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Aditya Packaging Vs. CCE, Meerut - I - (Customs, Excise and Service Tax Appellate Tribunal) (23 Jun 2017)

Conditions inserted in Notification are mandatory and cannot be held as mere procedural requirement



Appeal is against order of Commissioner (Appeals). Appellants are engaged in manufacture of corrugated cartons falling under Central Excise heading 4819. Appellant's production unit is located at Industrial Area, Haridwar. Appellants submitted a declaration 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 declaration, it was noticed that, Appellants started manufacturing excisable goods from 15th June, 2005 and effected first clearance on 17th June, 2005. In terms of said notification, they were required to file their option to avail exemption before affecting first clearance and such option shall be effective from date of exercising same.

As Appellants failed to comply with said condition, Revenue proceeded against them to deny exemption during relevant period. Original Authority confirmed Central Excise duty liability and imposed penalty. On appeal, Commissioner (Appeals) denied exemption and held that, Appellants are liable to pay Central Excise duty after crossing SSI exemption limit of Rs. 1,00,00,000/-. Though penalty was reduced to Rs. 4,00,000/-.

Notification No. 50/2003-CE : MANU/EXCT/0046/2003 dated 10th June, 2003 did not contain conditions regarding exercising option in writing, when it was first issued. Said notification was amended on 05/11/2003 which brought in specifically three conditions for availing Notification. Basic and substantial requirements to avail exemption are specifically inserted after issue of notification and clearly intended to counter any misuse of 'area based exemption' and also to make aware jurisdictional officer about exemption being availed by Assessee. These conditions do have specific legal implication and by no means be considered as a simple procedural requirement, infringement of which is condonable.

Supreme Court in CCE, New Delhi vs. Hari Chand Shri Gopal, observed that, doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the "essence" or "substance" of requirements. A mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential.

In view of principles laid down by Supreme Court and facts of present case, conditions inserted in Notification No. 50/2003-CE : MANU/EXCT/0046/2003 are mandatory and cannot be held as mere procedural requirement. For effective monitoring of exemption such pre-condition has been inserted in notification. In present case, Appellants failed to fulfill the condition. Accordingly, there is no infirmity in impugned order.

Relevant : CCE, New Delhi vs. Hari Chand Shri Gopal reported in .MANU/SC/0955/2010: 2010 (260) E.L.T. 3 (S.C.)


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