Availability of Benefit under Notification No. 108/95-CE

PJ/Case Study/2011-12/26

CASE STUDY

Prepared By:
CA Pradeep Jain,
Sukhvinder Kaur, LLB [FYIC]
And Megha Jain, B. Com

Introduction: -

In the case under study, the assessee had availed benefit of exemption under Notification No. 108/95-CE dated 28.08.1995. However, they did not furnish the certificate from the executive head of the Project Implementing Authority and countersigned by the Principal Secretary or the Secretary (Finance) of the Government of Madhya Pradesh, before making clearances of goods as prescribed in the Notification. They submitted the said certificate before the concerned authority after the clearance of goods. Whether this lapse in furnishing certificate before clearance of goods would result in denial of exemption benefit under Notification No. 108/95-CE?. This is the issue involved herein.

In the matter of M/s Qualitech Metals Industries
[Order-In-Original no. 20/2011-CE-Demand, Dated: 28.07.2011]

Brief facts of the case: -

- Noticee-assessee is engaged in the manufacture and clearance of M. S. Pipes, M. S. Flanges and M. S. Specials Joint falling under sub-heading no. 7305 19, 7307 91 and 7307 99 falling under the First Schedule to the Central Excise Tariff Act, 1985.

- During scrutiny of ER-3 return filed by assessee for the quarter January 2010 to March, 2010, it has been noticed that the assessee has cleared excisable goods without payment of Central Excise duty amounting to Rs. 106039/- by irregularly availing exemption under Notification No. 108/95-CE dated 28.08.1995 during the month of February, 2010 in contravention of the provisions of Rule 4, 6 and 8 of the Central Excise Rules, 2002. Department contended that the Central Excise Duties so evaded appears recoverable along with interest from them in terms of provisions of Section 11A (1) and Section 11AB of the Central Excise Act, 1944 for penal action under Rule 25(1) of the Central Excise Rules, 2002 for contravention of Rule 4, 6 and 8 of the Central Excise Rules, 2002.

- Department asked assessee to submit details of such clearances, like invoice No. and date, description and specification of goods, size, quantity, value of goods, duty foregone, and Certificate No. against which goods have been cleared. Assessee vide their letter dated 24.2.2011 furnished the detail along with copies of relevant invoices. On scrutiny of information so provided by the assessee it has further been observed that they have cleared the goods without payment of duty vide invoice No. 34 dated 9.2.2010 and 35 dated 15.02.2010 through M/s Pratibha Industries Ltd., Indore on the strength of Certificate No. IND/WS/17/EC/PMU/GOVT./60/2851 dated: 05.09.09 and certificate no. IND/WS/13/EC/PMU/GOVT./60/401 dated: 04.02.2010 respectively, issued by the Urban Administration and Development Department, Project UDAY (Urban Water Supply & Environment Improvement in M.P.), Government of Madhya Pradesh.

- In terms of the Notification, the assessee was required in the present case to produce a certificate from the executive head of the Project Implementing Authority and countersigned by the Principal Secretary or the Secretary (Finance) of the Government of Madhya Pradesh, before making clearances of goods in question. Assessee submitted vide letter dated 12.3.2010 to Divisional office that they had provided photocopy of the original certificates and now they are submitting the original/ attested copies of certificates (two original and two attested copies). The assessee furnished the Certificate No. IND/WS/131EC/PMU/GOVT.160/401 dated 4.2.2010 to the Division office vide their aforesaid letter dt. 12.3.2010 against the clearance made under invoice No. 35 dated 15.02.2010, thus the requisite certificates have been produced after affecting the clearance of goods in question. Therefore, the assessee has not fulfilled the condition as laid down, to avail the exemption benefits provided under Notification No. 108195-CE dated 28.08.1995.

