Village Manakpur, Adampur Roorkee, are also hereby required to show cause within 30(thirty days) of the receipt of this show cause notice to the Commissioner, Central Goods Services Tax, Commissionera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 10.06.2003. 9. Accordingly, it has been prayed to hold that the assessee was entitled to benefit of exemption of Notification and consequently drop the demand along with the interest, quash the penalty and allow other consequent reliefs. 10. In their appeals, Raghuveer Beti and C S Rao, have asserted that the assessee was entitled to the benefit of exemption Notification and consequently the penalties imposed on them under Rule 26 of the Central Excise Rules need to be set aside. 11. It is submitted that Balaji was entitled to the benefit of the exemption notification because it had started commercial production of goods (cartons) prior to the cut off date of 31 March 2010, though it did not claim the benefit until few days before it was sold to the assessee. Balaji had commenced production prior to cut off date, March 31, 2010 and the first sale invoice No. 1 was issued on 31.3.2010. Chartered Accountant s certificate to that effect was also submitted. It is further submitted that a declaration was filed with the office of District Industries Centre (DIC) although Balaji had not filed part II of the acknowledgement with the DIC. Non-filing of part II of the acknowledgem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The above text also does not establish that the statement was taken peacefully and not under duress. Yogesh Kumar Sharma has filed an affidavit on July 06, 2018 to clarify his stand. Therefore, the statement of Yogesh Kumar Sharma should be treated as involuntary given under duress. 16. It has further been submitted by the assessee that Balaji was purchased by it under slump sale agreement duly paying court fees. Thereafter, it was renamed Unit No. II and shifted to its own premises. Unit No. I has followed due process and rented the premises to Unit No. II and even paid the Service Tax and GST on the rent received from Unit No. II. The statement of Rajesh Singh that Unit I was closed at the end of February, 2016 and no production activity was being carried out up to March 2016 and from April, 2016, the production was carried out in the name of Unit No. II was not correctly interpreted. In his statement Rajesh Singh categorically stated that production had commenced but it was in Unit named as Unit No. II. 17. Regarding recommencement of manufacturing activity by Yogesh Kumar, the owner of Balaji after the slump sale in the name of Shri Ram Packing Industries, it was submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion to be answered is whether Balaji had commenced commercial production prior to 31.3.3010 at all which was the cut-off date for the benefit of the exemption notification. It is not disputed that the first invoice was issued to Balaji on 30.03.2010. The exemption notification was available to new industrial units which commenced commercial production on or before 7th day of January, 2003 but not later than 31st day of March, 2010. Therefore, the date of commencement of commercial production of the unit becomes relevant. In the statement submitted by Balaji before the District Industrial Centre (DIC), on the basis of which acknowledgement in part I was issued to Balaji, the proposed the date of commercial production was shown as December, 2010. Part II of the declaration which indicates the actual date of commencement part of commercial production was not filed by Balaji. The machinery was purchased by Balaji on 29.03.2010 from M/s. M R Engineering Works and raw material was purchased from M/s. Uttaranchal Pulp and Paper Mills (P) Ltd. on the same date. The machinery had not even entered the State of Uttaranchal before 30.03.2010. It would not be unreasonable to infer that aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification does not require any production by the Unit before the cut off date but commercial production. Even the goods which are produced during trials can be sold by the factory. The invoice issued indicates some production and in our considered view cannot be termed as commercial production. The submission of the learned counsel was that in view of the cut off date for the notification, Balaji completed all these activities working 24x7 and started commercial production within 24 hours. This argument holds no water if one considers that Balaji intended to commence commercial production only by December 2010 as per the declaration filed with the DIC. Further, if it was so keen on availing the benefit of the notification that it completed all these activities within 24 hours, it would have claimed the benefit of the notification which it never did until a few days before selling it to the assessee. From the factual matrix of this case, we can only infer that Balaji had purchased machinery and raw material, rented the generator set for a short while and started setting up and conducted some trials. Meanwhile, it has received electricity connection on April 24, 2010 and started ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is true that CBEC Circular states that if any additions are made to the plant and machinery or any modifications are made or manufacture of some new products is commenced, the appellant assessee will still be eligible for the benefit of exemption. It is also true that the CBEC Circular dated 17.2.2012 further clarified that the relocation of a new unit will not also disentitle the assessee the benefit of exemption Notification provided the new location is also in the area covered under the exemption. It is also true that the change of ownership per se, does not disentitle the unit to the benefit of exemption. 29. In this case, what needs to be noted is the nature of the slump sale agreement entered into between the assessee and Balaji. Balaji was manufacturing cartons. It was a Small Scale Industry and was anyway below the threshold limit for levy of excise duty. The Notification required the industry claiming the benefit to exercise the option in writing. Balaji had never applied for the benefit of exemption Notification No. 49/2003, except few days before the sale of the Unit to the assessee. Presumably, the reason for this is as a small scale unit, its manufacture was belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on prior to the cut-off date of 31.3.2010 even though a single invoice was issued and therefore, it was not entitled to the benefit of the exemption notification nor has it claimed it until a few days before the slump sale agreement. b) The so called slump sale agreement between Balaji and the assessee was, in essence, only an agreement by which the benefit of the exemption notification claimed by Balaji was transferred to the assessee to enable it to claim the benefit on the pharmaceuticals manufactured by it in its own plant (now renamed Unit I) on which the assessee had already availed the full benefit of exemption up to 10 years. Nothing in the business of Balaji remained with the assessee after transfer as the product line of Balaji was discontinued, the name was discontinued (along with it any possible goodwill), the machinery was disposed of, the location was changed to the assessee s own plant. c) The MOU signed between Unit I and Unit II is essentially one signed by the assessee with itself with two of its officers, viz., the Managing Director and General Manager signing as two parties whereby its own plant and land was leased to itself to manufacture the same goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded.] (2) Any person, who issues - (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater.] 34. The appellants contended that the assessee is entitled to the above exemption and therefore, they have done nothing to attract penalty under the same Rule. 35. We find that Raghuveer Beti and C S Rao were the persons concerned who had abetted the wrong. Important documents in the form of Slump sale agreement and the MOU between the two Units which enables the assessee to obtain and transfer the benefit of exemption Notification No. 49/2003 from Balaji to the assessee were in their knowledge. There is, therefore, no reason to interfere with the penalties imposed on them. 36. In view of the above, we find that imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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