TaxTMI 
TaxTMI 
2019 (11) TMI 1012
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....nt and machinery therein commences on or after 31.07.2001. The appellant's claim is that pursuant to the order of the Hon'ble Gujarat High Court and the clearances from the Forest department started the civil construction work at the clinker unit and also in grinding unit in August 2001. The appellant vide letter dated 21.12.2001 wrote a letter to the Superintendent of Central Excise-Gandhidham intimating the fact that they have commenced civil construction work on factory premises on 31.08.2001 after performing pooja on 25.08.2001. Subsequent to the issue of No.39/2001-CE Dated 31.7.2001 the appellant made an application dated 31.07.2001 to the Committee comprising of Chief Commissioner of Central Excise and Principal Secretary Industries and Mines Department, Government of Gujarat (hereinafter referred to as Committee) for issuance of eligibility certificate to clinker unit under No.39/2001-CE Dated 31.7.2001. The appellant in the declaration declared clinker unit as a new unit. The said application was rejected by Committee on the ground that exemption will not be granted to any unit which has started its work before the earthquake. It was held by the committee that the clinker ....
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....sted the Commissioner of Central Excise to send his factual comments and more specifically on the following: a) The physical availability and the installation/ erection of the plant machinery shown by the appellants in their application and their relevant date. b) The date/ period of installation/ erection of the machinery by the Appellants at the site. c) The date of commencement of production in said cement grinding unit at village Akri. 1.1 The Commissioner of Central Excise, Sh. Rishi vide his letter dated June 2003 submitted to the Chief Commissioner about his factual comments on the documents submitted by the appellant as well as comments sought vide letter dated 09.06.2003. The Commissioner Shri Rishi submitted that the appellant have declared the value of machinery to be Rs. 103,51,37,948/-. It was also stated that the machinery worth Rs. 68,89,55,496/- was imported prior to issue of Notification. It was also stated that on verification it was found that certain machines declared installed was not installed and same has to be deducted from total value declared. It was also stated that construction work started in 1995 and the plant and machiner....
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.... grinding unit of appellant is eligible for exemption on the following grounds: a) The Grinding Unit is 14 KM away from the Clinker unit. b) Grinding Unit has got separate central excise registration. c) Cement is different product form clinker. d) Grinding unit commenced its commercial production on 28.03.2003. e) IEM from Commerce and Industries, New Delhi for cement and clinker is different. 1.2 The copies of certificate date 31.12.2003 duly signed and then crossed by Principal Secretary were communicated to the Chief Commissioner of Central Excise by Office of the Principal Secretary. Vide letter dated 16.03.2004 reasons for not signing the certificate was called from the Principal Secretary by the Office of Chief Commissioner vide letter dated 29.03.2004 and once again made request for the comments of Principal Secretary. Vide letter dated 31.03.2004, Principal Secretary communicated to the Chief Commissioner reasons for delay. As regard to the Certificate to the appellants the Principal Secretary vide letter dated 02.04.2004 informed that the whole cement project was conceived by the appellants as back as in 1994 for capacity of....
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....f the Central Excise Act, 1944 by invoking extended period of limitation as per proviso to sub-section (1) of the said Section 11A. b) Excise duty amount deposited during investigation amount to Rs. 40,00,11,585/- deposited during the investigation should not be appropriated against the demand. c) Penalty should not be imposed upon them under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002. d) Interest at the prescribed rate should not be recovered from them under the provisions of Section 11AB of the Central Excise Act, 1944. 1.4 The case of the department in the SCN was that the appellant have wrongly claimed the benefit of Notification No.39/2001-CE Dated 31.7.2001 in respect of cement cleared from grinding unit. According to the department grinding unit do not satisfy the conditions of the said notification on the following grounds: a) Grinding unit is a part of cement palnt and not a separate unit and civil construction work started at Grinding Unit prior to 31.07.2001. b) Clinker Unit and Grinding Unit are not separate units. c) Preparatory work for whole cement plant was done ....
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....te of publication of this notification in the Official Gazette but not later than the 31st day of July, 2003; (ii) In order to avail of this exemption, the manufacturer shall produce a certificate from a Committee consisting of the Chief Commissioner of Central Excise, Vadodara and the Principal Secretary to the Government of Gujarat, Department of Industry, to the jurisdictional Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be, that the unit in respect of which exemption is claimed is a new unit and has been set up during the time period specified in condition (i) above. (iii) Before effecting clearances under this notification, the manufacturer shall also furnish a declaration regarding the original value of investment in plant and machinery installed in the factory as on the date of commencement of commercial production, to the Assistant Commissioner or the Deputy Commissioner of Central Excise, as the case may be. (iv) The manufacturer shall also produce a certificate from the said Committee confirming the original value of investment and such a certificate shall be produced within a period of one month from the ....