- As per Certificate No. IND1WS/17/EC/PMU/GOVT./60/2851 dated 05.09.09, the validity of said certificate was valid up to 30.9.2009 and even as per the addendum of essentiality Certificate issued vide Certificate No.PMU/GOVT./60/3944 dated 24.11.2009 & addendum of essentiality Certificate issued vide Certificate No.PMU/GOVT./60/256 dated 21.1.2010, the validity of the certificate was upto 30.9.2009, however clearance against said Certificate has been made on 09.02.2010. Therefore, it appears that the validity of aforesaid certificate had been expired before affecting clearance of the goods, and the exemption benefits claimed under Notification no. 108/95-CE, dated 28.08.1995 appears to be not admissible to them and they have wrongly cleared the goods without payment of Central Excise duty under guise of invalid Certificate.

- It was alleged that the assessee have cleared excisable goods without payment of Central Excise Duty by wrongly availing exemption of No. 108/95-CE dated 28.08.1995 knowingly and deliberately by willfully suppressing the facts with intent to evade payment of duty. The exemption under Notification No. 108/95-CE dated 28.08.1995 is not available to them as the goods cleared vide invoices No. 34 dated: 9.2.2010 are not covered under Certificate No. IND/WS/17/EC/PMU/Govt./60/2851 dated 05.09.09 and even subsequent addendums issued by as the validity of the Certificate in question was only upto it 30.9.2009 and goods have been cleared after expiry of validity of respective certificate. Further, in respect of clearance made vide invoice No. 35 dated 15.2.2010 the required certificate has been submitted on 12.3.2010 whereas as per the condition laid down in proviso to the Notification No. 108/95-CE dated 28.08.95 the same should have been produced before the Dy./ Assistant Commissioner of Central Excise, Jodhpur before clearance of the said goods.

- It was alleged that the assessee cleared the goods vide invoice No. 34 dated: 09.02.2010 without payment of Central Excise duty amounting to Rs. 106039/- by wrongly availing benefits of exemption of Notification No. 108/95-CE dated 28.08.1995, even after knowing that the validity of Certificate No. IND/WS/17/EC/PMU/GOVT./60/2851 dated 5.9.09 was up to 30.09.2009 and its subsequent addendums were valid only up to 30.09.2009. Further, the assessee has not fulfilled the conditions as laid down in said Notification in respect of clearance made vide invoice No. 35 dated: 15.02.2010 as the relevant certificate submitted in respect of the said clearance was valid upto 30.09.2009 and therefore exemption is not available to them.

- Department issued show cause notice alleging that the assessee have contravened the provisions of Rule 4, 6 and 8 of the CER, 2002 by not paying the Central Excise Duty at the time of clearance of the said goods, by not self-assessing the duty payable at the time of clearance of the said goods and by not paying duty to the Government Account by due date respectively. Therefore, the duty to the tune of Rs. 106039/- not paid by the assessee is recoverable from them in terms of Proviso to Section 11A (1) of the CEA, 1944 along with Interest thereon under Section 11AB of the CEA, 1944. Further, the assessee are liable to penal action under Rule 25(1) of the Central Excise Act, 1944 for contravening the provisions of Rule 4, 6 and 8 of the CER, 2002 with an intent to evade payment of Central Excise duty.

Assessee’s Contention: -

The assessee made following submissions before the Adjudicating Authority:

- That they have received the contract from M/s Pratibha Industries Ltd., Indore to supply the goods that were to be used by Urban Administration and Development Department Project -Uday (Urban Water Supply and Environment Improvement in M.P.), Government of Madhya Pradesh. For this purpose the goods were removed by the noticee on the strength of Certificate dated 5.9.09 and Certificate dated 4.2.2010 issued by relevant authority under Government of Madhya Pradesh. It is further submitted that they have also cleared the goods to same party – M/s Pratibha Industries Ltd. for the same project previously also during the year 2010. A separate Show cause notice dated 19/03/2010 was issued to the noticee by the Additional Commissionerate, Central Excise Commissionerate, Jaipur-II. This show cause notice was issued under the same facts and circumstances – the project and the party to whom the goods were supplied was also the same. This show cause notice have been adjudicated vide order in original no. 33-34/CE/JP-II/2011 dated 24.3.2011. In this order, learned Additional Commissioner has allowed the benefit of Notification no. 108/95-CE dated 28.08.1995. Since the facts and circumstances of the previous show cause notice are exactly the same as of this show cause; and the benefit have previously been allowed to the noticee; it cannot be denied now.

