2004 (1) TMI 534 - AT - Central Excise

SSI Exemption - Clubbing of clearances - Valuation - Depot sale price - Appeal - Grounds - Penalty - Imposition of

Summary

Issues Involved:
1. Clubbing of clearances for SSI exemption.
2. Valuation of goods for assessment.
3. Denial of SSI exemption on new grounds not alleged in the show cause notice.
4. Time-barred demand and penalty imposition.
5. Appeals filed by Revenue regarding duty and penalty imposition.

Detailed Analysis:

1. Clubbing of Clearances for SSI Exemption:
The show cause notices alleged that the clearances of Rajdoot Paints Ltd. (Rajdoot) should be clubbed with other SSI units to deny SSI exemption. The Commissioner, however, dropped the charges of clubbing of clearances but denied the benefit of SSI exemption on the new ground that the turnover of Rajdoot, including traded goods, exceeded the limits prescribed in the exemption Notification. The Tribunal observed that the Commissioner did not find that all units were one and the same or bifurcated to evade duty. Each unit was considered a manufacturer in its own right, selling its production to Rajdoot. Thus, the charge of all units being one was not confirmed.

2. Valuation of Goods for Assessment:
The Commissioner held that the value of goods should be determined based on the price at which they were sold from the depots, not the factory gate price. The learned Advocate argued that the factory gate price was accepted by the Revenue, and depot price should not be relevant. The Tribunal noted that the valuation aspect needed re-examination, particularly regarding the availability of factory gate price, the relationship between Rajdoot and other units, and whether the allegation of related persons was made in the show cause notices.

3. Denial of SSI Exemption on New Grounds Not Alleged in the Show Cause Notice:
The Commissioner denied SSI exemption on the new ground that the turnover of Rajdoot, including traded goods, exceeded the prescribed limits. The Tribunal found this reasoning unacceptable, as the Notification did not provide for including the value of traded goods in the aggregate value of clearances. The Tribunal held that Rajdoot and other units were eligible for SSI exemption, provided their individual clearances did not exceed the specified limits.

4. Time-Barred Demand and Penalty Imposition:
The learned Advocate argued that the demand was time-barred as the facts were within the Department's knowledge since 1991. The Commissioner did not uphold the clubbing of clearances, and the demand was confirmed on a new ground. The Tribunal agreed that the demand might be time-barred and directed re-examination of the valuation aspect, including the time-limit for demand and penalty imposition.

5. Appeals Filed by Revenue Regarding Duty and Penalty Imposition:
The Revenue's appeals questioned whether the Commissioner was right in demanding duty from the manufacturing unit only and not imposing penalties on Rajdoot. The Tribunal noted that the appeals were not filed against Rajdoot but against the units from whom duty was demanded and penalties imposed. Since no prayer was made against these units, the Tribunal found no merit in the Revenue's appeals and rejected them.

Conclusion:
The Tribunal held that all units were eligible for SSI exemption, provided their individual clearances did not exceed the specified limits. The valuation aspect required re-examination, and the demand might be time-barred. The appeals filed by Revenue were rejected due to lack of merit.