2010 (8) TMI 223 - AT - Central Excise

SSI exemption option from the middle of the year - appellant had paid duty at normal rate without availing Notification No. 38/97-C.E - they cannot be denied the benefit of Notification No. 9/98-C.E. w.e.f. 1-8-98, as the clearances effected at normal rate of duty during the period from 1-4-98 to 31-7-98 Exemption cannot be denied - appeal is allowed

Summary

Issues Involved:
1. Eligibility of the appellant to avail exemption under Notification No. 9/98-C.E. dated 2-6-98.
2. Interpretation and application of conditions under Notification No. 9/98-C.E.
3. Validity of the duty demand and penalty imposed by the Assistant Commissioner.

Issue-wise Detailed Analysis:

1. Eligibility of the Appellant to Avail Exemption under Notification No. 9/98-C.E. dated 2-6-98:
The appellant, a manufacturer of goods under specific sub-headings of the Central Excise Tariff, initially paid duty at the normal rate from 1-4-98 to 31-7-98. They later opted to avail the concessional duty rate under Notification No. 9/98-C.E. starting from 1-8-98. The Department contended that since the appellant paid duty at the normal rate during the initial period, they could not switch to the concessional rate mid-year. However, the Tribunal held that the notification did not prohibit opting for the exemption mid-year, provided the clearances made at the normal rate were included in the aggregate value of clearances for computing the limit of Rs. 50 lakhs.

2. Interpretation and Application of Conditions under Notification No. 9/98-C.E.:
The notification prescribed concessional rates for clearances up to Rs. 1 crore in the financial year 1998-99, with a 60% duty rate for the first Rs. 50 lakhs and 80% for the next Rs. 50 lakhs. The Tribunal noted that the notification allowed manufacturers to avail of the exemption mid-year, provided they included prior clearances in the aggregate value. The Tribunal referenced the case of Sonodyne Electronics Co. Pvt. Ltd. v. CCE, which supported the interpretation that clearances made prior to opting for the exemption should be included in the aggregate value for computing the limit.

3. Validity of the Duty Demand and Penalty Imposed by the Assistant Commissioner:
The Assistant Commissioner had confirmed a duty demand of Rs. 3,10,658 and imposed a penalty of Rs. 80,000, arguing that the appellant was ineligible for the concessional rate during August 1998 to March 1999. The Commissioner (Appeals) upheld this order. However, the Tribunal found that the appellant had correctly included the value of clearances made at the normal rate from 1-4-98 to 31-7-98 while computing the aggregate value for the concessional rate. Therefore, the Tribunal set aside the impugned order, holding that the appellant was entitled to the exemption under Notification No. 9/98-C.E. from 1-8-98.

Conclusion:
The Tribunal concluded that the appellant was eligible to avail the concessional duty rate under Notification No. 9/98-C.E. from 1-8-98, provided they included the value of prior clearances in the aggregate value. The duty demand and penalty imposed by the Assistant Commissioner were deemed incorrect and were set aside. The appeal was allowed, and the impugned order was overturned.

(Order pronounced in the open Court on 6-8-2010)