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..... Vs. CCE- 2005 (191) ELT 347 (T) [Copy of decision from page no. 6 to 7 in Volume-II of compilation] the assessee was denied benefit of exemption under Notification No.24/91-CE Dated 25.7.1991 and Notification No.5/93-CE Dated 28.2.1993 on the ground that capacity of plant is more than 1,98,000 tonnes per annum. Capacity was required to be certified by director of industries who in the facts certified that capacity is more than 1,98,000 tonnes. Ld. Tribunal held that once competent authority has certified the capacity same has to be accepted and accordingly granted the benefit of the notification. Therefore, in the present case once the Committee after due verification has issued the eligibility certificate, Commissioner of Central Excise, Rajkot has no jurisdiction whatsoever to deny exemption. 2.6 Once, an admitted fact is that the Appellants were holding eligibility certificate issued by the Committee as per the notifications, proceedings initiated to deny exemption are bad in law and same is liable to be set aside. In the land mark judgment of the Hon'ble Supreme Court in the case of East India Commercial Company Ltd. vs. Collector of Customs, Calcutta, reported in 1983 ELT....
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....uced below: "22. Furthermore, under the incentive scheme in question, there was only one method of verifying the eligibility for the various incentives granted including sales tax exemption. The procedure was for the matter to be scrutinized and recommended by the State Level Committee and District Level Committee and the certification by the Department of Industries & Commerce by issuing an Eligibility Certificate. There was no other method prescribed under the scheme for determining an industrial unit's eligibility for the benefits granted. The Department of Industries & Commerce having exercised its mind, and having granted the final eligibility certificate (which was valid at all material times), the Commercial Taxes Department could not go beyond the same. More so when the Commissioner, Sales Tax had accepted the Eligibility Certificate issued to the appellant and had separately notified the appellants eligibility for exemption under the 1993 G.O. In these circumstances the DCCT certainly could not assume that the exemption was wrongly granted nor did he have the jurisdiction under Section 20 of the State Act to go behind the eligibility certificate and embark upo....
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....ty has inherent power of review. The power of review has to be specifically conferred on the authority. There is no such power conferred on committee under the notification to review such certificate. Cancellation of certificate is thus bad in law. In any case, Ld. Chief Commissioner of Central Excise had no power to cancel such certificate as same was required to be cancelled by Committee alone. 2.10 Ld. Commissioner in the impugned order has held that certificate issued by the Committee has been cancelled by the Ld. Chief Commissioner vide letter dated 11.7.2007 and therefore exemption cannot be availed by the Appellants. 2.11 The aforesaid contention of the Ld. Commissioner is wholly mis-placed. Even assuming for the sake of argument that such cancellation is valid in law, even then as per letter dated 11.7.2007 such cancellation is prospective and not retrospective. Therefore, on this ground alone the eligibility of the Appellants to avail exemption cannot be questioned. 2.12 In any case, Notification No.39/2001-CE does not provide for cancellation of certificate once issued. In other words there is no power of review conferred on the Committee to revoke certificate su....
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.... the date of publication of this notification in the Official Gazette. 2.18 It is submitted that the notification uses the phrase "any civil construction work on its factory premises". Suppose a manufacturing unit was already functioning prior to earthquake in Kutch having vacate land which is in the approved ground plan. After the aforesaid notification is published on 31.7.2001 the said unit thinks of establishing a new unit making altogether different product on the vacate land. The notification does not debars such existing units to set up a new unit. Further the phrase "..any civil construction" appearing in the aforesaid explanation of the notification contemplates any civil construction major or minor which give rise to a new unit having installed plant & machinery after 31.7.2001. Therefore, even if some minor construction work is already being done it will not debar the assessee from claiming exemption. 2.19 In any case, the Appellants have produced on record the certificate of chartered engineer to the effect that all old piling work done has been abandoned and has not been used in new construction. Further, there does not seem to be any gap in chronology of event a....
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....oner of Central Excise. Sh. Rishi in his letter stated that the construction work and procurement of plant and machinery was done in year 1995 itself and therefore the exemption under Notification No.39/2001-CE cannot be granted as the Grinding Unit is not the new industrial unit within the meaning of the notification. Original application of the Appellants was returned along with enclosures. Committee however considered grinding unit to be separate unit. 2.24 Ld. Commissioner of Central Excise Shri. D.D. Rishi vide his letter dated Nil June 2003 submitted to the Chief Commissioner of Central Excise about his factual comments on the documents submitted by the Appellants as well as the comments sought vide letter dated 9.6.2003. Shri. Rishi, inter alia submitted that the Appellants have declared the value of machinery to be Rs. 103,51,37,948/-. It was also stated that the machinery worth Rs. 68,89,55,496/- was imported prior to issue of notification. It was also stated that on verification it was found that certain machine declared installed was not installed and same has to be deducted from total value declared. It was also clarified that since the construction work started in 1....
