Excise Appeal No. 2766 of 2007 (Arising out of the Order-in-Appeal No. 145-CE/MRT-I/2007 dated 17/07/2007 passed by The Commissioner (Appeals), Customs & Central Excise, Meerut) and Final Order No. 54323/2017

Decided On: 23.06.2017

Appellants: Aditya Packaging
Respondent: CCE, Meerut - I

Hon'ble Judges/Coram:
Dr. Satish Chandra, J. (President) and B. Ravichandran


B. Ravichandran, Member (T)

1. The appeal is against order dated 17/07/2007 of Commissioner (Appeals), Meerut - I. The appellants are engaged in the manufacture of corrugated cartons falling under Central Excise heading 4819. The appellant's production unit is located at Industrial Area, Haridwar. The appellants submitted a declaration on 27/03/2006 to avail exemption of Central Excise duty in terms of Notification No. 50/2003-CE : MANU/EXCT/0046/2003 dated 10/06/2003 as amended by Notification No. 76/2003-CE : MANU/EXCT/0151/2003 dated 05/11/2003. On perusal of the declaration, it was noticed that the appellants started manufacturing the excisable goods from 15/06/2005 and effected first clearance on 17/06/2005. In terms of the said notification, they were required to file their option to avail exemption before affecting first clearance and such option shall be effective from the date of exercising the same. As the appellants failed to comply with the said condition, the Revenue proceeded against them to deny the exemption during the period 17/06/2005 to 26/03/2006. The Original Authority confirmed the Central Excise duty liability of 13,98,787/- and equal amount of penalty was also imposed on the appellant. On appeal, the Commissioner (Appeals) denied the exemption under Notification No. 50/2003-CE : MANU/EXCT/0046/2003, as amended and held that the appellants are liable to pay Central Excise duty after crossing the SSI exemption limit of Rs. 1,00,00,000/-. He reduced the penalty to Rs. 4,00,000/-.

2. The learned Counsel for the appellant submitted that the substantial benefit provided by the exemption Notification No. 50/2003-CE : MANU/EXCT/0046/2003, as amended, which is to encourage the industrial units in backward areas, cannot be denied on the failure of fulfillment of procedural requirement. He submitted that filing of a declaration as required under Notification No. 50/2003-CE : MANU/EXCT/0046/2003, as amended by Notification No. 76/2003-CE : MANU/EXCT/0151/2003, is only procedural. Further, he referred to condition (ii)(e) which states that "date on which option under this notification has been exercised". It is his submission that the intention to the legislature is to have a procedural condition to avail the notification. He further relied on the decision of the Apex court in Mangalore Chemicals and Fertilizers Ltd. vs. Deputy Commissioner reported in MANU/SC/0035/1992 : 1991 (55) E.L.T. 437 (S.C.) to hold that non-observation of procedural condition is condonable.

3. The learned AR reiterated the findings of the lower authorities. He submitted that the conditions of exercising option in writing before effecting the first clearance is a substantial requirement to avail the exemption. This cannot be considered as a procedural infringement on the part of the appellant.

4. We have heard both the sides and perused the appeal records. We note that the Notification No. 50/2003-CE : MANU/EXCT/0046/2003 dated 10/06/2003 did not contain the conditions regarding exercising option in writing, when it was first issued. The said notification was amended on 05/11/2003 which brought in specifically three conditions for availing the notification. These are as below:-

"Provided that the exemption contained in this notification shall apply subject to the following conditions, namely:-

(i) The manufacturer who intends to avail of the exemption under this notification s........