2011 (7) TMI 359 - AT - Central Excise

SSI exemption - determination of aggregate value of clearances - exclusion of exempted goods - calculation mistakes - matter remanded back to Commissioner of Central Excise to requantify the demand of duty after rectifying all errors and mistakes referred to herein-before and after giving the assessee a reasonable opportunity of adducing evidence in support of their contention that some of the readymade garments and sarees cleared from the shops on and after 1.4.2001 were part of the stock received in the shops from the factory on or before 31.3.2001 and hence not includible in the aggregate value of clearances for purposes of para 3 of Notification 8/2001-CE ibid. Needless to say that, on the limited surviving disputes, a reasonable opportunity of being heard should also be given to the assessee.

Summary

Issues:
Demand of duty and penalty for the period from 1.4.2001 to 8.3.2002; Interpretation of Exemption Notification No.12/2001-CE dated 1.3.2001 and SSI Exemption Notification No.8/2001-CE; Calculation errors in the order for the financial year 2001-02; Inclusion of stock transferred from factory to shops in the aggregate value of clearances.

Analysis:
The appeal pertains to a demand of duty and penalty against the assessee for the period from 1.4.2001 to 8.3.2002. The dispute arose as the assessee, a small scale industrial unit, claimed exemption from registration and duty payment. The investigation revealed that the value of clearances exceeded the limit under the SSI Exemption Notification. The assessee contended that certain goods were chargeable to a 'nil' rate of duty under Notification No.12/2001-CE, thus not includible in the aggregate value of clearances. The adjudicating authority, however, rejected this claim, leading to the confirmation of the duty demand under the first show-cause notice dated 6.3.2003.

Upon review, the Tribunal found that the determination of the aggregate value of clearances did not consider Exemption Notification No.12/2001-CE, which provided for duty exemption for specific goods. The Tribunal noted that the clearances of readymade garments and sarees from the factory in April 2001, whether on payment of duty or not, should be part of the aggregate value of clearances. However, calculation errors were identified in the order for the financial year 2001-02, necessitating rectification.

Regarding the inclusion of stock transferred from the factory to the shops, the Tribunal observed a lack of documentary evidence to support the claim made by the assessee. The Tribunal allowed the appeal by remanding the case to the Commissioner for a fresh quantification of the duty demand, rectification of errors, and an opportunity for the assessee to provide evidence regarding the exclusion of certain goods from the aggregate value of clearances.

It was emphasized that the interest payable on the correct duty amount under Section 11AB of the Central Excise Act and the penal liability under Section 11AC needed to be determined afresh, with the assessee given a reasonable opportunity to present their case.