2019 (6) TMI 63 - AT - Central Excise

Tribunal rules Show Cause Notice time-barred, denial of exemption not sustainable. Emphasis on timely assessment & procedural omissions.

M/s. API Motors (P) Ltd. Versus Commissioner of Central Excise

The Tribunal ruled in favor of the appellant, finding that the Show Cause Notice was time-barred and the denial of exemption was not sustainable. The ... Area Based Exemption - N/N. 50/2003-CE dated 10.6.2003 as amended - period of dispute is 15/06/2007 to 18/03/2008 - it has been alleged that the appellant did not file declaration as required under said Notification before effecting first clearance, therefore benefit of exemption under the said Notification is not available for the period 15/06/2007 to 18/03/2008 - time limitation. HELD THAT:- There is no dispute that the goods being manufactured are not in the negative list of Annexure-I, and the unit is located in the specified Industrial Area mentioned in Annexure-II to the Notification No.50/2003-CE. - Since, the declaration has been made by the appellants themselves on 19.3.2008 and the same is correct, the jurisdictional Central Excise Authorities should have examined the question regarding the appellant company’s eligibility for exemption during the period prior to 19.3.2008, but they chose to sleep over the declaration and issued a Show Cause Notice on 8.10.2011. The appellant cannot be charged with suppression or mis-statement for more than three years long delay in issue of Show Cause Notice. The proviso to sub-Section 11A(1) cannot be invoked by the department. Hence, the demand of Show Cause Notice is time barred and the impugned Order is not sustainable on the ground of limitation. Appeal allowed - decided in favor of appellant. Issues Involved:- Eligibility for Area based exemption under Notification No.50/2003-CE dated 10.6.2003 as amended.- Time limitation for invoking Show Cause Notice.Analysis:Issue 1: Eligibility for Area based exemption under Notification No.50/2003-CEThe appellant contested the denial of exemption under Notification No.50/2003-CE for the period in question. The appellant's factory was located in a specified area and engaged in the manufacture of Three Wheeler Auto Rickshaw Chassis. The appellant started commercial production on 14.6.2007 and filed the required declaration on 19.3.2008. The jurisdictional Assistant Commissioner confirmed the eligibility of the unit for exemption. However, the department issued a Show Cause Notice on 8.10.2011, alleging non-compliance with the declaration requirement. The Additional Commissioner upheld the demand, but the Commissioner (Appeals) dismissed the appeal. The appellant argued that procedural omissions should not result in the denial of substantial benefits, especially when the unit is located in a specified area and manufactures goods not in the negative list of the notification. The appellant relied on previous tribunal decisions in similar cases, which were decided in favor of the appellant.Issue 2: Time limitation for invoking Show Cause NoticeThe appellant contended that the Show Cause Notice issued on 8.10.2011 was time-barred as the Range Superintendent had recommended granting area-based exemption for 10 years upon receiving the declaration on 19.3.2008. The appellant argued that the extended period for issuing the notice was not applicable due to the delay in raising the issue. The department, however, supported the denial of exemption, confirming the demand and penalty imposed. The Tribunal observed that the appellant had availed of the exemption from 15.6.2007, filed the declaration on 19.3.2008, and met the criteria for exemption under the notification. The Tribunal noted the department's delay in addressing the appellant's eligibility and held that the Show Cause Notice issued after more than three years was time-barred. The Tribunal also found merit in the appellant's case based on previous tribunal decisions cited by the appellant. Consequently, the Tribunal allowed the appeal, set aside the impugned order, and granted consequential benefits to the appellant.In conclusion, the Tribunal ruled in favor of the appellant, holding that the demand Show Cause Notice was time-barred and the denial of exemption was not sustainable. The decision highlighted the importance of timely assessment by the authorities and the need to consider procedural omissions in granting benefits under relevant notifications.