2008 (4) TMI 614 - AT - Central Excise

SSI exemption - Value of clearance - Computation of - Demand - Limitation, extended period - SSI exemption

Summary

Issues:
Classification of goods under Central Excise Tariff Act, 1985; Benefit of Notification No. 175/86 for financial years 1987-88 and 1988-89; Inclusion of clearances from leased premises in total value; Denial of benefit leading to demand of duty and penalty; Interpretation of clauses 3(a) and 3(b) of Notification No. 175/86; Appellants' contentions regarding separate entities and case laws; Invocation of extended period of limitation.

Analysis:
The judgment involves a dispute regarding the classification of goods under the Central Excise Tariff Act, 1985, and the eligibility of the appellants for the benefit of Notification No. 175/86 for the financial years 1987-88 and 1988-89. The appellants, engaged in manufacturing activities, declared their clearances below Rs. 150 lakhs for 1987-88 based on the aggregate value from all their manufacturing units. However, an audit revealed that clearances from leased premises were not included, leading to a total exceeding the threshold.

The appellants argued that the leased company should be considered a separate entity, not impacting their eligibility for the exemption. They cited case laws and contended that the value of clearances from the leased premises should not be added to their turnover. However, the Tribunal held that the clearances from the leased premises must be included, as per the Notification's clauses, resulting in the appellants being ineligible for the exemption for 1988-89.

Regarding the invocation of the extended period of limitation, the Tribunal found that mere knowledge of the lease agreement was insufficient, as the Department lacked data on clearances. The appellants failed to provide evidence of informing the Department about correct figures, leading to the rightful invocation of the proviso to Section 11A(1) of the Central Excise Act, 1944.

Consequently, the Tribunal upheld the denial of the exemption for 1988-89, confirmed the duty demand, and reduced the penalty imposed on the appellants. The decision was based on the interpretation of Notification No. 175/86's clauses and the specific circumstances of the case, distinguishing it from the cited case laws. The judgment highlights the importance of accurate reporting and compliance with statutory provisions to avail of exemptions under Central Excise laws.