- Noticee submitted that the impugned show cause notice covers the goods cleared vide two invoices namely invoice dated 9.2.2010 and invoice dated 15.2.2010. Regarding the clearances made under invoice dated 9.2.2010, the photocopy of certificate and extended certificate as well as original certificate was submitted to the department vide our various letters dated 24.11.09, 25.11.09, 27.12.2010 and 25.03.2010. Further, it is alleged that benefit under the above referred certificate is not available as the validity of the certificate dated 5.9.09 was only upto 30.9.09. It is alleged that since the clearances are made in the month of February, 2010; the certificate had already expired on that date and so the noticee was supposed to pay the duty on these clearances. In this regard, it is submitted that the above referred certificate no. 2851 dated 5.9.2009 was subsequently amended by Addendum Certificates.

Thus, it is ample clear that the Essentiality certificate dated 5.9.2009 was subsequently amended by above referred addendum certificates. Hence, as on the date of clearance made vide invoice dated 9.2.2010; the certificate stood amended and the expiry date of the said certificate was 15.2.2010. Thus, the allegation of the impugned show cause notice that the certificate had expired on the date of invoice no. 34 is not sustainable and is liable to be set aside.

- Further, regarding invoice dated 15.2.2010, the clearance was made against certificate dated 4.2.10 issued by principal secretary (Finance), Government of M.P. for ADB project for water supply scheme, Indore. It is alleged that the noticee was required to submit the certificate prior to clearance of goods under Notification no. 108/95-CE dated 28.08.1995 and whereas the certificate is submitted afterwards. In this regard, it is submitted that the submission of certificate is merely a procedural lapse. The benefit of a notification cannot be denied merely for a procedural lapse when the substantial condition is satisfied. It has been held by the highest Court of India that the procedural lapses would not deny the substantial benefit. This decision has been given in the following case:-

·                     FORMICA INDIA DIVISION Versus COLLECTOR OF CENTRAL EXCISE. [1995 (77) E.L.T. 511 (S.C.)]

As such, the verdicts of hon’ble Supreme Court are in their favour. Similar decision is also given in the following cases:-

·                     C.C.E., Mangalore v/s Mangalore Refinery & Petrochemicals Ltd [2002 (150) ELT 114 (Tri-Bang)]

·                     BENARA UDYOG PVT. LTD. Versus COLLECTOR OF C. EX., KANPUR [1998 (103)   E.L.T. 104 (Tribunal) ]

·                     VIKRAM LAMINATORS PVT. LTD. Versus COLLECTOR OF C. EXCISE, AURANGABAD [1995(79)E.L.T.147 (Tribunal)]

·                     TECHNOCRATS ENGINEERING CO. Versus COMMISSIONER OF C. EX., MUMBAI-II [2001(137) E.L.T. 459 (Tri.- Mumbai)]

·                     DELHI PAPER PRODUCTS CO.Versus COLLECTOR OF C. EX., NEW DELHI [2000(125)E.L.T. 661(Tribunal)]

·                     TUFAIL AHMED Versus COLLECTOR OF CENTRAL EXCISE [ 1992(62) E.L.T. 745 (Tribunal]

·                     LOKHANDWALA CONSTRUCTION INDUSTRIES LTD. Versus C.C.E., MUMBAI-II [1997(92)E.L.T.703 (Tribunal)]

·                     COMMISSIONER OF CENTRAL EXCISE, CHENNAI Versus ITC LTD. [2008(224)E.L.T. 226 (Mad.)]

