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Tarang Enterprises V/S C.C.E. & S.T., Dehradun

    Appeal No. E/52713/2016 [Arising out of Order-in-Original No. 36-COMMISSIONER-DDN-2015 passed by the Commissioner of Customs, Central Excise and Service Tax, Dehradun] and Final Order No. 50437/2018

    Decided On, 01 February 2018

    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi

    By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA (PRESIDENT) & THE HONORABLE JUSTICE: V. PADMANABHAN
    By, MEMBER

    For Petitioner: Shailendra Bharadwaj, Advocate And For Respondents: R.K. Mishra, AR



Judgment Text


1. The appellant has a factory situated in Haridwar. They filed a declaration under Notification No. 15/2003-CE dated 10.06.2003, claiming the benefit of Area Based Exemption from payment of Central Excise Duty. As per the terms of the Notification, the manufacturers who set up a new unit in the area notified under the said Notification and commence commercial production on or before 31.03.2010 will be entitled to avail the benefits of duty-free clearance for a period of ten years. The said declaration was filed on 29.03.2010 and the appellant claimed that they started commercial production from 30.03.2010. On 07.04.2010, a team of Central Excise Officers visited the factory premises to verify their eligibility for the benefit

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s of the Notification. After the verification and completion of investigation, show cause notice was issued and the impugned order was passed in which the appellant was denied the benefit of the Notification and duty amounting to Rs. 1,72,15,565/- was demanded from the appellant along with the interest as well as penalty of an equal amount. Aggrieved by the impugned order, the present appeal has been filed.

2. With the above background, we heard Shri Shailendra Bharadwaj, learned Advocate on behalf of the appellant, and Shri R.K. Mishra, learned A.R. representing the Revenue.

3. The learned Advocate submitted on behalf of the appellant that the department has wrongly denied the exemption Notification of 15/2003. His main arguments are summarized below:

(i) The appellant had provided all the necessary information required for availing the benefits of the Notification. This included the project report, details of packing material, process flowchart, raw materials and items to be manufactured, list of machinery and other connected details.

(ii) On 30.03.2010, the appellant has manufactured 10 numbers multimedia speakers and DVD players. These have been sold on 31.03.2010 to M/s. Real Electronics. Accordingly, they have filed intimation that commercial production had started on 30.03.2010.

(iii) The appellant has procured the various raw materials and components required for the manufacture of multimedia speakers and DVD players and have submitted copies of the purchased bills which are all prior to the date of commencement of production. But the department has ignored the same.

(iv) The main evidence on which the department is relying is

(a) The testing equipments are purchased by the appellant only after 31.03.2010.

(b) The appellant could not produce the permission letter of the brand holder of "Soyer" and "F&D" brands, by which the appellant was permitted to manufacture goods bearing such brand names.

(v) At the time of visit of the officers on 07.10.2010, no manufacture was happening in the factory, since it was closed for whitewashing and due intimation was filed on 05.04.2010.

(vi) The first consignment of goods was cleared to M/s. Real Electronics and the same has been confirmed as received in the statement of Shri Amreesh of M/s. Real Electronics.

(vii) He finally submitted that commercial production had been started prior to 31.03.2010, and had been continued even in the subsequent period. Accordingly, the appellant was entitled to the benefits of the Notification No. 15/2003.

4. The learned A.R. justified the impugned order. He submitted that the appellant did not commence commercial production before the last date but only showed manufacture and clearance of 10 numbers of Multimedia Speakers and one sample DVD Player. Even the goods have not been entered into the statutory records. He highlighted the discrepancies in the statement of Shri Balvinder Singh, wherein he has stated that 100 numbers of Multimedia Speakers were manufactured, but the records revealed that they have procured in which 100 numbers of Speakers, whereas the Multimedia Speakers are always cleared in pairs, that is, 200 numbers of Speakers should have been procured.

5. We have heard both sides and perused records.

6. There is no dispute about the fact that the site of the appellant where the factory is situated in Haridwar falls within the area notified under Notification No. 15/2003. The appellant has filed declaration and claimed the benefits of the Notification on 29.03.2010, and claimed immediately thereafter, i.e., on 30.03.2010 that the commercial production has been started. To verify such claims, investigations were undertaken by the department by visiting the factory premises on 07.04.2010. The department has alleged that the appellant has failed to commence commercial production before 31.03.2010, and hence, has denied the benefits of the Notification and demanded the duty for all the goods cleared from the appellant's factory.

7. After perusal of the various documents submitted by the appellant, we note that the appellant had already procured the various capital goods to be used for manufacture of the electronic goods proposed to be manufactured. From the copies of the invoices submitted by the appellant, we note that the purchase of capital goods and various raw materials and components required for the manufacture of electronic goods, such as Multimedia Speakers and DVD Players, have been procured on or before 29.03.2010. In the statements recorded from Shri Negi as well as Shri Balvinder Singh, they have stated that the production of some of the goods was commenced before 31.03.2010. The claim of commercial production is based on the clearance of 10 numbers of Multimedia Speakers to M/s. Real Electronics vide Invoice No. 1 dated 31.03.2010. To verify the genuineness of the said invoice, the departmental officers recorded the statement of Shri Amreesh Sharma, proprietor of M/s. Real Electronics, in which he confirmed the purchase of 10 pairs of Multimedia Speakers vide the above invoice. To this extent, the claim of commercial production has been established by the appellant.

8. In spite of the evidences as above, the department has alleged the charge of non-starting of commercial production by citing other supporting evidences, such as the inability of the appellant to provide letter of permission from the brand name holders whose brand has been used by the appellant in the goods manufactured by them. The charge has further been made on the basis of the allegation that some of the testing equipments have been purchased by the appellant only after 31.03.2010. However, the claim of the appellant is that it is possible to manufacture the goods without the testing equipments and minimum testing equipments required is only the multimeter.

9. After considering the full facts and circumstances of the case, and after perusal of the voluminous documents submitted by the appellant, we are of the view that the evidences produced by the department do not establish the allegation that the appellant has failed to commence commercial production before 31.03.2010. The genuineness of the first consignment of 10 Multimedia Speakers manufactured prior to 31.03.2010 is established. Consequently, we are of the view that the appellant will be entitled to the benefit of the Notification No. 15/2003.

10. In view of the above discussions, we set aside the impugned order and allow the appeal
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