M/S Deyam Industry vs Cce & St, Chandigarh

[Arising out of the Order-in-Original No. CHD-CEX-001-COM-04-2013 dated 19/02/2013 passed by The Commissioner, Central Excise, Chandigarh.]

For Approval and signature :

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1. Whether Press Reporters may be allowed to see :

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of :

the CESTAT (Procedure) Rules, 1982 for

publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair :

copy of the order?

4. Whether order is to be circulated to the :

Department Authorities?

M/s Deyam Industry Appellant

Versus

CCE & ST, Chandigarh Respondent

Appearance

Shri B.L. Narasimhan, Advocate  for the appellant.

Shri Pramod Kumar, Authorized Representative (Jt. CDR)  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52269/2015 Dated : 13/07/2015

Per. Ashok Jindal :-

The appellant is in appeal against the impugned order denying benefit under Notification No. 50/2003-CE during the period 27th February 2008 to 14th July, 2009. The appellant set up a New Industrial Unit in Nalagarh, Himachal Pradesh and commenced commercial production on 27th February, 2008. At that time setting up of their commercial production it is admitted that the appellant has not filed any declaration under Notification No. 50/2003-CE i.e. area based exemption and the appellant filed a declaration on 15th July, 2009 for claiming exemption under Notification No. 50/2003-CE with effect from 27th February, 2008. The Revenues view that before the period 27th February 2008 to 14th July, 2009 as appellant has not filed declaration for claiming benefit under Notification No. 50/2003-CE before commencement of their commercial production they are entitled to benefit of Notification No. 50/2003-CE. In these certain facts a show cause notice dated 19th April, 2011 was issued to the appellant to deny benefit of exemption Notification No. 50/2003-CE. The Adjudicating Authority denied the benefit of exemption notification and consequently demanded excise duty alongwith interest and penalty was also imposed. Aggrieved with the said order appellant is before us.

2. The learned Counsel for the appellant submits that in October 2007 the appellant has approached to Directorate of Industries to intimate that they are going to start Industrial Unit and their commercial production shall start in the manufacture of November 2007 although they could not start their commercial production in November 2007, but Directorate of Industries have intimated to the Central Excise Department that appellant is going to set up an Industrial Unit which shall commenced their production in November 2007. These facts were in the knowledge of the Department that the appellant is going to start commercial production in November 2007 and that these set of facts the Revenue was having knowledge that appellant has set up a industrial unit and not paying duty which means that appellant is claiming benefit of Notification No. 50/2003-CE. He further submits that as appellant has filed declaration for claiming exemption under Notification No. 50/2003-CE on 15th July, 2009 and thereafter show cause notice has been issued by invoking extended period of limitation, the show cause notice is not sustainable in the light of the decisions of this Tribunal in the case of Herbal Concepts Healthcare Pvt. Ltd. vs. CCE, Meerut  I reported in 2013 (294) E.L.T. 570 (Tri.  Del.) and Surya Polypack Pvt. Ltd. vs. CCE vide final order No. 53827053828/2014 dated 30/09/2014, therefore exemption to the appellant under Notification No. 50/2003-CE cannot be denied. On the other hand, the learned AR reiterated the findings of the impugned order and submits that as the appellant has not filed mandatory declaration to claim the exemption under said notification, therefore, appellant is not entitled to claim exemption under Notification No. 50/2003-CE in the light of the decision of the Honble Supreme Court in the case of CCE, New Delhi vs. Hari Chand Shri Gopal reported in 2010 (260) E.L.T. 3 (S.C.).

3. Heard the parties. In this case it is admitted fact that on 15th July, 2009 the appellant filed a declaration for claiming of benefit of exemption Notification No. 50/2003-CE with effect from 27th February 2008 onwards and thereafter show cause notice has been issued by invoking extended period of limitation on 19th July, 2011, therefore, in the light of the decisions of Surya Polypack Pvt. Ltd. vs. CCE (supra) wherein this Tribunal has observed as under :-

14. Though we have held in favour of the assessee on merits, we are of the view that the demand is bared by limitation having been raised by show cause notice dated 31/3/2011 for the period 20/05/2006 to 13/03/2008 invoking the extended period of limitation. In terms of Section 11A of the Central Excise Act, 1944, the extended period is available to the Revenue in case duties have not been paid by reason of fraud, suppression or any willful mis-statement with intent to avail payment of duty. When the appellant was not required to pay any duty, if they would have exercised their option in writing, where is the question of malafide intention to evade payment of duty. Otherwise also we find that investigations were made by the Revenue with the appellants authorized representative, immediately after filing of declaration by them on 14/03/2008, even then the show cause notice was issued in 2011. We find no justification for the same and agree with the learned Advocate that the demand is wholly barred by limitation. The same is accordingly set aside alongwith setting aside of the penalties imposed upon both the appellants. In a nut shell, both the appeals are allowed with consequential relief to the appellant.

19. As regards the question of limitation, it is un-disputed that while the assessee started availing of this exemption from 20/05/2006 when the first clearances were made, they filed the declaration only on 14/03/2008. There is no dispute that the goods being manufactured are not in the negative list of Annexure-I and the unit is located in the Industrial Area mentioned in Annexure-II. Since the declaration had been made by the appellant themselves on 14/03/208 and the same is correct, they cannot be accused of suppression of the relevant information with to evade the payment of duty. When on 14/03/2008, the declaration was filed, the Jurisdictional Central Excise Authorities should have examined the question regarding the appellant companys eligibility for exemption during the period prior to 14/03/2008, but they chose to sleep over the declaration and issued a show cause notice only on 31/03/2011. The appellant cannot be blamed for about three years delay in issue of show cause notice. The proviso to Section 11A (1) cannot be used to cover up indolence on the part of the Jurisdictional Central Excise officers. Therefore I agree with the decision of my learned sister that the duty demand is totally time barred and accordingly the impugned order would not be sustainable on limitation.

4. Therefore, we hold that in this case extended period of limitation is not invokable as show cause notice has been issued by invoking extended period of limitation, therefore, impugned order is set aside. Appeal is allowed with consequential relief, if any.

(Dictated and pronounced in open court)

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

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