·                     VIVEK RE-ROLLING MILLS Versus COLLECTOR OF CENTRAL EXCISE, CHANDIGARH [1994 (73) E.L.T. 660 (Tribunal)]

·                     APEX STEELS (P) LTD. Versus COLLECTOR OF CENTRAL EXCISE, CHANDIGARH [1995 (80) E.L.T. 368 (Tribunal)]

·                     COLLECTOR OF CENTRAL EXCISE, NEW DELHI Versus DALMIA INDUSTRIES LTD. [1997 (91) E.L.T. 71 (Tribunal)]

·                     ANDHRA SUGARS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, GUNTUR [1997 (95) E.L.T. 484(Tribunal)]

·                     VENUS METAL WORKS Versus COLLECTOR OF C. EX., BANGALORE. [1998(98) E.L.T. 257(Tribunal)]

·                     L.M.L. LTD. Versus COLLECTOR OF CENTRAL EXCISE, KANPUR [1998(97) E.L.T. 66 (Tribunal)]:-

·                     M/S MANSI STEELS (P) LTD VS CCE, PATNA [2009-TIOL-1821-CESTAT-KOL]

·                     MODERN PROCESS PRINTERS [2006 (204) E.L.T. 632 (G.O.I.)]:-

·                     KRISHNA FILAMENTS LTD.[2001 (131) ELT 726 (G.O.I)]:-

Thus, from the above-cited decisions, it is ample clear that this is set rule that the procedural lapses cannot be taken as basis to deny the substantial benefit. In the instant case, no doubt has been raised in the entire show cause notice that the goods were not used for the purpose specified in the Notification no. 108/95-CE dated 28.08.1995. Hence, it is clear that the said goods were used for the purpose mentioned in the notification. Thus, the substantial condition prescribed in the notification is satisfied. The delay in furnishing of the certificate is merely a procedural lapse. In the cases cited hereabove the benefit of exemption notification was allowed even when the declaration/certificate was not submitted at all. In the instant case, the certificate was submitted but the only error was that there was some delay in filing the same. This is nothing more than a procedural lapse. Thus, the benefit of this notification cannot be denied to the noticee for the procedural lapse when there is no doubt that the substantial condition is fulfilled. Therefore the impugned show cause notice is not tenable and is liable to be quashed.

- In continuation to above it is submitted that the delay in filing the certificates under Notification no. 108/95-CE dated 28.08.1995 is merely procedural lapse. The following decisions have been given in context of this notification only:-

·                     Commissioner v. Ircon International Limited [2008(228)ELT 587]

·                     Bajaj Tempo Limited v. Commissioner [ 2004(165)ELT 323]:-

Thus, the above decisions are squarely applicable in the case of the noticee wherein the benefit under Notification no. 108/95-CE dated 28.08.1995 is allowed even when there was delay in production of the certificate.

- Further, the benefit of Notification no. 108/95-CE dated 28.08.1995 has been allowed to the noticee previously under similar facts and circumstances vide order in original no. 33-34/CE/JP-II/2011 dated 24.3.2011. While passing this order it is held by Additional Commissionerate, Central Excise Commissionerate, Jaipur-II that the substantive benefit of notification cannot be denied for the technical lapses. The learned Additional commissioner at para 7.5 of the aforesaid order has held as follows:-

“7.5      I thus find that it is well settled by now that the substantive benefit of the notification should not be denied merely on technical/procedural condition of producing certificate before clearance of goods. I also find that the substantive condition of the exemption notification has been complied with and therefore, the assessee are entitled to exemption as envisaged under the said notification. Thus, I hold that the assessee are entitled for availment of the benefit of nil rate of duty.”

- Thus, previously also, the certificate was submitted after clearance of goods whereas the benefit of notification was duly allowed by the Additional Commissioner, Central Excise Commissionerate, Jaipur-II. Thus, the benefit of this decision should be allowed to noticee again and the proceedings initiated by impugned show cause notice should be set aside.

