2019 (10) TMI 1142 - AT - Central Excise

Tribunal Upholds IT Solutions Provider's Duty Exemption

The Tribunal upheld the impugned order dropping the demand of duty against the respondent, engaged in IT solutions, under an area-based exemption. The ... Area Baswed exemption - substantial expansion by increasing installed capacity by more than 25% - benefit of N/N. 50/03-CE dt.10.6.2003 - It appeared to Revenue that out of 19 computers, 15 computers were used for such activity which was not covered by the provisions of Central Excise Act and only for 4 computers were installed for replication of data on CDs which was the activity covered by Central Excise Act,1944 - Substantial expansion took place or not - HELD THAT:- For the earlier period in their own case M/S. NIIT GIS LIMITED, SHRI TARUN CHATTERJEE VERSUS CCE, CHANDIGARH [2018 (10) TMI 1544 - CESTAT CHANDIGARH], this Tribunal has dropped the demand against the assessee-respondent holding that the respondent is entitled to avail the benefit of Notification No.50/03-CE dt.10.6.2003 - Benefit allowed - appeal dismissed - decided against Revenue. Issues:Appeal against demand of duty dropped, Interpretation of Notification No. 50/03-CE, Substantial expansion requirement, Jurisdictional Range Superintendent's recommendation, Applicability of Central Excise Act, 1944.Analysis:The case involved an appeal by the Revenue against an order dropping the demand of duty against the respondent, who was engaged in providing IT solutions related to geographical information systems. The respondent operated under an area-based exemption under Notification No. 50/03-CE, and the Revenue alleged non-compliance with the substantial expansion requirement. The Revenue issued a show cause notice proposing denial of exemption and recovery of Central Excise duty. However, the impugned order dropped the demand, leading to the Revenue's appeal before the Tribunal.In the earlier case, the Tribunal had ruled in favor of the respondent, allowing them to avail the benefits of Notification No. 50/03-CE. The Tribunal observed that the installed capacity had increased by 31%, satisfying the conditions of the notification. The appellant contended that the installed capacity should increase by at least 25%, which was supported by the jurisdictional Range Superintendent's recommendation and the report from the District Industries Centre. The Tribunal, after reviewing the records and submissions, upheld the appellant's eligibility for exemption and set aside the impugned order, allowing both appeals.Ultimately, the Tribunal found no infirmity in the impugned order and upheld it, dismissing the Revenue's appeal. The decision was based on the satisfaction that the appellant had met the conditions of Notification No. 50/03-CE, particularly regarding the substantial expansion requirement. The judgment highlighted the importance of meeting the specified criteria under the notification for availing exemptions under the Central Excise Act, 1944.