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2025 (5) TMI 1008 - AT - Central ExciseRefund claim - eligibility for exemption under N/N. 33/99-C.E. dated 08.07.1999 based on substantial expansion of installed capacity exceeding 25% after 24.12.1997 - delay of approximately seven years in filing the exemption/refund claim. Refund claim - eligibility for exemption under N/N. 33/99-C.E. dated 08.07.1999 based on substantial expansion of installed capacity exceeding 25% after 24.12.1997 - HELD THAT - The respondent has claimed the benefit of Notification No. 33/1999-C.E. dated 08.07.1999 under Para 2(a) read with Para 3(b) of the said Notification. The claim of the respondent was verified by the Ld. Assistant Commissioner of Central Excise Digboi on 17.06.2008 and it was found that the percentage of increase in installed capacity by way of substantial expansion during the post expansion period was made by way of (i) withering troughs 25.39% and (ii) fermenting floor 88.88%. Thus the respondent had fulfilled the condition prescribed in the Notification No. 33/99-C.E. dated 08.07.1999 and thus the ld. adjudicating authority found the respondent to be eligible for the refund and sanctioned the refund and the said order has been upheld by the Commissioner (Appeals). However the Revenue has objected to it stating that the refund claims in these cases were filed by the respondent after a lapse of seven years from the date of eligibility to Notification No. 33/99-C.E. dated 08.07.1999 which is not a reasonable period as contended. The respondent have fulfilled the condition of 25% substantial expansion in the capacity and have also filed the statement of duty paid by way of RT-12 / ER-1 every month. Accordingly it is observed that they have fulfilled both the conditions stipulated in Notification No. 33/99-C.E. dated 08.07.1999 for availing the benefit. Delay of approximately seven years in filing the exemption/refund claim - HELD THAT - The Tribunals in a number of cases namely (1) Commissioner of Central Excise vs Vinay Cement Limited 2001 (4) TMI 723 - CEGAT KOLKATA ; (2) Commissioner of Central Excise vs Napuk Tea Estate 2006 (7) TMI 554 - CESTAT KOLKATA and (3) Dhanseri Tea Estate vs. Commissioner of Central Excise 2011 (7) TMI 760 - CESTAT KOLKATA have held that statements of duty paid submitted in RT-12 returns amount to full compliance of Clause 2(a) of the said notification and refund of duty paid cannot be denied for want of separate claim for refund of duty paid. In an identical case of disposing multiple Central Excise appeals including C.Ex.App. 8/2016 MK Jokai Agri Plantations Limited Anr. vs. Commissioner of Central Excise Dibrugarh 2018 (9) TMI 566 - GAUHATI HIGH COURT the Division Bench of the Hon ble Guwahati High Court has held that an incumbent having been once found to be eligible for exemption and refund of duty paid denial of benefit of exemptions and refund on the ground of delay would cause grave injustice which cannot be permitted. Conclusion - The respondent has fulfilled the condition of 25% expansion in capacity as has been verified by the adjudicating authority. Secondly the respondent has been filing their RT-12 / ER-1 Returns indicating their duty liability. In these circumstances by relying on the decision of the Hon ble Gauhati High Court referred it is held that the respondent has fulfilled the conditions prescribed in the Notification No. 33/99-C.E. dated 08.07.1999 and the refund has been rightly sanctioned to the respondent. The lower authorities have rightly allowed the refund claims filed by the respondent - appeal of Revenue dismissed.