- It is further submitted that the impugned show cause notice is proposing to impose penalty under rule 25 of the Central Excise Rules, 2002 and section 11AC of the Central Excise Act, 1944. In this regard it is submitted that the penalty was withdrawn under similar facts and circumstances vide order in original no. 33-34/CE/JP-II/2011 dated 24.3.2011 issued by Additional Commissionerate, Central Excise Commissionerate, Jaipur-II. In this decision it was held that there was only procedural lapse on part of the assessee, so demand was not sustainable and in absence of sustainability of demand, the question of imposing the penalty does not arise at all. Since the facts and circumstances under which penalty was withdrawn previously are the same, penalty cannot be imposed now also. Thus, the contention of the impugned show cause notice is not sustainable and is liable to be quashed.

- Further, penalty cannot be imposed if the assessee has acted under bonafide belief based upon certain decisions. The noticee was under bonafide belief that they are eligible to avail benefit under this notification and delay in filing of the certificate cannot deny this benefit to them. This belief was based upon the various judgments as cited in forgoing paras. It has been held in various cases that no penalty is warranted when the assessee has acted on the basis of bona fide belief. Even the highest court of India – Hon’ble Supreme Court has held in the case of COMMISSIONER OF CENTRAL EXCISE, TRICHY Versus GRASIM INDUSTRIES LTD. [2005 (183) E.L.T. 123 (S.C.)]that where the act of assessee is based on the interpretation taken by the Tribunal, penalty cannot be imposed as the act is based on bona fide belief. The verdicts of Apex Court are produced as follows:-

“Penalty - Bona fide belief caused by Tribunal’s decision - Tribunal in a number of cases giving an interpretation as understood by assessee - Penalty not imposable - Rule 173Q of erstwhile Central Excise Rules, 1944 - Rule 25 of Central Excise Rules, 2002. [para 20]”

- Therefore, penalty cannot be imposed on them for the charge of suppression of facts. This has also been held in the following cases:-

·                     Star Neon Singh vs. Commissioner of Central Excise, Chandigarh [2002 (141) ELT 770 (Tri.-Del.)]
·                     Straw Products Ltd. vs. Collector of Central Excise, Indore [1996 (87) ELT 115 (Tribunal)]
·                     Johnson & Johnson Ltd. vs. Collector of Central Excise, Bombay [1995 (78) ELT 193 (Tribunal)]
·                     Indian Explosives Ltd. vs. Collector of Customs [1992 (60) E.L.T. 111 (Cal.)]
·                     Tata Engineering & Locomotive Co. Ltd. vs. Collector of Customs [1991 (56) E.L.T. 812 (Tribunal)]
·                     SuratMunicipal Corpn. Vs. Commissioner of C. Ex., Surat [2006 (4) S.T.R. 44 (Tri. - Del.)]

Thus, in the light of above decisions, no penalty is warranted in the instant case. As such, the impugned show cause notice is not sustainable and is liable to be quashed.

- The impugned show cause notice is proposing to impose the penalty under section 11AC of the Central Excise Act, 1944. This penalty can only be imposed in the cases of fraud, wilful mis-statement, collusion or suppression of facts. Provisions of Section 11AB were perused and it was submitted that the analysis of this section makes it clear that the penalty under this section can only be imposed if there is any fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made there under with intent to evade payment of duty. And whereas, no such allegation has been proved in the impugned show cause notice. Further, this is the second show cause notice on the even issue, the first one was issued vide letter dated 19/03/2010 which is being adjudicated vide order in original no. 33-34/CE/JP-II/2011 dated 24.3.2011. The allegation of suppression or willful mis-statement cannot be alleged in such cases where the show cause notice has already been issued previously. It has been held in various cases that the fraud, willful mis-statement or collusion or suppression cannot be alleged in subsequent proceedings. Thus, the penalty imposable for the reason of fraud, willful mis-statement or collusion or suppression of facts cannot be imposed in such cases. Penalty has been withdrawn in a similar case by the hon’ble Supreme Court in the case of ECE INDUSTRIES LIMITED Versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI [2004 (164) E.L.T. 236 (S.C.)]. The verdicts of Hon’ble Supreme Court are produced as follows:-

“Demand and penalty - Limitation - Extended period of limitation not invocable in subsequent proceedings when earlier proceedings on same subject matter pending/decided - Suppression or misstatement - Second show cause notice alleging suppression - Earlier show cause notice for demand of duty and imposition of    penalty for wrong availment of Modvat and its non-reversal adjudicated - Extended period of limitation not invocable for wilful suppression or misstatement in the second show cause notice - No penalty imposable - Section 11A of Central Excise Act, 1944.”

