Substitution in Notification would Naturally Apply to Assessee: CESTAT Confirms Area-Based Excise Duty Exemption [Read Order]

In a significant case, the Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that substitution in the notification would naturally apply to the assessee and confirmed the area-based excise duty exemption.

The department challenged the impugned order passed by the Commissioner (Appeals) whereby he dismissed the appeal of the Revenue and upheld the order passed by the original authority.

Black Gold Rubber, the respondent is engaged in the manufacture of Tread Rubber, Cushions, and Solutions falling under Chapters 4006.10 and 4005.90 of the First Schedule to the Central Excise Tariff Act 1985.  The respondent filed a letter dated 13.08.2004 declaring that they are entitled to avail of area-based exemption under Notification No. 49/50/2003 dated 10.06.2003.

The respondent stated that they have made substantial expansion of plant and machinery and thereby increased the installed capacity by more than 25% which entitles them to the benefit of the said notification.

The respondent assessee submitted the required documents in the form of a certificate dated 17.08.2004 issued by the chartered engineer and a certificate issued by the chartered accountant indicating that the value of the addition of plant and machinery installed for substantial expansion has been shown in their books of accounts.

The department concluded that the unit is not entitled to exemption in terms of Notification No. 50/2003 dated 10.06.2003 as the unit is not located in the specified Khasra No./Hadbast No. After following due process of adjudication, the Assistant Commissioner held that the respondent is entitled to avail the exemption under Notification No. 50/2003 dated 10.06.2003 from the date of filing their declaration. The Commissioner (Appeals) rejected the appeal of the department.

The two-member bench comprising Mr S S Garg, (Judicial) and Mr P Anjani Kumar, (Technical) observed that exemption notification must be construed strictly. It was viewed that the Notification No. 34/2005 dated 30.09.2005 which was issued by way of substitution and the respondent’s unit which was in the said Hadbast and Khasra Nos. 110 (1 to 418) have been substituted and the Revenue Authority of the State has also clarified that the respondent is entitled to benefit of said notification. 

The CESTAT dismissed the appeal and upheld the impugned order.

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