2010 (2) TMI 621 - AT - Central Excise

SSI Exemption - appellants file declaration and sent under Postal Certificate to the concerned Assistant Commissioner DR submitted that communication by way of certificate of posting cannot be taken as conclusive proof - the Commissioner has held that there was no declaration in accordance with the provisions of law comprised under the said notification - clearly required submission of declaration prior to availment of the benefit under the notification Held that - compliance of condition cannot be by mere sending a declaration under Postal Certificate, but it need to be submitted to the concerned officers as he was empowered to call for further information or documents as may be necessary to get himself satisfied about the claim made by the manufacturer

Issues Involved:
1. Invocation of the extended period of limitation.
2. Entitlement to benefit under Notification No. 4/2006-C.E.
3. Legality of the second show cause notice for the same period.
4. Imposition of penalty on the Director.

Detailed Analysis:

1. Invocation of the Extended Period of Limitation:
The appellants challenged the invocation of the extended period of limitation, arguing that the claim was partly time-barred. The court noted that the period involved was from July 2006 to January 2008, with the first show cause notice issued on January 9, 2008, and the second on May 15, 2008. The first show cause notice was related to the failure to submit the required declaration under Notification No. 4/2006-C.E. The court emphasized that the manufacturer must make a declaration to the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise regarding the installed capacity before availing of the exemption. The appellants contended they had sent the declaration under Postal Certificate, but the court held that mere sending of a declaration under Postal Certificate does not constitute compliance, as the declaration must be submitted to the concerned officer for verification. Consequently, the court found that the extended period of limitation was validly invoked due to the appellants' failure to submit the required declaration in accordance with the notification.

2. Entitlement to Benefit under Notification No. 4/2006-C.E.:
The appellants argued that they were entitled to the benefit of the notification as the brand name 'Kamdhenu' was assigned to them by Kamdhenu Ispat Ltd. The court examined the explanation clause of condition 1(iii) of the notification, which defines a "brand name" as a name used in relation to a product to indicate a connection in the course of trade between the product and the person using the name. The court found that 'Kamdhenu Cement' was indeed a brand name of Kamdhenu Ispat Ltd., and the agreement between the appellants and Kamdhenu Ispat Ltd. did not change this fact. The court held that the use of the brand name 'Kamdhenu' by the appellants disqualified them from claiming the benefit under the notification, irrespective of the assignment agreement.

3. Legality of the Second Show Cause Notice:
The appellants contended that the Commissioner could not confirm the demand based on the second show cause notice for the same period. The court differentiated between the two show cause notices, noting that the first was related to the failure to submit the declaration, while the second was about the use of the brand name of another person. The court cited the case of Siddharth Tubes Ltd., which held that a show cause notice cannot be issued for the same issue and period twice on different grounds. However, the court found that the two show cause notices in this case were issued for different issues, and therefore, the second show cause notice was valid.

4. Imposition of Penalty on the Director:
The court reviewed the imposition of a penalty of Rs. 10,00,000 on the Director. It found no justifiable reason for such a high penalty and considered the facts and circumstances of the case. The court reduced the penalty imposed on the Director to Rs. 50,000, deeming it a justifiable amount.

Conclusion:
The court upheld the demand for duty and interest, as well as the imposition of penalty against the company. However, it reduced the penalty imposed on the Director to Rs. 50,000. The appeals were disposed of accordingly.

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