In the above referred case it was held by the Apex court of India that penalty is not imposable by alleging the suppression, mis-statement etc. in the second show cause notice on the even issue. In the case of noticee also, a show cause notice has already been issued previously and now this show cause notice has been issued which also covers the same facts and circumstances. Thus, suppression of facts is not proved, hence the penalty imposable in lieu of suppression, mis-statement, collusion, etc. cannot be imposed in the light of above decision. Similar decision was given in the case of NIZAM SUGAR FACTORY Versus COLLECTOR OF CENTRAL EXCISE, A.P. 2006 (197) ELT 465 wherein it is held as follows:-

Demand - Limitation - Suppression of facts - All relevant facts in knowledge of authorities when first show cause notice issued - While issuing second and third show cause notices, same/similar facts could not be taken as suppression of facts on part of assessee as these facts already in knowledge of authorities - No suppression of facts on part of assessee/appellant - Demands and penalty dropped - Sections 11A and 11AC of Central Excise Act, 1944.

            Thus, it is ample clear that the penalties are not warranted in subsequent proceedings. In the case of noticee also, the penalty cannot be imposed by alleging the suppression as it is the second show cause notice on the even issue. Thus, the ratio of these decisions should be extended to them and the show cause notice should be quashed.

- In continuation to above it is submitted that even the hon’ble Supreme Court has decided that penalty should not be ordinarily imposed unless there is deliberate in defiance of law. This has been held in the case of Hindustan Steel v. State of Orissa [1978 2 ELT J 159 (Supreme Court)]. In this case it was held that an order imposing penalty for failure to meet statutory obligation is a result of proceedings which are quasi judicial in nature and penalty should not ordinarily be imposed unless the person acted deliberately in defiance of law or was guilty of misconduct or dishonest or acted in conscious disregard of his obligation. It is further held in the case of Orient Ceramics and Industries [1987 (32) ELT 218 (I)] that words ‘with intent to evade payment of duty’ are very significant and unless and until the intention to evade payment is proved on part of assessee, no penalty can be imposed. As such, relying on these decisions, penalty under section 11AC of the Central Excise Act, 1944 is not imposable in the instant case. Thus, the impugned show cause notice is not sustainable and is liable to be set aside.

Issue:

-                      Whether exemption under Notification No 108/95-CE, dated: 28.08.1995 in respect of goods cleared under invoice dated 09.02.2010 was available to the assessee or not on the basis of Certificate dated: 05.09.09 read with subsequent addendum extending the validity of the Certificate in question upto 30.09.09.

-                      Whether exemption under Notification No. 108/95-CE, dated: 28.08.1995 in respect of goods cleared under invoice dated 15.02.2010 was available to the assessee or not where the assessee has submitted the requisite Certificate on 12.03.2010 i.e. after affecting the clearances under the said exemption.

Judgment of the Adjudicating Authority:-

The learned Adjudicating Authority held as under:

- The photocopy of certificate No. IND/WS/17/EC/GOVT./60/2851 dated: 05.09.09 and from the Photocopy of the addendum certificate No. PMU/GOVT/60/256 dated: 21.01.2010 submitted, it was found that an amendment was made in respect of the certificate No. IND1WS/17/EC/GOVT./60/2851 dated 05.09.09 to extend the validity of said Essentiality Certificate No. IND/WS/17/EC/GOVT.160/2851 dated: 05.09.09 till 15.02.2010. After perusal of the original certificate, it was found that in view of the said addendum, the allegation that Certificate No. IND/WS/17lEC/GOVT./60/2851 dated 05.09.09 was not valid on the date of clearance made under invoice No. 34 dated 09.02.2010 is not sustainable.

