2008 (9) TMI 657 - AT - Central Excise

Demand - Limitation - SSI exemption - Held that - the appellant was under bona fide belief that such use would not result in denial of the benefit of Notification. As such, they cannot be held guilty of suppression - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of small scale exemption Notification due to the use of a foreign manufacturer's brand name.
2. Imposition of duty demand and penalties.
3. Dispute over the normal period of limitation for raising the demand.

Analysis:

1. The appellants, engaged in the manufacture of screen emulsions and screen auxiliaries, faced a challenge to the small scale exemption Notification they were availing due to using a foreign manufacturer's brand name. A show cause notice sought to deny the benefit, proposing a duty demand of Rs. 1,20,277. The impugned order confirmed the demand and imposed penalties on the appellants.

2. The appellants' representative acknowledged a precedent against them but argued that the demand was time-barred. The authorities rejected this argument citing the appellants' failure to declare the use of the brand name in their central excise documents. However, historical Tribunal decisions prior to the final ruling in 2000 had allowed the benefit of the Notification despite the use of a foreign brand name. The appellants' belief in compliance with these decisions was considered bona fide, leading to the setting aside of the impugned order on the grounds of time-bar.

3. The Tribunal's decision in the case of Nandevi Foot Care Ltd. established that when there are conflicting opinions in the field and an assessee acts on a bona fide belief based on such views, they cannot be accused of suppression. Applying this principle, the impugned order was overturned, and both appeals were allowed with relief for the appellants.

This judgment highlights the importance of considering the historical legal landscape and an assessee's bona fide belief in interpreting tax laws and determining the applicability of exemptions, especially in cases involving brand names and small scale exemptions under the Central Excise Tariff Act, 1985.