2015 (2) TMI 1140 - AT - Central Excise

Eligibility for the Notification No. 62/95-C.E - suppression of relevant facts - non supply of goods shown trading of - bogus purchase of components for boxes from various traders - Held that - There was no response from the Department informing the appellant that they are not eligible for the Notification No. 62/95-C.E. On the contrary, from para 52 of the order-in-original passed by the Joint Commissioner, it is seen that another manufacturer M/s. Jai Forging and Stamping (P) Ltd., located in the same industrial area and falling under the same division was also manufacturing same goods for supply to Defence and in his case the benefit of exemption Notification No. 62/95-C.E., dated 16-3-1995 had been extended. Thus, from this it is clear that during the period of dispute, the Department were of the view that the private manufacturers manufacturing ammunition boxes and supplying to Defence are covered by Serial No. 16 of the Notification No. 62/95-C.E. and such supplies are fully exempt from duty. This is also clear from Superintendent (Technical) s letter dated 27-8-2001 to the Jurisdictional Superintendent of Central Excise. In view of these facts, the Department cannot allege that the appellant have suppressed the relevant facts from the Department. As regards, the allegation that the appellant during 2002-2003 had shown trading of goods worth about ₹ 33 lakhs and on inquiry, it was found that the persons from whom they claim to have produced those goods have not supplied, it is seen that the goods which are claimed to have been purchased from M/s. PH Steel, M/s. Jay Gee Steels, M/s. S.N. Traders and M/s. Ranji Products are the complete sets of components for boxes and the components of boxes like M.S. Brackets etc. The dispute in this case is in respect of the ammunition boxes manufactured by the appellant supplied to Ordnance factories of the Ministry of Defence in respect of which the appellant had informed the Department that they are availing of SSI exemption to the extent available and they would be availing the Notification No. 62/95-C.E. It is, therefore, not understood as to how the allegation that the appellant showed bogus purchase of components for boxes from various traders is relevant. - Decided in favour of assessee

Summary

Issues Involved:
1. Eligibility for duty exemption under Notification No. 62/95-C.E.
2. Alleged suppression of facts and wilful misstatement by the appellant.
3. Invocation of extended period under proviso to Section 11A(1) of the Central Excise Act, 1944.
4. Imposition of penalty under Section 11AC and Rule 26 of the Central Excise Rules, 2002.

Detailed Analysis:

1. Eligibility for Duty Exemption under Notification No. 62/95-C.E.:
The appellant firm, a manufacturer of ammunition boxes, claimed duty exemption under Notification No. 62/95-C.E. for goods supplied to the Defence. The Department contended that the exemption was applicable only to goods manufactured by a factory belonging to the Central Government. The appellant argued that they had informed the Department about their claim of exemption and relied on a similar case where another manufacturer was granted the exemption. The Tribunal found that during the disputed period, the Department had extended the exemption to similar manufacturers, indicating that the appellant's belief in their eligibility was bona fide.

2. Alleged Suppression of Facts and Wilful Misstatement:
The Department issued a show cause notice alleging that the appellant suppressed relevant facts and submitted fictitious invoices. The appellant countered that they had communicated their exemption claims to the Department and received no objections. The Tribunal noted that the Department had acknowledged similar exemptions for other manufacturers, which undermined the allegation of suppression. Additionally, the Tribunal found that the claim of bogus purchases from traders was irrelevant to the main issue of exemption eligibility.

3. Invocation of Extended Period under Proviso to Section 11A(1) of the Central Excise Act, 1944:
The duty demand for the period 2001-2002 and 2002-2003 was raised in 2005, invoking the extended period for recovery. The appellant argued that the extended period was not applicable as there was no suppression of facts. The Tribunal, referencing the High Court's directive, concluded that the conditions for invoking the extended period were not met, as the appellant had disclosed their exemption claims and there was no evidence of wilful suppression or misstatement.

4. Imposition of Penalty under Section 11AC and Rule 26 of the Central Excise Rules, 2002:
The Joint Commissioner had imposed penalties on the appellant firm and its partner under Section 11AC and Rule 26. The Tribunal previously set aside these penalties, noting the appellant's disclosure of exemption claims. Upon remand, the Tribunal reaffirmed that the absence of suppression or misstatement negated the basis for penalties. Consequently, the duty demand and penalties were deemed unsustainable.

Conclusion:
The Tribunal concluded that the appellant's claim for duty exemption under Notification No. 62/95-C.E. was made in good faith and supported by similar cases within the Department. The extended period for duty demand was not justified due to the lack of suppression or wilful misstatement. Consequently, the duty demand and penalties were set aside, and the appeals were allowed.