- The Adjudicating Authority further found that the assessee had furnished Certificate No. IND/WS/13IECIPMU/GOVT.160/401 dated 4.2.2010 to the Division office vide their letter dt. 12.03.2010 against the clearance made under Invoice No. 35 dated 15.2.2010, thus the requisite certificates have been produced after affecting the clearance of goods in question. Therefore, the assessee has not fulfilled the condition as laid down, to avail the exemption benefits provided under Notification No. 108/95-CE dated 28.08.1995.

- It was further found that the substantive condition of the Notification is before clearance of the said goods, the manufacturer produces before the Assistant Commissioner of Central Excise having jurisdiction over his factory in case of the said goods are intended to a project financed (whether by a loan or a grant) by the World Bank, the Asian Development Bank or any international organization, other than those listed in the Annexure, and

(i)                   if the said project has been approved by the Government of India, a certificate from the executive head of the Project Implementing Authority and countersigned by an officer not below the rank of a Joint Secretary to the Government of India, in the concerned line Ministry in the Government of India, that the said goods are required for the execution of the said project and that the said project has duly been approved by the Government of India, and

(ii)                 if the said project has been approved by the Government of India for implementation by the Government of a State or a Union Territory, a certificate from the executive head of the project Implementing Authority and countersigned by the Principal Secretary or the Secretary (Finance) as the case may be, in the concerned State Government or the Union Territory, that the said goods are required for the execution of the said project, and that the said project has duly been approved by the Government of India for implementation by the concerned State Government.

- It was found that substantive condition for availment of benefit under the exemption notification stands satisfied when the assessee have produced the original certificate, received from the original authority, to the jurisdiction officer to make the assessee eligible for clearances of the goods at nil rate of duty. Commissioner further finds that time and again in a number of decisions of Hon'ble Supreme Court/ Tribunal it has been held that even if it is a condition in the Notification that certificate be produced before clearance of goods in such case substantive benefit of the said notification should not be denied merely on this technical/procedural requirement of producing certificate before clearance of the goods. In this regard, the Commissioner further finds that the reliance placed on the decisions of (i) Bajaj Tempo Ltd. Vs. Commissioner of Central Excise, Indore reported in 2004 (165)ELT323(Tri. - Del.) (ii) Commissioner of Central Excise, Chennai Vs. Dynaspede Integrated System Ltd., reported in 2002(147) ELT 541 (Tri. - Chennai) and (iii) Commissioner of Central Excise, Vadodara-II Vs. IRCON International Ltd., reported in 2008(228) ELT-587 (Tri. - Ahmd) are squarely applicable to the facts of the case.

- The Adjudicating Authority thus found that it is well settled by now that the substantive benefit of Notification should not be denied merely on technical/procedural condition of producing certificate before clearance of goods. Commissioner also finds that the substantive condition of the exemption notification has been complied with and therefore, the assessees are entitled to exemption as envisaged under the said notification. Thus, it was held that the assessee are entitled for availment of the benefit of nil rate of duty in the case where the assessee have produced the requisite certificate on 12.03.2011 in respect of clearances made under invoice No. 35 dated 15.2.2010.

- With regard to imposition of penalty, it was held that since, demand is liable to be dropped, therefore interest is not recoverable and penalties are not imposable in view of decision given by the Hon'ble Supreme Court in the case of CCE Vs. H.M.M. Ltd. [1995 (76) ELT 497 (SC)].

Decision:-

Proceedings initiated vide impugned show cause notice were dropped.

Conclusion:-

The learned Adjudicating Authority rightly held that when the substantive conditions of the Exemption Notification are fulfilled than the mere procedural condition of not filing certificate before the clearances should not come in the way of denying substantive right of the assessee.

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PJ/CASE STUDY/2011-12/26
28 September 2011

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PJ/CASE STUDY/2011-12/26
28 September 2011