2016 (7) TMI 1030 - AT - Central Excise

Tribunal grants refund for Acid Oil production post-cut-off date under Notification No. 39/2001-CE

The Tribunal allowed the appeal, overturning the order-in-appeal that rejected the refund claim for Acid Oil manufactured after 31.12.2005 under ... Benefit of area-based exemption Notification No.39/2001-CE - Cut-off date for eligibility (31.12.2005) - Manufacture of new product using plant and machinery installed before cut-off - Requirement of evidence to show manufacture from installed plant and machinery - CBEC clarification regarding new products manufactured on pre-cut-off machinery - Reliance on Tribunal precedentsBenefit of area-based exemption Notification No.39/2001-CE - Cut-off date for eligibility (31.12.2005) - Manufacture of new product using plant and machinery installed before cut-off - Requirement of evidence to show manufacture from installed plant and machinery - CBEC clarification regarding new products manufactured on pre-cut-off machinery - Reliance on Tribunal precedents - Whether Acid Oil, first manufactured after 31.12.2005, is eligible for benefit under Notification No.39/2001-CE when produced using plant and machinery installed before the cut-off date. - HELD THAT: - The Tribunal held that the question whether a product first manufactured after the cut-off date is excluded from the notification is settled by earlier Tribunal decisions and the CBEC circular of 10.07.2008; the decisive inquiry is whether the product was manufactured using the same plant and machinery installed before 31.12.2005. The appellant had made categorical submissions and produced evidence before the Commissioner (Appeals) to show installation of plant and machinery prior to the cut-off and that Acid Oil was produced without addition of new machinery. The Commissioner (Appeals) based his adverse finding on conjecture and surmise, failing to accord weight to the appellant's evidence and the clarified legal position. Applying the settled principle and the appellant's uncontradicted evidentiary showing, the Tribunal concluded that the conditions of the notification were satisfied in respect of Acid Oil and that the product was therefore entitled to the exemption benefit. [Paras 7, 8]Appellant satisfied the conditions of Notification No.39/2001-CE in respect of Acid Oil manufactured after the cut-off date; the impugned order is set aside and the appeal is allowed.Final Conclusion: The appeal is allowed; the impugned order is set aside and the appellant is accorded consequential relief as per law on account of eligibility of Acid Oil for the benefit of Notification No.39/2001-CE. Issues:Appeal against order-in-appeal rejecting refund claim based on area-based exemption Notification No.39/2001-CE for Acid Oil manufactured after 31.12.2005.Analysis:The appellant, engaged in manufacturing various products falling under Chapter 15 of CETA, filed a refund claim for all products, including Acid Oil, under Notification No.39/2001-CE. The claim was partly rejected due to Acid Oil not being manufactured before 31.12.2005. The appellant contended that despite Acid Oil being produced after the cut-off date, they should still be eligible for the exemption. They provided evidence of plant installation before 31.12.2005 and argued that no new machinery was added post the cut-off date. The Revenue supported the Commissioner (Appeals)'s findings.The Tribunal examined whether the appellant qualified for the benefit of the notification for Acid Oil made post 31.12.2005 using pre-existing machinery. The Commissioner (Appeals) had doubted if Acid Oil was manufactured from the same machinery installed before the cut-off date. The Tribunal referred to past decisions and a CBEC Circular, emphasizing that if a new product is made post the cut-off date using existing machinery, the benefit should not be denied. The Tribunal noted the appellant's submission of evidence of pre-cut-off date machinery installation capable of producing Acid Oil without additional machinery post 31.12.2005. They found the Commissioner (Appeals)'s reasoning speculative and held that the appellant met all notification conditions for Acid Oil, thus entitled to the exemption.The Tribunal set aside the impugned order, allowing the appeal with any consequential relief as per law.