Two appeals filed by the Revenue concern the eligibility and sanction of exemption and refund claims under Notification No. 33/99-C.E. dated 08.07.1999 by a tea manufacturing unit that underwent substantial expansion after 24.12.1997. The core legal questions considered are:
Issue-wise detailed analysis: 1. Eligibility for exemption under Notification No. 33/99-C.E. dated 08.07.1999 based on substantial expansion The relevant legal framework is Notification No. 33/99-C.E., which grants exemption to industrial units that either commenced commercial production on or after 24.12.1997 or existing units that undertook substantial expansion by increasing installed capacity by not less than 25% on or after that date. Clause 2(a) requires submission of monthly statements of duty paid to the Assistant Commissioner by the seventh of the following month, with Clause 2(b) mandating refund after verification. Clause 3(b) defines eligibility for existing units that substantially expanded capacity. The adjudicating authority physically verified the factory on 17.06.2008 and found increases in installed capacity of 25.39% in withering troughs and 88.88% in fermenting floor, thereby satisfying the 25% threshold. The expansion was completed on 19.03.1998, with commercial production commencing on 22.03.1998. The Commissioner (Appeals) upheld these findings, noting that the respondent had been filing monthly RT-12/ER-1 returns and declarations under Rule 57T of the Central Excise Rules, 1944, which constituted compliance with the notification's procedural requirements. The respondent also produced a letter dated 23.04.2001 detailing the expansion and intention to claim exemption, which the Commissioner (Appeals) held the Department was duty-bound to verify. The Court relied on precedents from various tribunals and the Hon'ble Gauhati High Court, which held that filing monthly statements of duty paid suffices for compliance with Clause 2(a), and that denial of exemption/refund on procedural grounds, especially delay, causes grave injustice. The Court cited the decision in M.K. Jokai Agri Plantations Ltd. & ors. v. Commissioner of Central Excise and Service Tax, Dibrugarh, which emphasized that non-following of procedural requirements cannot deny substantive benefits and that exemption notifications should be liberally construed to promote industrial growth. Thus, the Court concluded that the respondent fulfilled the substantive and procedural conditions of the notification and was entitled to exemption and refund. 2. Delay in filing exemption/refund claim The Revenue contended that the claim was filed after a lapse of over seven years from the date of eligibility, which was beyond a reasonable period, citing Supreme Court decisions that emphasize timely claims for exemption/refund. The Revenue argued that the adjudicating authority and Commissioner (Appeals) erred in allowing claims after such delay. The respondent countered that the notification does not prescribe a specific time limit for filing refund claims and that the filing of monthly RT-12 returns constituted timely claims. The letter dated 23.04.2001 was argued to be a reminder rather than an initial claim. The respondent also submitted that the delay was attributable to change in management in 2005, who only then became aware of eligibility. The Court observed that the issue is no longer res integra, referring to the Gauhati High Court's ruling which held that denial of exemption/refund on the ground of delay is unjustified if substantive eligibility and procedural compliance via monthly returns are established. The Court emphasized the principle that procedural lapses should not defeat substantive benefits, particularly for notifications with a beneficent object. The Court accordingly rejected the Revenue's contention on delay, holding that the respondent's claim was valid and timely within the meaning of the notification. 3. Admission of additional evidence at appellate stage (letter dated 23.04.2001) The Revenue argued that the letter dated 23.04.2001 was additional evidence produced for the first time at the appellate stage, which the respondent had never produced before the original adjudicating authority. The Assistant Commissioner confirmed that neither the Divisional nor Range Office received this letter. The Revenue relied on Rule 5 of the Central Excise (Appeals) Rules, 2001, which restricts admission of additional evidence except in limited circumstances, and cited several tribunal decisions holding that additional evidence at appellate stage should be admitted sparingly. The respondent submitted that the letter was not a new claim but a narration of claims already lodged via monthly returns, and that the Department did not dispute the existence or contents of the letter, only its receipt. The letter was argued to be a reminder to the Department to act on claims already made. The Commissioner (Appeals) was empowered under Rule 5 to admit additional evidence and did so to correct the record, as the original order did not refer to the letter. The Court accepted that the letter did not introduce new claims but corroborated existing claims established through monthly returns and declarations. The Court found no legal or factual error in the Commissioner (Appeals) admitting and relying on the letter, especially since the Department did not contest the letter's authenticity or contents. The Court held that the Department's objection on non-receipt was insufficient to deny the letter's evidentiary value. 