2019 (11) TMI 1615 - AT - Central Excise

Tribunal upholds denial of exemption benefits, Cenvat credit, SSI exemption, imposes penalties

M/s Bentex Control & Switchgear Company Versus Commissioner of Central Excise & Service Tax, Meerut-I

M/s Bentex Control & Switchgear Company Versus Commissioner of Central Excise & Service Tax, Meerut-I - TMI Issues Involved:1. Denial of exemption under Notification No. 50/2003-CE dated 10 June 2003.2. Commencement of commercial production before the cutoff date of 31 March 2010.3. Validity of the evidence provided by the appellant.4. Entitlement to Cenvat credit on inputs, capital goods, and input services.5. Claim for SSI exemption and cum duty price.6. Imposition of penalty on the appellant.Detailed Analysis:1. Denial of Exemption Under Notification No. 50/2003-CE:The core issue was whether the appellant, M/s Bentex Control and Switchgear Company, was entitled to the benefit of the exemption notification, which required that a new industrial unit must have commenced commercial production on or after 7 January 2003 but not later than 31 March 2010. Both the Additional Commissioner and the Joint Commissioner denied this benefit, asserting that the appellant did not meet the essential condition of starting commercial production within the stipulated timeframe. The Commissioner (Appeals) upheld these findings, leading to the dismissal of the appellant's appeals.2. Commencement of Commercial Production Before the Cutoff Date:The appellant claimed to have started commercial production before 31 March 2010, substantiated by invoices dated 19 March 2010 and courier receipts. However, the adjudicating authority and appellate authority found this evidence insufficient. The authorities noted that the appellant failed to provide documents showing receipt of goods by customers or receipt of payment, which were crucial for substantiating the claim of commercial production. Additionally, the inspection team found packed cartons marked with the Delhi unit's address, suggesting that the goods were manufactured in Delhi and not at the Roorkee unit. The explanation that this was due to the illiteracy of laborers was not accepted.3. Validity of the Evidence Provided by the Appellant:The appellant presented various documents, including electricity bills and wage registers, to support their claim of commercial production. However, the authorities found these documents unconvincing. The electricity consumption was deemed too low for an industrial unit, and the wage register was not corroborated by records from the Uttarakhand Labour Provident Fund Employees or State Insurance. Additionally, no raw material was found during the inspection, contradicting the appellant's claim of ongoing production.4. Entitlement to Cenvat Credit on Inputs, Capital Goods, and Input Services:The appellant's claim for Cenvat credit was denied because they did not comply with the procedural requirements laid down in the 2004 Rules. The Commissioner (Appeals) found that the appellant had not followed the necessary procedures to avail of this benefit.5. Claim for SSI Exemption and Cum Duty Price:The appellant also sought the benefit of SSI exemption and cum duty price. The SSI exemption was denied because the appellant did not exercise the option before the first clearance, a mandatory requirement. The cum duty price benefit was also denied as the appellant did not demonstrate that the duty element was included in the wholesale price charged from buyers. No evidence was provided to show that the gross value charged was inclusive of duty.6. Imposition of Penalty on the Appellant:The penalty was imposed on the appellant for suppressing facts with the intent to evade payment of central excise duty. The Commissioner (Appeals) found that the appellant had deliberately made a false declaration to claim the exemption benefit. This finding was based on the inspection report, which revealed that the appellant had not started commercial production before 31 March 2010 and had brought finished goods from their Delhi unit to the Roorkee unit to claim the exemption.Conclusion:The Tribunal dismissed all six appeals filed by the appellant, upholding the denial of the exemption benefit, the rejection of the claims for Cenvat credit, SSI exemption, and cum duty price, and the imposition of penalties. The findings were based on substantial evidence and proper consideration of the inspection reports and documents submitted by the appellant.