2002 (4) TMI 411 - AT - Central Excise

Summary

Issues:
1. Interpretation of SSI exemption under Notification No. 1/93-C.E.
2. Applicability of exemption to the unit manufacturing oxygen gas.
3. Liability for duty payment and penalties under Central Excise Act, 1944.

Interpretation of SSI exemption under Notification No. 1/93-C.E.:
The case involved the interpretation of the Small Scale Industries (SSI) exemption under Notification No. 1/93-C.E. The dispute arose when M/s. Bharat Steel Rolling Mills claimed exemptions under this notification for clearing oxygen gas at a 'NIL' rate of duty. The Excise Authorities contended that the SSI exemption was not available to the appellants due to clause 3(b) of the notification, which stated that the exemption was not applicable if the aggregate value of clearances of all excisable goods had exceeded Rs. 3 crores in the preceding financial year. The Tribunal analyzed the facts and concluded that the appellants were not eligible for the SSI exemption under the notification for the year 1995-96.

Applicability of exemption to the unit manufacturing oxygen gas:
The unit manufacturing oxygen gas, previously part of M/s. Ludhiana Steels Ltd., was taken over by M/s. Bharat Steel Rolling Mills. The Tribunal noted that since M/s. Ludhiana Steels Ltd. had exceeded Rs. 3 crores in clearances during the preceding financial year, the SSI exemption could not be extended to the oxygen gas unit under the notification. The Tribunal emphasized that the unit's clearances were linked to the overall turnover of M/s. Ludhiana Steels Ltd., making the appellants ineligible for the exemption.

Liability for duty payment and penalties under Central Excise Act, 1944:
The Deputy Commissioner of Central Excise confirmed the duty amounts and imposed penalties on the appellants, which were upheld by the Commissioner (Appeals). However, the Tribunal, while dismissing the appeals, set aside the penalties considering the wrongful interpretation of the exemption notification by the appellants as non-intentional. The Tribunal held that the penalties were unjustified in this case of misinterpretation and overturned the penalties of Rs. 50,000/- and Rs. 20,000/- imposed on the appellants. The appeals were dismissed, except for the modification in the penalty imposition.