2010 (11) TMI 299 - AT - Central Excise

Waiver of pre-deposit - SSI exemption - Calculation of value of clearances - Clearances to 100% EOUs but not against CT-3 certificate and hence the same cannot be treated as exempt from duty under Notification No. 22/03-C.E. dated 31-3-03 and the value of these clearances also would have to be included while calculating the value of clearances during the year - Find that clearances made on job work basis have also not been counted for determining the value of clearances during each year - Prima facie it appears that while during each of the year the appellant had crossed the threshold limit of full duty exemption - The appellant have not been able to establish prima facie case in their favour and hence this is not the case for total waiver from the requirement of pre-deposit - No financial hardship has been pleaded - The appellant therefore are directed to deposit the entire duty demand.

Issues Involved:
Application for waiver from the requirement of pre-deposit of duty demand, penalty imposed under Section 11AC, misuse of SSI exemption, evasion of duty, clearance to 100% EOUs without payment of duty, value of clearances for home consumption, duty short paid, imposition of penalty, compliance with exemption conditions, prima facie case for waiver.

Analysis:

1. Waiver from Pre-Deposit:
The appellant sought waiver from pre-deposit of duty demand, interest, and penalty. The appellant argued that the value of clearances to 100% EOUs should be deducted from the total value of clearances for home consumption. They contended that non-production of CT-3 certificate for EOUs was a procedural lapse and should not deny the benefit of duty exemption. The appellant also claimed that clearances under parallel invoices were not clandestine and had a strong prima facie case in their favor. However, the department opposed the waiver, citing substantial clearances under parallel invoices, non-production of CT-3 certificates, and duty short paid. The Tribunal found that the appellant failed to establish a prima facie case for total waiver and directed them to deposit the entire duty demand within eight weeks.

2. Misuse of SSI Exemption and Evasion of Duty:
The appellant, engaged in furniture manufacturing, availed SSI exemption under Notification No. 8/2003-C.E. The Central Excise officers found evidence of misuse of the exemption, including the use of parallel invoice books for clearances without duty payment. The appellant's authorized signatory admitted to using invoices without printed serial numbers for clearances. The department alleged that clearances to 100% EOUs were not against CT-3 certificates, making them liable for duty. The Tribunal noted that the appellant had not included certain clearances in the value for home consumption, leading to duty evasion.

3. Imposition of Penalty:
The Additional Commissioner confirmed the duty demand, interest, and imposed a penalty under Section 11AC. The Commissioner (Appeals) upheld this decision, leading to the appellant's appeal. The department argued that the appellant had substantial clearances without duty payment and had not complied with exemption conditions. The Tribunal found that the appellant had crossed the threshold limit for duty exemption and had not paid the full duty amount, leading to the imposition of penalty and interest.

4. Compliance with Exemption Conditions:
The Tribunal emphasized the strict compliance required for duty exemption under Notification No. 22/03-C.E. The failure to produce CT-3 certificates for clearances to 100% EOUs rendered those clearances ineligible for exemption. The Tribunal referred to the Supreme Court judgment emphasizing the strict adherence to exemption conditions for availing benefits. Additionally, clearances made on job work basis were not considered in calculating the value of clearances, leading to non-compliance with exemption conditions.

In conclusion, the Tribunal denied the appellant's request for total waiver, directing them to deposit the entire duty demand within a specified period. The decision highlighted the importance of compliance with exemption conditions and the consequences of duty evasion and non-payment.

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