2016 (12) TMI 1679 - AT - Central Excise

SSI exemption - confiscation of goods on the ground that certain goods not covered by the exemption notification - Held that - since the appellant is otherwise eligible for SSI exemption they were not required to obtain any registration. One of the item was not excluded from the exemption notification however the appellant was of bona fide belief that there unit itself is exempted under SSI exemption. In our opinion bona fide belief cannot be doubted for the reason that except the aforesaid goods all other goods were under exemption. Just because the exemption notification is not applicable on one particular product the said goods lying within the factory should not be confiscated - appeal allowed.

Summary

Issues:
1. Confiscation of goods under Central Excise Rules, 2002 due to alleged non-entitlement for SSI exemption.
2. Imposition of redemption fine and penalty under Central Excise Act, 1944 and Central Excise Rules, 2002.
3. Appeal against the Order-in-Original before the Appellate Tribunal CESTAT Mumbai.

The judgment revolves around the confiscation of goods by the department under Rule 25 of the Central Excise Rules, 2002, based on the belief that the goods were not eligible for Small Scale Industry (SSI) exemption. The appellant, engaged in manufacturing Brass Wire Bars falling under Chapter 74 of the Central Excise Tariff Act, 1985, was availing SSI exemption under Notification No. 8/2003-C.E. The department seized Brass Wire Bars exceeding 10 feet in length, alleging non-entitlement for exemption, leading to confiscation, imposition of a redemption fine of Rs. 50,000, and a penalty of Rs. 25,000. The Commissioner (Appeals) upheld the Order-in-Original, prompting the appellant to appeal before the Tribunal.

During the proceedings, the appellant did not appear, while the Assistant Commissioner (AR) representing the Revenue reiterated the findings of the impugned order. The Tribunal, after considering the submissions and records, noted that all goods manufactured by the appellant were covered under the SSI exemption, except for Brass Wire Bars exceeding 10 feet in length. Despite this exclusion, the appellant, in good faith, believed their unit was entirely exempted under SSI. The Tribunal emphasized that a bona fide belief, especially when most goods are exempt, should not lead to confiscation. It was determined that the goods, though not entitled to SSI exemption, should not be confiscated, and the appellant was directed to clear them by paying duty, as per the RG.1 Register. The Tribunal concluded that the case did not involve an attempt to clear goods clandestinely, and thus set aside the impugned order, allowing the appeal.

In a detailed analysis, the Tribunal highlighted the significance of bona fide belief, the scope of SSI exemption, and the principles governing confiscation under the Central Excise Rules, ultimately ruling in favor of the appellant and overturning the Order-in-Original. The judgment underscores the importance of interpreting exemption notifications in a manner that upholds the spirit of the law while considering the circumstances and beliefs of the parties involved.