2007 (4) TMI 519 - AT - Central Excise

Summary

Issues:
The issues involved in the judgment are waiver of pre-deposit of duty amount, imposition of penalties on various parties, incorrect declaration of annual production of cement, denial of SSI exemption to job work units, clubbing of clearance without proper show cause notice, and interim stay on recovery of amounts.

Waiver of Pre-deposit and Penalties:
The appellants sought waiver of pre-deposit of duty amount and penalties totaling Rs. 46,51,762/- along with penalties on different parties. The penalty was imposed under Rule 209A of Central Excise Rules, 1944/Rule 26 of Central Excise (No. 2) Rules, 2001. The appellants argued that they were independently manufacturing the item on their accounts and the clubbing of clearance was not justified. They cited numerous judgments in their favor to set aside the demands.

Incorrect Declaration of Annual Production:
The appellants were charged with incorrectly declaring the annual production of cement to avail benefits under Notification No. 3/2001-C.E. It was found that the cement was manufactured through job workers using the brand name 'Chakra Gold' owned by the appellants. The Revenue did not propose the clubbing of clearance in the show cause notice, and the denial of SSI exemption without proper basis was challenged. The appellants were granted interim stay as there appeared to be a mistake by the Revenue in not stating the requirement to club the clearance value of the units with the main unit.

Denial of SSI Exemption to Job Work Units:
The job work units were denied the benefit of SSI exemption without issuing a show cause notice proposing the clubbing of clearance. The appellants argued that each unit was independently manufacturing the item and the clubbing of clearance was not justified. The Tribunal found that all units should have been issued show cause notices before clubbing clearances, and the denial of SSI benefit without proper notice was a strong case for the appellants.

Interim Stay on Recovery of Amounts:
The Tribunal granted an interim stay on the recovery of amounts, directing the Commissioner to file comments/replies before the next hearing date. The Revenue was instructed not to proceed with the recovery until the appeals were disposed of. The matter was scheduled for consideration on 28th May 2007.

Commissioner's Mistake and Imposition of Costs:
In a related matter, the Commissioner was questioned about the serious mistake in not properly issuing show cause notices, leading to revenue loss. The Commissioner was required to explain why costs should not be imposed on him for this lapse before the next hearing date.