2008 (8) TMI 129 - AT - Central Excise

Area based exemption (Kutch) under Notification No. 39/2001-C.E. - new unit set up in the Kutch commencing the commercial production before 31-12-05 are entitled to the benefit of the said Notification since commercial production (of corrugated sheets) started before 31.12.05 exemption cannot be denied for subsequent emergence of a new product (boxes out of such corrugated sheets) using same plant and machinery exemption not deniable revenue s appeal rejected

Summary

Issues:
Refund of duty paid on corrugated boxes under the (Kutch) Area based exemption Notification No. 39/2001-C.E. dated 31-7-2001.

Analysis:
The dispute in the present appeal revolves around the refund of duty paid on corrugated boxes. The respondents, engaged in manufacturing excisable goods, were availing the benefit of the (Kutch) Area based exemption Notification. The issue arose when the original adjudicating authority rejected the refund claim for corrugated boxes, stating that production and clearance began after the cut-off date of 31-12-2005 specified in the Notification. However, the Commissioner (Appeals) accepted the respondent's argument that the exemption pertains to a new "unit" commencing commercial production by the specified date, not a new product. The Commissioner noted that corrugated boxes were downstream products of corrugated sheets made from the same plant and machinery installed before the cut-off date. The Commissioner found no fault in the respondent's claim that commercial production had commenced before the specified date, supported by evidence of orders received and production records.

The Commissioner's decision was further supported by a clarification from the Central Board of Excise & Customs, emphasizing that where a unit starts producing new products after the cut-off date using existing plant and machinery without additions, the benefit of the exemption would still apply. This clarification reinforced the view that subsequent production of boxes from sheets manufactured before the cut-off date did not disqualify the respondent from the Notification's benefit. The Tribunal highlighted that the Revenue cannot contest the Board's clarifications, and even without such clarification, the Commissioner's decision was deemed appropriate. The Tribunal emphasized that manufacturing boxes from pre-existing sheets did not constitute a new product, maintaining the respondent's eligibility for the exemption. Consequently, the appeals filed by the Revenue were rejected, affirming the Commissioner (Appeals) decision in favor of the respondent.

In conclusion, the judgment clarifies the application of the (Kutch) Area based exemption Notification to products manufactured before and after the specified cut-off date, emphasizing the continuity of production using existing plant and machinery. The decision underscores the importance of considering the manufacturing process and plant setup in determining eligibility for duty exemptions under specific Notifications.