2015 (1) TMI 1214 - AT - Central Excise

Duty demand - Job work by SSI units - whether the non-fulfillment of conditions of Notification No. 214/1986-CE as also of Notification No. 83/1994-CE dated 11.04.94 can be held to be a procedural violation so as to extend the benefit of the Notification to the appellant - Invocation of extended period of limitation - Held that - Benefit of Notification No. 121/1994 which prescribes a condition of following Chapter-x procedure for the purpose of claim of exemption the Hon ble Supreme Court observed that the conditions prescribed therein are substantative and the procedures so envisaged in terms of Notifications are mandatory requirements to claim the benefit of exemption. The object of such prerequisites is to ensure that the goods are not diverted or utilized for some other purposes under the guise of exemption. While referring to the compliance of such condition the Hon ble Supreme Court observed that test for determining applicability of substantial compliance doctrine is to examine the fact as to whether requirement relates to substance or essence of the Statute and if so strict adherence to such requirements is a precondition to give effect to the doctrine. By differentiating between the mandatory and directory condition of the Notification it was observed that provisions of substantive character are built in with certain specific policy objectives have to be distinguished from the provisions which are merely procedural and technical nature. Demand in the first case stands issued by invoking longer period of limitation. As during the relevant period there were some of the decisions laying down that the benefit of Notification in question can be extended even if the conditions were not satisfied we hold that no specific suppression or mis-statement with malafide intent can be prima facie attributed to the appellants so as to invoke the longer period of limitation. We are informed that an amount of around 6, 00, 000/- may fall within the limitation period. However two demands to the extent of around 1.75 crores and 46 lakhs fall within the limitation period. - Partial stay granted.

Issues Involved:
1. Confirmation of demand invoking extended period for a specific period.
2. Non-payment of excise duty on manufactured goods.
3. Violation of conditions of Notifications related to job work basis manufacturing.
4. Applicability of Notification benefits based on fulfillment of conditions.
5. Legal obligation to pay excise duty on manufactured goods.
6. Interpretation of substantive conditions of Notifications.
7. Invocation of longer period of limitation for demand.
8. Requirement of deposit amount due to confirmed demands.

Detailed Analysis:

1. The judgment involves the confirmation of demand amounting to approximately Rs. 22.68 crores for the period 2008-2012 by invoking the extended period. Two other demands of around Rs. 1.75 crores and Rs. 45 lakhs were within the limitation period. Additionally, a penalty was imposed on the Director in a separate appeal.

2. The appellant, engaged in manufacturing Printed Circuit Boards (PCBs), did not pay excise duty on goods manufactured on job work basis where raw materials were supplied by customers. Investigations revealed non-payment of duty, and the appellant was found to be in violation.

3. The proceedings were initiated against the appellants for non-compliance with the conditions of Notifications allowing excisable goods' manufacture on job work basis without duty payment. The lower authorities confirmed demands and penalties due to non-fulfillment of notification conditions.

4. The legal issue revolved around whether non-fulfillment of notification conditions could be considered a procedural violation to extend the benefit of the notification to the appellant. The Supreme Court's decision emphasized the mandatory nature of such conditions for claiming exemption benefits.

5. The judgment highlighted that the substantive conditions of the Notifications required fulfillment to ensure excise duty payment on goods manufactured. Non-compliance resulted in denial of benefits, as established by legal precedents.

6. Despite some earlier decisions suggesting benefits could be extended without full compliance, the Tribunal emphasized the importance of adhering to substantive conditions for claiming exemption benefits under the Notifications.

7. Due to the absence of evidence indicating malafide intent or financial hardship, the appellant was directed to deposit a specific amount within a stipulated period to stay the recovery of the balance dues, interest, and penalties.

8. The judgment concluded by requiring the appellant to deposit Rs. 2,25,00,000 collectively for the confirmed demands within twelve weeks, with the provision for waiver and stay of recovery subject to the deposit.

This detailed analysis covers the issues involved in the judgment, focusing on the legal aspects and interpretations relevant to the case.

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