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TMI Blog2025 (3) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no condition that the said unit must be functioning on the day of transfer - M/s Stanley Controls has filed returns for all the quarters, for the period 30.09.2009 to 31.12.2012, on one single date i.e on 14.01.2013 together just before the takeover; they have shown production/clearance of 80 Nos of Solenoid Valves valued at Rs 73,301, during the quarter ending September 2009, whereas they have shown clearance of 1050 Nos of said valves valued at Rs. 36, 750 without showing any production of these valves in the register for the quarter ending 31.12.2012; even after filing declaration dated 25.03.2013 by the applicant with the department to continue to avail the area-based exemption, their Quarterly Returns for the period from 01.01.2013 to 31.12.2013 shows NIL production/clearance. The appellants have not given any documentary evidences to controvert the findings of the adjudicating authority or the appellate authority to the effect that M/s Stanley Controls was a working unit prior to its takeover by the appellants. Therefore, M/s Stanley Controls was a non-working and a defunct unit at the time of its sale and therefore not eligible for area -based exemption as envisaged u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the dates of shifting to new factory premises; they did not submit a Chartered Engineer certificate in Proforma-I as per Trade Notice no. 07/2012 dated 02.05.2012 and violated Board's circular No. 960/3/2010-CX dated 17.2.2010 and 960/03/2013-Cx3 dated 21.2.2012. Original Authority vide order dated 04.07.2014 rejected the claim of the appellant. An appeal filed by the appellants before the Commissioner (Appeals), who vide the impugned order dated 30.12.2014, upheld the order of the adjudicating authority denying the exemption. 2.1. Aggrieved with the order of the Commissioner (Appeals), the appellants filed appeal with the Hon'ble Tribunal, who vide Final order No. 61111/2016 dated 11.08.2016, allowed the appeal of the appellants. Revenue filed an appeal before the Hon'ble Supreme Court, vide Civil Appeal No. 831/2018; Hon'ble Supreme Court, vide order dated 25.07.2018, remanded the matter to CESTAT for fresh reconsideration giving findings on the observation by the authorities below on the contention advanced on behalf of the appellant-Revenue that M/s. Stanley Controls at the relevant point of time i.e. when the respondent had taken over was a non-functional unit and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Union of India - 2005 (188) ELT 257 (Guj), * Duncan Industries Ltd. v. CCE 2006 (201) ELT 517 (SC); * Union of India v. Upper Ganges Sugar and Industries Ltd. - 2005 (179) ELT 277 (SC). 5. Learned Counsel for the appellants submits further that the appellant is entitled to area-based exemption; M/s Stanley Controls was a running unit, engaged in the manufacturing of Solenoid Valves since 2009 and when it was taken over by the Appellant; exemption was allowed. Department of Industries issued a letter stating that the Appellant has taken over a running unit, exemption cannot be denied. When DIC gives a certificate exemption cannot be denied as held in Anphar Laboratories Pvt Ltd 2019 (21) GSTL 546 (Tri. Chan.) and NIIT GIS Ltd. & Another Chandigarh -Final Order No. 63346- 63347/2018 dated 24.10.2018. He submits that the fact that M/s Stanley Controls was working is evident from the following documents: * sales tax returns for the quarters ending September 2009, March 2010, December 2012 * Agreement for sale of going concern as such with the machineries * Part I of the Chartered Engineer Certificate certifying that the plant and machinery was functioning prior to shifting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition in February 2013; there is no dispute that the unit was manufacturing solenoid valves and thus, a functional unit; the Appellant has also met all other requisite conditions, like submission of a fresh declaration opting to avail exemption; and relocating to new premises in an area specified in the Exemption Notification. Thus, the Appellant has fulfilled all necessary conditions to avail the benefit of exemption. 8. Learned Counsel for the appellants submits in addition that the Exemption Notification does not impose any condition that the unit should be a functional unit in case of relocation or expansion of an existing unit; Circular No. 960/03/2012-CX.3 dated 17.02.2012 merely provides for cases of shift of factory, change of ownership and expansion of factory area and installation of new plant & machinery; or when a Unit physically shifts to a new location, the exemption shall continue to be available for the residual period of exemption; the said circular only mandates certain safeguards like proper inventorisation and certification by a Chartered Engineer, which has been duly complied with by the Appellant; the Appellant has fulfilled all necessary conditions like fili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Champdany Industries Ltd. - 2009 (241) ELT 481 (S.C.); * Sachin Gandhi v. CCE - 2016 (339) ELT 73 (Tri. - Ahmd.) 12. Learned Counsel for the appellants submits lastly that charging of interest under the provisions of section 11AA of the Act is not proper and legal since the demand of duty itself is not sustainable; the Appellant has already deposited the entire duty amount before issuance of show cause notice, therefore demand of interest is not sustainable. He submits that no penalty is imposable in the present case as no demand is sustainable against the assessee; the Appellant has always been and still are under the bona fide belief that they are eligible to avail the area-based exemption under the Notification; the Appellant had no intention to avail the said exemption wrongly as mentioned in the grounds and therefore, no penalty can be imposed. 