2007 (2) TMI 42 - AT - Central Excise

SSI Exemption Alleged that appellant had delayed in payment of duty amount and accordingly penalty and interest impose in it After considering all the facts allow the appeal and interest and penalty were set aside.

Summary

Issues:
1. Denial of SSI exemption benefit under Notification No. 9/2003-CE due to exceeding clearance value.
2. Validity of Circular issued by Regional Advisory Committee (RAC) regarding calculation of aggregate value for SSI exemption.
3. Applicability of penalty and interest for delayed payment.
4. Interpretation of Notification regarding exemption based on quantity or value of clearances.

Analysis:
Issue 1:
The appeals raised a common question of law and facts regarding the denial of the SSI exemption benefit under Notification No. 9/2003-CE due to the appellants' clearances exceeding Rs. 3 crores during 2002-2003. The show cause notice for short levy was issued under Section 11A without any plea of time bar. The Commissioner relied on Board's Circular No. 733/49/2003-CX, which required adding the value of exempted goods from the previous financial year to calculate the aggregate value of clearances. The learned Counsel argued for the appellants, citing a clarification from RAC meeting that exempted goods' value need not be considered for SSI exemption calculation. However, the Tribunal found no merit in this plea and upheld the demands.

Issue 2:
The learned Counsel contended that the Circular issued by RAC should be treated as binding under Section 37B of the Central Excise Act, but the learned JDR argued that only circulars issued by the Board of Central Excise under Section 37B are binding. The Tribunal agreed with the JDR, stating that the wrong circular issued by RAC cannot override the subsistence proviso of Section 11A. The Tribunal referenced a previous judgment to support its decision and rejected the argument regarding the wrong circular issued by RAC.

Issue 3:
Regarding penalty and interest for delayed payment of a small amount after the show cause notice, the Tribunal accepted the appellants' explanation of a bona fide error in calculation and waived the penalty and interest on that amount. The Tribunal confirmed the demand of duty but set aside the penalty and interest.

Issue 4:
In another appeal, the Tribunal addressed the interpretation of the Notification stipulating that clearances exempted from excise duty other than based on quantity or value should not be taken into account. The Tribunal rejected the appellant's plea based on a previous decision and upheld the penalty imposed. The Tribunal found no merit in the appeal and dismissed it.

In conclusion, the Tribunal upheld the demands for duty while considering the validity of Circulars, applicability of penalty and interest, and the interpretation of the Notification for exemption calculation based on clearances' quantity or value.