The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Commissionerate in Himachal Pradesh had no jurisdiction to confirm any duty liability in case the manufacturing of High-Security Registration Plate (HSRP) would have completed in the State of Rajasthan.
Real Mazon India Ltd, the appellant assessee was a company engaged in the manufacture and sale of High Security Registration Plates and windshield stickers having its manufacturing unit at Trilokpur Road, Kala Amb, District Sirmour, Himachal Pradesh and the assessee entered into agreements with State Transport Commissioners for installation of HSRP Plates and windshield stickers on the vehicles sold in their States/Union Territories.
The assessee appealed against the order passed by the adjudicating authority for confirming the demand of Central Excise duties amounting to Rs.6,30,94,677/- on the clearances of HSRP, windshield stickers, and scrap made by the assessee along with the proportionate interest and for the imposition of penalties.
A.K. Prasad and Surabhi Sinha, the counsels for the assessee contended that the manufacture of HSRP was completed at Kala Amb, Himachal Pradesh which entitles the assessee to avail the Area Based Exemption and also clear that in State Transport Authority was merely a service as no new product emerged after the activity.
Also submitted that the department had wrongly held it to be part of manufacturing activity which got done in Rajasthan and the benefit of exemption Notification had therefore wrongly been denied.
Rakesh Agarwal, the counsel for the department contended that the manufacturing activity had been bifurcated by the assessee to evade the Central Excise Duty and to wrongly avail the benefit of area-based exemption Notification No.50 of 2003.
The Bench observed that the assessee in the present case was claiming area-based exemption in terms of Notification No.50/2003 on the ground of manufacturing HSRP in Kala Amb, Himachal Pradesh.
The two-member bench comprising Rachna Gupta (Judicial) and Subba Rao (Technical) held that there was no evasion of tax liability and that the product of assessee gets manufactured in Himachal Pradesh to which area-based exemption was available and the order by Himachal Pradesh Commissionerate confirmed the demand for excise duty was not legally sustainable.
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