13. Learned Authorized Representative for the Revenue reiterates the findings of OIO and OIA in respect of appeal No E/51033/2015 and the findings of OIO in respect of appeal No E/60670/2023. He submits that the appellants have not given any explanation for filing of all the quarterly returns on a single day i.e. 14.01.2013, just be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 111/2016 dated 11.08.2016, passed in appeal No E/51033/2015 and remanded back, vide order dated 25.07.2018, in Civil Appeal No. 831/2018, for a fresh consideration giving findings on the observation by the authorities below on the contention advanced on behalf of the appellant-Revenue that M/s. Stanley Controls at the relevant point of time i.e. when the respondent had taken over was a non-functional unit and has stopped its manufacturing process. Appeal No E/60670/2023 pertains to the proceedings which culminated with the issue of impugned order, wherein, applicable duty payable during the period 28.01.2013 to 14.12.2018, was confirmed along with interest and penalty. The confirmation of duty in the second appeal squarely hinges on the determination of the eligibility of the appellant for exemption based on the question as to whether M/s Stanley Controls was operational when the appellants took over the same. The precise direction of the Hon'ble Apex court to this bench is to give findings on the observations of the lower authorities on the submissions made by Revenue in this regard. Therefore, we find that the appeal no E/51033/2015 needs to be addressed in this context and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of area based exemption, to initially shift their old business to new location and thereafter could have undertaken necessary expansion or addition of new plant and machinery therein for manufacturing the additional new product; however, by mentioning in their letter dated 09.01.2014 about shifting to new premises and intending to commence production of additional products, the applicant had taken over a closed unit with the intention to start entirely new business for which they had already installed a complete new plant & machinery at the new location; Part- II of Chartered Engineer's Certificate prepared by Shri Manoj Gupta was submitted by the applicant along with their letter dated 19.03.2014 only and not on 09.01.2014, which also shows that the said certificate was prepared at a later date only. 19. The gist of the findings of OIO on the issue as to whether M/s Stanley Controls was operational on the day of takeover is as follows. * M/s Stanley filed a declaration dated Nil in this office on 15.12.2008 under Notification No. 49-50/2003-CE dated 2003, as amended for the manufacture of Industrial Automation goods, Solenoid Valves, filters, float switches, Tem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as dated 08.2.2014 which was enclosed with their letter dated 04.2.2014; validity of the certificate is in doubt as certificate has been presented to the department before its date of issue; accordingly, it cannot be said that machinery was there in the unit purchased by the appellant. * The appellant has not followed the procedure laid down by the Board vide circular No. 960/03/2012-CX dated 17.02.2012; * it has come out clearly in Order-in Original that quarterly returns filed by them for the period Jan, 2013 (when they purchased old unit) and December, 2014 (In January they intimated about shifting their unit to new premises) shows NIL production; this shows that unit purchased by the appellant was not a working unit; they have also not carried any production at old premises of the unit; they have also not carried out any expansion/addition of products at the old premises; * intimation about shifting of existing unit ie. M/s Stanley Controls to a new premises was given 11 months after submission of Part-I certificate in terms of Trade Notice No. 7/2012 dated 02.5.2012 and Part-Il certificate in terms of Trade Notice No. 7/2012 dated 02.5.2012, which is certificate of setti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14.01.2013 together just before the takeover; they have shown production/clearance of 80 Nos of Solenoid Valves valued at Rs 73,301, during the quarter ending September 2009, whereas they have shown clearance of 1050 Nos of said valves valued at Rs. 36, 750 without showing any production of these valves in the register for the quarter ending 31.12.2012; even after filing declaration dated 25.03.2013 by the applicant with the department to continue to avail the area-based exemption, their Quarterly Returns for the period from 01.01.2013 to 31.12.2013 shows NIL production/clearance. 22. The original authority and the appellate authority find that the appellant submitted in Form Part-1 Chartered Engineer's Certificate dated 08.02.2013 to the Department along with their letter dated 04.02.2013, which clearly shows that the certificate was prepared without actual physical verification; even if the contention is accepted, the appellant would have been in a position to shift to a new designated factory premises immediately; however the appellant in their letter dated 04.02.2013 neither informed about the location of the new premises; in their letter dated 25.03.2013 applicant intimated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a different product; continue to produce the same product i.e. OSAA, which they were manufacturing before acquiring the unit of M/s Stanley controls alleged to be manufacturing solenoids. The conclusion drawn in the OIO and OIA that in all probability, the appellants have installed new machinery to manufacture OSAA after the cut-off date and attempted to use the exemption that was available to a defunct unit. The appellants rely on the certificate said to have been issued by the DIC to m/s Stanley Controls. This certificate, a provisional one, issued subject to adherence to the procedures and rules made by other departments and agencies, would at best certify the date of commencement of Commercial production with effect from 02.04.2009. It does not establish that the unit was operational as on 28.01.2013. The certificate does not vouch that M/s Stanley controls was operational on the date of transfer and therefore, the exemption is available to the appellants. 25. The appellants have raised the issue of the DIC certificate issued after transfer to them. They have also pleaded that it is not required that a unit must be functional at the time of transfer, in terms of the Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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