4. Sanctioning refund without awaiting decision on stay petition The Revenue contended that the refund sanctioning authority erred in sanctioning refund of approximately Rs. 61.93 lakhs without waiting for the CESTAT's decision on the stay petition filed by the Department. The respondent relied on the Supreme Court decision in Atmaram Properties (P) Ltd. vs Federal Motors Pvt. Ltd., which held that mere filing of an appeal does not operate as a stay on the order appealed against unless specifically granted by the appellate authority. The Court emphasized that the appellate court has discretion to grant or refuse stay, considering sufficient cause. The Court found the respondent's submission legally sound and held that sanctioning refund prior to stay order was not per se illegal or improper. The Department's remedy was to seek stay, which was discretionary and not automatic. 5. Procedural compliance under Notification No. 33/99-C.E. and necessity of formal refund claim The Commissioner (Appeals) and the Court noted that the notification requires submission of monthly statements of duty paid (RT-12 returns) but does not mandate filing a separate refund claim. Several tribunal decisions confirm that monthly returns constitute substantial compliance with procedural requirements and entitlement to refund cannot be denied for absence of a formal separate claim. The Court observed that the respondent had consistently filed monthly RT-12/ER-1 returns and declarations detailing machinery and capacity expansion, which fulfilled the procedural conditions. The Department never disputed the filing of these returns. The Court held that the Revenue's argument for denial of refund on procedural grounds was untenable and that the substantive benefit of exemption and refund must prevail. Treatment of competing arguments and conclusions: The Revenue's primary arguments pertained to delay in claim filing, inadmissibility of additional evidence at appellate stage, and procedural non-compliance. The respondent rebutted with factual evidence of substantial expansion verified by authorities, consistent filing of monthly returns, and reliance on judicial precedents supporting liberal construction of exemption notifications and acceptance of procedural compliance through returns. The Court, after thorough examination of facts, documents, and precedents, found the respondent's contentions legally and factually sound. It rejected the Revenue's objections concerning delay and additional evidence, and upheld the entitlement to exemption and refund. The Court emphasized the principle that procedural lapses should not defeat substantive rights, especially in notifications intended to promote industrial growth. Significant holdings: "A bare reading of the above quoted clauses of the Notification makes it clear that the appellant was first required to prove its eligibility for notified exemptions by establishing that the three industrial units had undertaken substantial expansion of not less than 25% on or before 24 day of December, 1997 and then file every month's statement of duty paid from the account current to the Assistant Commissioner. And, if these two conditions were fulfilled, the appellant was entitled to refund of the amount of duty paid." "The Notification nowhere mandates the manufacturer to submit a separate claim for refund of duty paid. The appellant having been once found to be eligible for exemptions and refund of duty paid, denial of benefit of exemptions and refund on the ground of delay, in our considered opinion, will cause grave injustice which cannot be permitted." "It is well settled law that non-following of procedural requirement cannot deny the substantive benefit, otherwise available to the assessee. Also exemptions made with a beneficent object like growth of Industry in a Region have to be liberally construed and a narrow construction of the Notification which defeats the object cannot be accepted." "Statements of duty paid submitted in RT-12 returns amounts to full compliance of Clause 2(a) of the Notification and refund of duty paid cannot be denied for want of separate statement of such duty paid." "The Commissioner (Appeals) is justified and is sustainable being based on materials on record in admitting the letter dated 23.04.2001 as corroborative evidence and the Department's objection on non-receipt is insufficient to deny its evidentiary value." "Mere preferring of an appeal does not operate as stay on the decree or order appealed against nor on the proceedings in the Court below. A prayer for the grant of stay has to be specifically made and is discretionary." The Court ultimately upheld the orders of the Commissioner (Appeals) sanctioning the refund and dismissed the Revenue's appeals, confirming that the respondent had complied with the substantive and procedural requirements of Notification No. 33/99-C.E. dated 08.07.1999 and was entitled to the exemption and refund despite the delay in formal claim submission.
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