M/S Fem Care Pharma Ltd vs Cce, Chandigarh

[Arising out of the Order-in-Original No. 12/CE/CHD/2009 dated 10/02/2009 passed by The Commissioner of 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 Fem Care Pharma Ltd. Appellant

Versus

CCE, Chandigarh Respondent

Appearance

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

Shri Ranjan Khanna, Authorized Representative (DR)  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52278/2015 Dated : 17/07/2015

Per. Ashok Jindal :-

The appellant is in appeal against the impugned order denying exemption under Notification No. 50/2003-CE dated 10/06/2003 i.e. area based exemption. The facts of the case are that the appellant started their unit in the month of April 2006 and filed certain declaration to the Department. Later on 28th July, 2006 they filed a detailed declaration for availing exemption under Notification No. 50/2003-CE. Vide letter dated 15/01/2008 certain queries were raised to the appellant that they have not supplied certain information for availing the said exemption (referring to the declaration filed by the appellant dated 28/07/2006). The appellant immediately replied to the said queries thereafter a show cause notice dated 04/11/2008 was issued to the appellant to deny exemption for the period prior to January 2008 on the ground that the appellant has not opted for exemption under Notification No. 50/2003-CE prior to said date. The Adjudicating Authority hold that as show cause notice has been issued by invoking extended period of limitation and in the facts of the case the charge of suppression is not sustainable against the appellant therefore demand for the normal period i.e. October 2007 to January 2008 was confirmed by denying the benefit of Notification No. 50/2003-CE ibid. Aggrieved from the said order appellant is before us.

2. Shri B.L. Narasimhan, learned Counsel for the appellant submits that the appellant has filed all the required details vide their letters dated 23rd March 2006, 10th April 2006 and 28th July, 2006 about availing of the exemption under Notification No. 50/2003-CE and also regarding what product they are manufacturing and thereafter they are filing their periodical returns regarding their clearances during the impugned period. Only on 15/1/2008 a query was made to the appellant regarding the nature of the inputs to be used in manufacturing of final product it was supplied by the appellant immediately. The non-supply of the details of nature of input at the time of starting of their unit will not be fatal of availment of exemption under Notification No. 50/2003-CE in the light of decision 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.). He also drew our attention to the impugned order wherein the learned Commissioner has observed that there is no suppression on the part of the appellant to hide any facts from the Department, therefore, impugned order is to be set aside.

3. On the other hand learned AR reiterated the findings of the impugned order. Learned AR objected the contention of the learned Counsel and submits that to avail the benefit of exemption Notification No. 50/2003-CE the appellant was required to file necessary declaration and details when they claim initially filed their application for claiming exemption. Admittedly appellant has not done so. Therefore they are not entitled to claim the benefit exemption under Notification No. 50/2003-CE. He relied on the decisions of Honble Supreme Court in the cases of Eagle Flask Industries Limited vs. CCE, Pune reported in 2004 (171) E.L.T. 296 (S.C.), Mangalore Chemicals & Fertilizers Ltd. vs. Deputy Commissioner reported in 1991 (55) E.L.T. 437 (S.C.), Novopan India Ltd. vs. CCE & CUSTOMS, Hyderabad reported in 1994 (73) E.L.T. 769 (S.C.) and CCE & CUS., Indore vs. Parenteral Drugs (I) Ltd. reported in 2009 (236) E.L.T. 625 (S.C.).

4. Heard the parties and considered the submissions. In this case, the facts which are admitted are here as under.

5. The appellant is located in area which gives benefit of Notification No. 50/2003-CE i.e. area based exemption. Appellant is manufacturing the final product which is specified in the list for claiming exemption under the said notification. The appellant has filed in the list for claiming exemption under the said notification. The appellant has filed a declaration on 28/07/2006 declaring the goods which they are manufacturing and details of their unit. Appellant is regularly filing the details of their clearances during the impugned period periodically. On 15th January, 2008 a query was raised in response to the declaration filed by the appellant on 28th July 2006 for want of nature of inputs being used in manufacturing of final product which was also provided by the appellant vide their letter dated 25/01/2008.

6. The dispute by the Revenue is that as appellant has not filed the declaration regarding nature of inputs, therefore, they are not entitled for the benefit of Notification No. 50/2003-CE. In this case show cause notice has been issued to the appellant after the normal period of limitation but no demand has been raised in the show cause notice for the extended period of limitation. By not invoking extended period of limitation it is clear that the appellant has substantially complied the conditions of the notification for availment of exemption. For the impugned period, the learned Commissioner has also observed so which is reproduced here as under :-

4.11 Now I come to the question of limitation, it is very clear from the beginning, at least after the declaration of July 06, that the party was availing of the exemption notification. Not only that, they were filing returns, giving the full description, quantity and clearances of the goods produced by them. There was absolutely no evidence nor any intent to evade payment of excise duty. In fact, the departmental officers should have pointed out at that stage itself that the declaration of July 06 was not complete and that they should give the information with respect to description of inputs. The noticee has never suppressed the facts from the department and the department had also full knowledge of all the goods being produced by the noticee. They genuinely believed that they were correctly availing the benefit of exemption notification. Therefore, this is a case where no penalty is at all imposable and I would say that it is an unfortunate case where with a little guidance from the department, such a situation would not have come to pass whereby the party is being denied the benefit of Notification No. 50/2003-CE for a lapse which could have been easily rectified. It will, therefore, be harsh if any penalty is imposed. Thus, I hold that the party is required to only pay the excise duty as demanded in the show cause notice for the period October 2007 to January 2008. Obviously they are also liable to interest under Section 11AB of the Central Excise Act, 1944. Relevant portion of Section 11AB are reproduced as under :

where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the period who is liable to pay duty as determined under sub-Section (2) or has paid the duty under sub-Section (2B) of Section 11A shall in addition to duty be liable to pay interest ..

As discussed in the proceeding paras since the noticee is liable to pay duty, he is also liable to pay interest on the delayed payment in terms of Section 11AB of the Central Excise Act, 1944.

7. As it is the understanding of the Department itself that non-supplying the details of nature of inputs to be used by the appellant prior to January 2008 was not a suppression in that case the denial of benefit of exemption notification shall become fatal to the appellant. Same view has been taken by this Tribunal in the case of Herbal Concepts Healthcare Pvt. Ltd. vs. CCE, Meerut  I (supra) wherein this Tribunal has observed as under:-

7. Now, the question requires to be decided is as to whether the appellants non-filing of option prior to 27/06/2005 can be fatal to their claim of exemption especially when all the particulars stand disclosed by them in the registration application. As is seen from the above notification the fact requires to be disclosed are the name and address of the factory, details of the input as also the details of the final product. The same very details already stand given by the appellant in their application dated 24/09/2004. In as much as the entire idea of filing option letter is put to Revenue on notice about existence in the specified area of the unit and the availability of the notification to the unit in respect of the final product manufactured by them, we are of the view that initial letter filed on 24/09/2004 serves the same purpose.

8. We have gone through the case laws relies upon by the learned AR to deny the exemption to the appellant. In fact the facts in those cases are altogether different to the facts of the case in hand as in this case it is the view of the Department for not invoking the extended period of limitation that the non-supply of details of nature of inputs is not fatal, therefore, the case relied upon by learned AR are not relevant to the facts of this case. As observed herein above, we hold that when the allegation of suppression has been dropped against the appellant, the appellant is entitled for benefit of exemption Notification No. 50/2003-CE during the impugned period also. With these terms, the 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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