2024 (8) TMI 1402 - AT - Central Excise

CESTAT denies area-based exemption but grants cum-duty price benefit under Section 4(1)(b) of Central Excise Act

M/s Parvatiya Plywood Private Limited and Shri Akhilesh Pratap Saraswat Versus Commissioner of Central Goods, Dehradun Uttrakhand Service Tax,

The CESTAT New Delhi denied area-based exemption under N/N. 50/2003-CE as the appellant's unit was not situated on notified khasra numbers. However, ... Area based exemption under the provisions of the N/N. 50/2003-CE dated 10.06.2003 - denial of benefit on the ground that the khasra numbers on which the appellant unit is situated, is not notified in the Annexure II or III appended to the said Notification dated 10.06.2003 - benefit of cum-duty price - HELD THAT:- An identical issue pertaining to the previous period has been decided by the Division Bench of this Tribunal in M/S PARVATIYA PLYWOOD PRIVATE LIMITED AND AKHILESH PRATAP MD VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX-MEERUT-II AND COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX, CUSTOMS AND CENTRAL EXCISE-DEHRADUN [2022 (12) TMI 451 - CESTAT NEW DELHI] where it was held that 'the appellant is entitled to the benefit of recalculation of demand on cum- duty basis in accordance with explanation to Section 4(1)(b) of the Central Excise Act. We find that admittedly appellant have not collected Central Excise duty in addition to the sale price, in view of their claim of Area based exemption. Thus, the appellant shall be entitled to benefit of calculation of duty on cum-duty-price.' Cum duty benefit - HELD THAT:- It is also noted that the impugned order has allowed the benefit of cum-duty and has denied the benefit of CENVAT credit on inputs. The matter to the original authority for verifying the claim for availing Cenvat credit on the duty paid inputs, giving an opportunity to the appellant to produce all relevant invoices/ledgers and other relevant documents before the adjudicating authority to substantiate their claim for CENVAT credit - Appeal allowed by way of remand. Issues Involved:1. Applicability of area-based exemption under Notification No. 50/2003-CE.2. Denial of exemption leading to demand of central excise duty, interest, and penalties.3. Claim for cum-duty benefit and Cenvat Credit on inputs.4. Imposition of penalty under Section 11AC of the Act.5. Imposition of penalty on the Director of the appellant.6. Verification of duty paid inputs and CENVAT credit eligibility.7. Recalculation of duty liability on a cum-duty basis.Analysis:1. Applicability of Area-Based Exemption:The appellant, engaged in manufacturing Plywood, Block Board, etc., claimed area-based exemption under Notification No. 50/2003-CE. However, the department alleged that the khasra numbers of the unit were not notified, leading to a demand for central excise duty, interest, and penalties.2. Claim for Cum-Duty Benefit and Cenvat Credit:The appellant contended that they made substantial expansions and believed they were eligible for the exemption. They argued for cum-duty benefit and Cenvat Credit on inputs used in manufacturing, citing relevant case laws and a previous favorable decision by the Tribunal in their case.3. Imposition of Penalty under Section 11AC:The appellant challenged the imposition of penalty under Section 11AC, arguing that there was no mens-rea involved as they genuinely believed in their entitlement to the exemption. They relied on precedents to support their argument for setting aside the penalty.4. Penalty on the Director:The appellant's Director, under a bona fide belief in the exemption, was also penalized. The appellant argued that since there was no mens-rea on the Director's part, the penalty should be waived.5. Verification of Duty Paid Inputs and CENVAT Credit:The Revenue contended that there was a lack of evidence regarding duty paid inputs, absence of invoices, and ledger details. They opposed the allowance of CENVAT credit on inputs, supporting the impugned order.6. Recalculation of Duty Liability:The Tribunal noted a previous decision in the appellant's favor regarding recalculation of demand on a cum-duty basis and the allowance of CENVAT credit on inputs. Consequently, the matter was remanded to the original authority for verifying the CENVAT credit claim based on relevant documents.7. Final Decision:The Tribunal partially modified the impugned order, allowing the appeals to the extent of remanding the matter for verifying the CENVAT credit claim. The decision was based on the appellant's entitlement to cum-duty benefit and CENVAT credit as per previous rulings.This detailed analysis covers the key issues addressed in the judgment, providing a comprehensive understanding of the legal arguments and decisions made by the Tribunal.