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....ion against the Appellants. 2.27 The above submission also founds support from the letter dated 27.1.2004 wherein it was requested by the Principal Secretary that "....in doubtful cases, where interpretations of Govt. of India's Notification is involved, guidance from the concerned Ministry/Department of Govt. of India may please be sought". The above letter admittedly suggests that lot of thinking process has gone before issuing the certificate to the Appellants. This supports the submission of the Appellants that certificate was not issued merely on the basis of documents furnished by the Appellants and therefore allegation of fraud and mis-statement are incorrect. 2.28 Also, the Appellants paid back the amount of refund not because they accepted the contention of the department but they surrendered it voluntarily to avail sales tax exemption without any dispute. Though in law, the Appellants are eligible for benefit under both the scheme i.e. excise exemption under Kutch Notification and Sales Tax incentive under policy framed by the Government of Gujarat. The Appellants therefore submit that their voluntary act should not be treated as an acceptance of the contention of t....
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....eld in the case of Geep Flashlight Industries Ltd. Vs. UOI- 1983 (13) ELT 1596 (S.C) in context of provisions of Section 28 of the Customs Act, 1962 that Section 28 speaks of only three kinds of errors in regard to duties firstly non-levy, secondly short-levy and thirdly erroneous refund i.e., refund under an order erroneously made while refund is made under Section 27 of the Customs Act, 1962. Same analogy would apply under Section 11A i.e. erroneous refund would mean refund ordered under Section 11B of the Central Excise Act. It was also held that refund can never be the case of short levy. 2.36 In view of the above, the Appellants submit that proceedings are bad in law and are liable to be set aside. 2.37 In view of the various submissions made above no penalty can be imposed on the Appellants under Section 11AC of the Central Excise Act. There is no suppression of facts by the Appellants, further refund sough to be recovered is not erroneous refund as per Section 11AC of the Central Excise Act. The Appellants further submit that they of their own voluntarily paid back the amount of refund which is available to them in law. Since, issue involved is pure question of interpr....
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....were also found to be not reflecting the true position. As per the depositions of officials of GOG, Certificates were issued by them based on the statements of SIL not verification by them. The Industries Commissioner of GOG had by his letter dated 15.05.2007 informed the Department that benefit of Sales tax exemption under 1995-2000 scheme of the State Government was granted to SIL as one entity and the benefit was given for the entire unit i.e. Clinker and Cement Plant. As per the Industries Department of GOG, SIL cannot be considered as a separate new unit under the Kutch package and it would not be eligible for the benefit of Kutch package as a new unit. In fact details received from the said department showed that the High Power Committee of GOG had, in its meeting held on 12.04.2007, unequivocally informed SIL that grinding unit cannot be considered as a separate unit under the Scheme of 1995-2000 and they cannot avail of the benefit of the said scheme as well as the benefit of exemption under Notification 39/2001. By its letter dated 12.06.2007, SIL had informed the CC that they would not like to avail of the benefit of the notification no. 39/2001 as they were informed by t....
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....its that in the present case, SIL had taken refund of duty paid by them by way of self-credit, which action was later approved by the Department after verification of the correctness of the amount claimed as refund. Thus, the refund taken by the appellant had become final at the relevant point of time. Secondly, in the present case, there was a clear allegation in the SCN that the refund was taken by way of fraud, suppression of facts, willful mis-statement and contravention of the provisions of CEA, 1944 and the Rules made thereunder with intent to avail refund erroneously by claiming exemption. [Vide para 21.2 and 21.3 of OIO]. Further, as per the findings recorded by the adjudicating authority in Para 63.5 of the OIO, that the refunds taken by them u/n 39/ 2001 was obtained by way of fraud, suppression of facts, willfull mis-statement and contravention of the provisions of CEA, 1944 and the Rules made thereunder inasmuch as the certificate was obtained by them by making false declarations and suppression of facts with intent to evade duty. Since SIL had been availing of refunds as laid down in the subject notification by way of fraud, suppression of facts, willful mis-statement ....
