2010 (1) TMI 586 - AT - Central Excise

SSI Exemption Brand name of other used by appellant - Appellate Authority further held that given that facts that MPL is not entitled to the benefit of the Notification exempting SSI - that turnover was computable on the basis of records seized in the course of search - deliberate suppression of fact without seeking central excise registration - proceeding never became time barred for suppression of fact unearthed by search Held that - Plastic moulded chairs a tools were covered under Ch. Sub Heading No. 9403.00 of CETA, 1985 (under Ch. Heading No. 9403 70.00 w.e.f. 1-3-2005), and were chargeable to Central Excise duty and the Appellant not being found to be eligible for SSI exemption as the goods manufactured and cleared by it was affixed with brand name of others, it was rightly made liable to duty u/s 11A of the Act as well as levy of penalty u/s 11AC of the Act. No reduction in penalty is permissible since intention to evade duty was proved in this case calling for such levy of penalty to be equal to the amount of duty evaded irrespective of part of duty paid before issuance of show cause notice - Appeal of the assessee is dismissed and Revenue appeal is allowed.

Summary

Issues Involved:
1. Use of brand name "Maniyar" and eligibility for SSI exemption under Notification No. 8/2003.
2. Classification and confiscation of goods under Central Excise Tariff Act, 1985.
3. Liability to pay Central Excise duty and penalty under Section 11AC of the Central Excise Act, 1944.
4. Applicability of limitation under Section 11A of the Central Excise Act, 1944.
5. Appropriateness of penalties imposed on individuals involved.

Issue-wise Detailed Analysis:

1. Use of Brand Name "Maniyar" and Eligibility for SSI Exemption:
The learned Commissioner (A) held that the brand name "Maniyar" belonged to Maniyar Plast Ltd., Jalgaon, and was used by the appellant, thereby establishing a connection in the course of trade between the brand name and the products manufactured by the appellant. Consequently, the appellant was disentitled to the benefit of the Notification exempting small-scale industries (SSI). The Tribunal confirmed that the appellant had manufactured and cleared goods carrying the brand name "Maniyar," which belonged to another entity, thus invalidating the claim for SSI exemption under Notification No. 8/2003.

2. Classification and Confiscation of Goods:
The goods, specifically plastic moulded chairs, baby chairs, and stools, were classified under Chapter Sub-Heading No. 9403.00 up to 28-2-2005 and under 9403.70.00 w.e.f. 1-3-2005 of the Central Excise Tariff Act, 1985. The Tribunal upheld the confiscation of "Maniyar" brand plastic chairs, baby chairs, and stools valued at Rs. 13,98,288/- under Rule 25 of the Central Excise Rules, 2002, but allowed redemption on payment of a fine of Rs. 1,00,000/-.

3. Liability to Pay Central Excise Duty and Penalty:
The appellant was found liable to pay an amount of Rs. 46,30,026/- towards CENVAT and Rs. 75,722/- towards Education Cess under Section 11A(1) of the Central Excise Act, 1944. The Tribunal confirmed the imposition of a penalty equal to the amount of duty evaded under Section 11AC of the Act, rejecting any reduction in penalty despite the appellant having paid Rs. 10 lakhs before the issuance of the show cause notice.

4. Applicability of Limitation:
The Tribunal agreed with the lower authorities that the proceedings were not time-barred under Section 11A of the Act due to the positive act of suppression of facts by the appellant. The investigation revealed deliberate suppression and abuse of the process of law with the intent to evade duty liability.

5. Appropriateness of Penalties Imposed on Individuals:
Penalties were imposed on individuals involved, including Rs. 25,000/- on the Ex-Manager and Rs. 50,000/- on the Authorized Signatory of the appellant under Rule 26 of the Central Excise Rules, 2002. The Tribunal upheld these penalties, recognizing the roles played by these individuals in the contraventions.

Conclusion:
The Tribunal dismissed the appeal of the assessee and allowed the Revenue's appeal, reversing the first appellate authority's decision to reduce the penalty under Section 11AC of the Act. The Tribunal confirmed the adjudication order in its entirety, including the classification, confiscation, duty liability, and penalties imposed, emphasizing the deliberate suppression of facts and the intent to evade duty by the appellant.