2017 (3) TMI 1592 - AT - Central Excise

SSI exemption - clubbing of clearances - failure to comply with stipulated pre-requisite - Held that - On a perusal of the impugned order it is seen that there is a finding that the two units are independent and separately eligible for the said exemption. This finding has not been controverted in the grounds of appeal of Revenue which has merely relied upon the absence of declaration to deny the exemption. Declaration is merely an intimation of eligibility for the exemption. In the instant case, that is not in doubt and to deny the benefit of the exemption would be a denial of the substantive intent of the legislature on technical grounds - appeal dismissed - decided against Revenue.

Summary

Issues:
- Confirmation of demand for recovery of duty under section 11A of Central Excise Act, 1944
- Imposition of penalty under section 11AC of the Central Excise Act, 1944
- Imposition of penalty on the proprietor under rule 26 of the Central Excise Rules, 2002
- Eligibility of benefit of threshold exemption by the respondent

Confirmation of Demand and Imposition of Penalties:
The dispute in this case revolves around the confirmation of demand for the recovery of duty under section 11A of the Central Excise Act, 1944, along with interest and the imposition of penalties under sections 11AC of the Act and rule 26 of the Central Excise Rules, 2002. The Commissioner of Central Excise (Appeals) limited the demand to a specific amount, considering the benefit of exemption available to small scale industries under a particular notification. However, the Revenue appealed against this decision. The issue was whether the appellant was eligible for the benefit of the exemption and whether the decision of the Hon'ble Supreme Court in a previous case had any bearing on this matter.

Eligibility of Benefit of Threshold Exemption:
The key issue in this case was the eligibility of the respondent for the benefit of the threshold exemption. The Revenue argued that the exemption was not available due to the absence of a prescribed declaration, citing a previous decision of the Hon'ble Supreme Court. However, it was found that the two units in question were independent and separately eligible for the exemption. The grounds of appeal by the Revenue did not contest this finding but focused on the absence of the declaration. It was emphasized that the appellant, being a small scale unit, met the criteria for the exemption, and the declaration was merely an intimation of eligibility. Denying the benefit of the exemption on technical grounds would go against the legislative intent. Consequently, the appeal of the Revenue was dismissed, affirming the eligibility of the appellant for the exemption.

This judgment highlights the importance of properly assessing eligibility criteria for exemptions and the significance of legislative intent in interpreting such provisions. The decision underscores the need to consider the substantive aspects of the law rather than relying solely on technicalities. It also emphasizes the independence of units in determining eligibility for exemptions and the implications of failing to comply with prescribed requirements.