Exemption for pre-cut-off commercial production sustained where records proved manufacture began before the deadline despite no electricity connection.

Exemption under Notification No. 49-50/2003-CE depended on whether commercial production had begun before the cut-off date, and the denial based on absence of an electricity connection or DG set was not sustainable on the record. The materials showed installation of machinery, a licence to manufacture drugs, batch-marked finished goods, clearance of goods before the cut-off date, release of electricity connection on 31.3.2010, and an certificate confirming commercial production from 30.3.2010. The DG set supplier also stated that the set was provided on rental basis, and this was not rebutted by cogent evidence. The exemption was therefore available, and the duty demand, interest, and penalty were unsustainable.

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Issues: Whether the appellant was entitled to exemption under Notification No. 49-50/2003-CE dated 10.6.2003 on the basis that commercial production had commenced before the cut-off date, and the denial of exemption on the ground of absence of electricity connection or DG set was sustainable.

Analysis: The exemption was denied only because the adjudicating authority doubted commencement of production due to the absence of electricity connection or DG set at the time of investigation. The materials on record showed installation of machinery, a licence to manufacture drugs, batch-marked finished goods, clearance of goods before the cut-off date, release of electricity connection on 31.3.2010, and a certificate from the Department of Industries stating that commercial production started on 30.3.2010. The supplier of the DG set stated that the set had been provided on rental basis, and this was not rebutted by cogent evidence. The departmental reports also supported the appellant's claim that the exemption had been correctly availed.

Conclusion: The appellant was entitled to the benefit of the exemption notification, and the demand of duty, interest, and penalty was unsustainable.

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