2004 (7) TMI 461 - AT - Central Excise

SSI Exemption - Clubbing of clearances - Departmental Clarification - Demand - Limitation - Penalty - Confiscation of Plant and Machinery

Summary

Issues:
Clubbing of production for determining benefit under SSI exemption Notification 175/86 as amended by 1/93; Duty demand on M/s. MPP under Section 11A; Consolidated penalties under Rules 173CP(1), 52A, 226, and 210 of the Central Excise Rules; Confiscation of plant and machinery; Interest demanded.

Clubbing of Production for Benefit Determination:
The appeals involved the clubbing of production to determine the benefit under the SSI exemption Notification. The adjudicator found that M/s. AA was a dummy unit while M/s. MPP was the main unit. Therefore, he ordered the turnover of M/s. MPP to be clubbed with M/s. AA to ascertain the benefit under the notification. This decision was based on factors like finance management control, mutuality in marketing, raw materials, and common advertisements. Consequently, duty demand was imposed on M/s. MPP under Section 11A, along with consolidated penalties and confiscation of plant and machinery.

Interpretation of Board Circulars:
The Tribunal analyzed the inter-relationship between M/s. MPP and M/s. AA in light of Board circulars dated 1-3-56 and 6/92 dated 29-5-1992. These circulars emphasized that if two firms have only some partners in common, each firm is entitled to a separate exemption limit. The Tribunal stressed that the Revenue cannot deviate from these instructions. The Tribunal also highlighted that the confiscation of partnership of M/s. MPP to Mr. Malsi T. Rita and Smt. Jayshree A. Rita while partners of M/s. AA are different, indicating that both firms should be entitled to separate exemptions. Therefore, the Tribunal set aside the decision to club the clearances of the two firms.

Penalties and Confiscation Issues:
The Tribunal addressed the imposition of consolidated penalties without specifying on whom the penalties were intended, leading to a lack of clarity in the order. Each rule has a separate maximum limit for penalties, and the Tribunal emphasized that penalties should be clearly attributed to the relevant party. As a result, the Tribunal found the consolidated penalties to be legally flawed and set them aside. Additionally, the Tribunal ruled that confiscation of plant and machinery was not warranted when no duty or penalty liabilities were upheld. The offer of redemption should have been split between M/s. MPP and M/s. AA, and as it was not, the Tribunal deemed the offer to be legally flawed and set it aside.

Conclusion:
In conclusion, the Tribunal found that the duty demands, penalties, confiscation orders, fines, and interest imposed were not sustainable based on the issues discussed. Therefore, the Tribunal set aside the orders on duty demands, penalties, confiscation, and redemption, ultimately allowing the appeals with consequential relief.

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