Duty Exemption can’t be allowable When Slum Sale Agreement made only to Transfer the benefit of Exemption beyond 10 years: CESTAT [Read Order]

Duty Exemption - Slum Sale Agreement - exemption - CESTAT - taxscan

The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that duty exemption can’t be allowable when a slum sale agreement is made only to transfer the benefits exemption beyond 10 years.

Shri Rajesh Gupta, Advocate appeared for the appellant and Shri Sanjay Kumar Singh, Authorised Representative appeared for the respondent

Theappeals have been filed assailing the Order-in-Originaldated May 01, 2019, passed by the Commissioner of Central Goods and Service Tax, Dehradun and are therefore being disposed of together.

The appellant, M/s. Pegasus Pharmaco India Pvt Ltd is a manufacturer of pharmaceutical products which availed area-based notification No. 49/2003-CE dated June 10, 2003, which was available in the location of its premises. The exemption notification was available to an assessee for ten years only, which period came to an end.  

The assessee purchased under the slump sale agreement, a unit namely M/s. Shri Balaji Packing Industries was initially a partnership firm and was thereafter converted into a proprietary firm of Shri Yogesh Kumar Sharma. 

The agreement was signed on February 12, 2016, and thereafter it was named by the assessee as Unit No.II of M/s. Pegasus Pharmaco India Pvt  Ltd and instead of manufacturing cartons, the assessee started manufacturing pharmaceutical products using the plant and machinery of Unit No. I, and started claiming exemption under Notification No. 49/2003 in the name of Unit No. II.

It was evident that there was no change in the business of the assessee also since it continued to manufacture pharmaceutical products that it was manufacturing earlier.  

The Commissioner Passed impugned order denying the benefit of Central Excise duty exemption under Notification No. 49/2003-CE dated 10.06.2003 to M/s Pegasus Farmaco India (P) Ltd [Unit-II] Khasra No. 112, Village-Matlabpur, Roorkee and confirmed the demand of Central Excise duty amounting to Rs.23,04,75,983/- (Rupees Twenty Three Crore Four Lac Seventy Five Thousand Nine Hundred Eighty-Three only) from the party for the period 20.04.2016 to 30.06.2017 under Section 11A(4) of Central Excise Act, 1944.

A Coram consisting of Justice Dilip Gupta, president and Mr P V Subba Rao, member (technical) heldthat theorder passed by the Commissioner is correct in denying the benefit of exemption under notification No. 49/2003 and confirming thedemand of duty under section 11A along with interestfrom the assessee under section 11AA of the Central Excise Act, 1944.  The Tribunal observed that the benefit of exemption did not apply to the assessee as the only thing which changed with the slump sale agreement is the claim of the benefit of the exemption by Balaji and its transfer to the assessee to extend the benefit of the exemption to the pharmaceuticals manufactured by it beyond 10 years.

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PEGASUS PHARMACO INDIA PVT LTD vs COMMISSIONER, CENTRAL GOODS & SERVICE TAX, DEHRADUN

Counsel for Appellant:   Shri Rajesh Gupta

Counsel for Respondent:   Shri Sanjay Kumar Singh

CITATION:   2022 TAXSCAN (CESTAT) 502

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