Hindustan Unilever Limited Vs Commissioner of Central Excise & Service Tax (CESTAT Kolkata)
CESTAT Kolkata held that rejection of application for fixation of special rate under notification no. 32/99-CE and notification no. 31/2008-CE to new industrial units set up in North-Eastern States is incorrect and are in violation of law.
Facts- The appellant are engaged in the manufacture of Oral Preparations, Cosmetics, Hair Care & Skin Care Preparations. On 20.11.1997, the Central Government announced an Industrial Policy, inviting entrepreneurs to set up new industrial Units in North-Eastern States and promised that such Units would be exempt from payment of central excise duty and income tax for a period of 10 years from their date of commencement of their commercial production.
In order to avail of the benefits, the appellant set up three factories at Doomdooma Industrial Estate in Tinsukia District of Assam State.
Value addition for all goods falling under Chapter 33 i.e. “Cosmetics & Toilet Preparations”, being manufactured by the Appellants, was fixed at 56%, at Sr. No. 3 of the Table under Para 2A of the Notification No. 32/99-CE, as amended by the said Notifications. In other words, the Appellants were entitled to exemption/refund of 56% of the total duty payable on the goods manufactured and cleared by them, subject to the amount paid from PLA.
The Appellants, in each of the financial year, claimed value addition ranging between 62% and 83%. The Appellants filed separate applications for fixation of special rate for each Unit financial year-wise for the disputed period, along with relevant documents, including certificates issued by Statutory Auditors.
However, the commissioner rejected the claims on the grounds that the Balance Sheet, based on which the computation of value addition done by the Appellant, is not in conformity with Section 211of Companies Act, 1956; that the gross sales value (GSV) arrived at by the Appellants by multiplying the quantity of the goods manufactured and cleared from the Unit with All India Average Rate of sales realization at the Depots. The GSV represents an amount which relates to goods manufactured by the number of manufacturing units located at different parts of the country and not solely the Units in NESA. Therefore, it is incorrect, as the actual cost of production of the said Units is not considered; that as per Explanation to Para 4 of Notification No.32/99-CE, the computation of value addition does not include work-in-progress.
Conclusion- Held that for the purpose of calculation of actual value addition, as per the prescribed format, relevant figures from the audited Balance Sheet have been extracted, which has been enclosed along with each application. Hence, it is not a case that a separate Balance Sheet was prepared for the purpose of special rate fixation, as held by the adjudicating authority.
Held that the average rate of VAT at the rate of 5% is equalized the basis and the same is permissible for fixation of special rate. Hence, rejection of special rate of fixation, the applications cannot be rejected on that ground.
Held that the rejection of the applications of fixation of special rate by the adjudicating authority is not correct and are in violation of law.
FULL TEXT OF THE CESTAT KOLKATA ORDER
As all the appeals are having a common issue, therefore, all the appeals filed by the appellants are being disposed off by a common order.
2. The facts of the case are that the appellants are engaged in the manufacture of Oral Preparations, Cosmetics, Hair Care & Skin Care Preparations at their factories at Doomdooma Estate, Dist. Tinsukia, Assam.
2.1 On 20.11.1997, the Central Government announced an Industrial Policy, inviting entrepreneurs to set up new industrial Units in North-Eastern States and promised that such Units would be exempt from payment of central excise duty and income tax for a period of 10 years from the date of commencement of their commercial production. The Ministry of Industry notified the Industrial Policy on 24th December 1997. In order to aid industrial growth in various non-developed areas of the country, including north-eastern States, Central Govt. issued Notifications granting exemption from payment of central excise duty on the goods manufactured in such areas.
2.2 Accordingly, a Notification No.32/1999-CE dated 08.07.1999 was issued granting exemption from duty of excise or additional duty of excise equivalent to the amount paid from PLA, by way of refund of such duty paid from PLA, after exhausting the Cenvat credit balance.
2.3 In this regard, another Notification No.56/2002-CE and Notification No. 57/2002 both dated 14.11.2002 for Jammu & Kashmir, Notn. No. 56/2003-CE dated 10.06.2003 and Notification No.71/2003- CE dated 09.09.2003 for Sikkim, etc. were issued.
2.3 In order to avail of the benefits under the said Notifications, the appellants set up the following factories at Doomdooma Industrial Estate in Tinsukia District of Assam State:
(i) Unit No.1 in August 2001
(ii) Unit No.2 in April 2003
(iii) Unit No.3 in March 2013
The appellants were manufacturing the following goods in their Units:
