AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 366
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....ve, the respondent invested huge amount on plant and machinery procuring several new and old machines for setting of the manufacturing facilities for manufacturing of recorded and blank audio cassettes, VCD/DVD player, VCD player in combination with radio DVD player in combination with radio, optical discs, audio/video/DVD/MP3, CD & DVD, CD Rom and CD/VCD/DVD Deck mechanism. The respondent opted for exemption under notification no. 50/2003-CE dt. 10.06.2003 on 04.06.2004. The exemption was allowed. Against the said order, the Revenue is in appeal before us. 3. The Ld. A.R. for the Revenue submits that as M/s SMI has leased out the factory building and machinery to the respondent and the management of both the units remains the same; therefore, not a new unit has been established, therefore, they are not entitled to avail the benefit under exemption notification. He also submits that the Revenue authorities have the power to lift the corporate veil where one resort to subterfuge and artful evasion of duty under an apparent legal facade. He further submits that although the term "New Industrial Unit" not been defined in the central excise law, but as per the scheme, new industrial ....
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....use notice is that M/s Super Music International and the Noticees were under the same management and the transactions entered between them regarding sale of certain plant and machinery and letting out of the manufacturing premises resulted only in the change of control of the existing unit from a proprietary concern to the unit owned by a company and no new unit was established. As no new unit was created and no substantial expansion of the existing unit was undertaken hence the benefit of exemption under notification number 50/2003 was not available. The basis of the allegation is that M/s Super Music International was a proprietary concern and the proprietor of this concern was the managing director of the Noticees and he held majority of the shares in the Noticees‟ company. 4.4 The allegations in the paragraph immediately preceding are based on improper understanding of law. The Noticees are a company incorporated under the Companies Act, 1956. A company incorporated under the law is a "legal person‟ or "legal entity‟ separate from and capable of surviving legally as an entity apart from its members, capable of rights and duties of its own and endowed with t....
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....cumstances the revenue authorities are allowed to look behind the corporate veil. Section 4 of the Central Excise Act, 1944 which deals with the valuation of excisable goods for the purposes of charging of the duty of excise allows looking behind the corporate veil in specified circumstances. Only when manufacturer of excisable goods sells the goods to an "interconnected undertaking", the assessing officer can look beyond the corporate veil to ascertain the transaction value of the goods. There is no other provision under the law for looking behind the corporate veil except in the jurisdiction of higher courts. The courts have larger discretion than the revenue authorities to lift the corporate veil. The courts lift the corporate veil on substantial grounds supported by cogent evidence. 4.7 M/s Super Music International ceased the production of recorded/blank audio cassettes and surrendered their registration with the central excise authorities. They sold part of the plant and machinery to the Noticees and also let out their manufacturing premises to the Noticees. "Sale" is exchange of property for a price. It involves the transfer of ownership of the things sold from the seller....
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....l conditions prescribed under the said notification. Only the conditions which are relevant to the facts of the present case are being delineated here. They are; (i) the goods should not specified in 'Annexure-I' appended to notification, (ii) the goods are cleared from a unit located in the Industrial Growth Centre or Industrial Infrastructure Development Centre or Export Promotion Industrial Park or Industrial Estate or Industrial Area or Commercial Estate or Scheme Area, as the case may be, specified in Annexure-II and Annexure-III appended to the said notification, (iii) the manufacturer who intends to avail of the exemption under the notification shall exercise his option in writing before effecting the first clearance and such option shall be effective from the date of exercise of the option, (iv) in the option the manufacturer shall give the information prescribed under the notification and (v) the exemption is available to (a) new industrial units set up in areas mentioned in Annexure-II and Annexure-III, which have commenced commercial production on or after the 7th day of January, 2003, but not later than the 31st day of March, 2010 or (b) industrial units existin....
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....e installed, erected and commissioned Depending upon the location of the industrial unit, installed capacity, nature and range of the products to be manufactured and other factors having bearing on the manufacture of goods, the time taken from laying the first break of the manufacturing unit to commencement of commercial production may run into months or years. The requirement of the law was not that when the installation, erection or commissioning of the unit commenced. The requirement of the law was when the commercial production commenced. Accordingly, a unit could be at any stage of installation, erection or commissioning prior to 07/01/2003 but the commercial production should have commenced on or after 07/01/2003 but not later than 31/03/2010. Accordingly, it made no difference if the Noticees had bought certain plant and machinery on 'as is where is' basis and in installed condition even if the machinery was installed prior to 07/01/2003. What was necessary for availing exemption of duties of excise under notification number 50/2003 that the unit should be new and it should have commenced commercial production on or after 07/01/2003 but not later than 31/03/2010. How....
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....7/01/2003. Since the notification dated 08/01/2003 was also part of the industrial policy under which exemption notification 50/2003 was issued, hence the definition of "new industrial unit" mentioned in the aforesaid notification shall be a guiding factor for determining as to what constituted a "new industrial unit" under notification number 50/2003. Under the notification dated 08/01/2003 the defining criteria for a new industrial unit was taking of effective steps for setting up of the unit after 07/01/2003. Though the expense and of the effective steps have not been defined anywhere yet it would definitely mean that the notification does not contemplate that the unit should set up by laying the first brick after 07/01/2003. If the unit is set up by laying the first brick after 07/01/2003 it shall definitely be a new unit. However, the notification dated 08/01/2003 had not required that the new unit should be setup from the scratch after 07/01/2003. Accordingly, even if the unit was partially in existence prior to 7/01/2003 but was not in production and steps have been taken to put it into production after 07/01/2003, it should meet the criteria for setting up of a new unit. Ta....