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....f not sufficient to invalidate the exercise of that power". This decision was rendered while overruling the Tribunal's order which had held that since the provision mentioned in the show-cause notice was inapplicable, the show-cause notice was invalid." The abovementioned decision of the LB has relied on two landmark decisions of the Hon'ble SC. Hence, mention of "erroneous refund" in the SCN does not make the SCN invalid. 3.5 No defence was offered with reference to the allegations and findings on 'fraud'. As observed by the Hon'ble SC in the case of Commissioner of Customs vs. Essar Oil Ltd. [2004 ELT 172 433 (SC) viz. paras 29 to 44], "Fraud and collusion vitiate even the most solemn proceedings in any civilized system of jurisprudence." In the instant case, SIL's act of obtaining the Certificate as prescribed u/n 39/2001 by way of fraud, suppression of facts, and wilful mis-statement has clearly vitiated their availing of the refund by self-credit. Accordingly, its recovery, invoking the proviso to section 11A (1) is not only justified but also legal and proper. 3.6 Payment of duty initially and claiming of the same as refund, as prescribed under the notificat....
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....unt already surrendered even if the appellant succeeds in appeal. It was also stated that affidavit to such an effect that no refund will be claimed back of amount already paid even if the appellant succeed was given in another proceeding in appeal No. E/464/2009, E/844/2010 and E/1196/2012 and they prayed for setting aside the penalty and interest on the company and penalty imposed on the Managing Director. The appeal was again relisted for a clarification as the affidavit mentioning in their letter dated 24.10.2019 was not available on record. The matter was heard again only on the limited point of affidavit. Learned counsel Shri Anand Nainawati submitted a copy of the affidavit as a disclaimer of refund of the amount already deposited by the appellant which was taken on record. 4.1 The appellant made various submission on merit as well as on time bar in support of their claim that since the demand is not sustainable the penalty imposed under Section 11AC and demand of interest under Section 11AB will also not sustain. Therefore, first we are taking up the matter on the ground of limitation. We find that the Show Cause Notice for recovery of the refund for the period November ....
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....as once again along with enclosures was forwarded to Learned Commissioner of Central Excise. The Additional Commissioner (CCO) vide letter dated 09.06.2003 requested the Commissioner of Central Excise to send his factual comments, the Commissioner vide his letter dated June 2003 submitted to the Chief Commissioner about his factual comments on the documents submitted by the appellants as well as comments sought vide letter dated 09.06.2003. 4.2 It was also stated that construction work started in 1995 and plant and machineries were purchased in 1995 itself, therefore, the Grinding Unit is not a new industrial unit. According to the Commissioner, Grinding Unit was set up after 31.07.2001 is of no relevance as it is mere addition to the old unit and cannot be termed as new unit. The facts were communicated to the issuing authorities much before the date and certificate was issued. After so much deliberation and recording the facts even the contention of the department that in Grinding Unit some work was started before 31.07.2001, considering all these facts the Committee consisting of Chief Commissioner of Central Excise and Principal Secretary of State Government issued the Certi....
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....ellant in claiming the Exemption Notification No. 39/01-CE. The entire investigation of the DGCEI was boiled down to only on one point that the appellant have mis-declared the commencement of the work i.e. after 31.07.2001, however in the entire verification as discussed above there was recorded fact before the Chief Commissioner as well as principle Secretary of State that some construction was started before 31.07.2001 and some of the plant and machineries were also received prior to that date, therefore, there is no substantial new facts was brought on record in the investigation of the DGCEI Officer. In this position, there is absolutely no suppression of facts or mis-declaration on the part of the appellant hence the extended period was illegally invoked for issuance of the SCN. Since, the demand is not sustainable on the ground of the time bar itself, there is no question of imposition of penalty under Section 11AC and the demand of interest under Section 11AB of the Central Excise Act, 1944. 4.3 Without prejudice to our above finding, we also intend to deal with the issue raised by the appellant that whether the cancellation of certificate by the Chief Commissioner is leg....
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....asis of said license importer made the imports. Subsequently the goods imported, it was noted that the importer had imported the goods on the basis of license which was obtained from the licensing authority on the basis of mis-representation of the facts. The Hon'ble Supreme Court considering the fact held that in the matter that there is no legal basis for the contention that the license obtained by misrepresentation makes the license non est. In the present case also when the eligibility certificate was issued by the competent committee, the certificate was valid and the same cannot be non est. Somewhat the identical issue was dealt by the Hon'ble Supreme Court in the case of Vadilal Chemicals Ltd. (Supra) as per the fact of the said case, the assessee was eligible for tax scheme. For this purpose state level committee was constituted who supposed to decide the eligible investment and sanctioning of incentives. The assessee was issued such certificate and benefit was being claimed by the assessee. Subsequently, the exemption was sought to be denied by the sales tax department. The Hon'ble Apex Court precisely held as under:- "The Department of Industries & Commerce havin....