2011 (2) TMI 597 - AT - Central Excise

SSI Exemption - Classification - Search and seizure - On 23-2-07, the factory was searched by the officers in presence of respondent s representative and it was found that the unit had two wire drawing machines and was engaged in the manufacture of copper wire but neither had obtained Central Excise Registration nor had given any declaration for availing the SSI exemption - Since in this case the goods being manufactured were excisable goods attracting Central Excise duty, the same would not automatically become exempt from duty under SSI exemption under Notification No. 8/03-CE, unless the assessee exercises the option for availing the same by filing the declaration to the department. In this case, admittedly no declaration had been made and on the contrary the respondent was not only not maintaining any record of production and sales but was also systematically destroyed the record of clearances of the finished goods - Decided against the assessee since penalty on the respondent firm has been imposed, separate penalty on Shri Shyam Sawaria is not called for and as such, the Commissioner (Appeals) s order setting aside the penalty on him is upheld - Revenue s appeal is partly allowed

Summary

Issues:
1. Central Excise duty liability on a wire drawing unit manufacturing copper wire.
2. Seizure of finished goods due to lack of Central Excise Registration and SSI exemption declaration.
3. Confiscation of seized goods and imposition of penalties.
4. Appeal against the order-in-appeal setting aside the penalties.

Central Excise Duty Liability:
The respondent, a wire drawing unit manufacturing copper wire, was found without Central Excise Registration and SSI exemption declaration during a visit by Central Excise officers. The unit lacked documentation on production, sales, and clearances, with finished goods seized as a result. The Assistant Commissioner ordered confiscation of the goods, imposition of penalties, and an option for redemption. The Commissioner (Appeals) set aside the penalties, noting the eligibility for SSI exemption. The Revenue appealed, arguing that SSI exemption required a formal declaration, which was not done by the respondent.

Seizure of Finished Goods:
The respondent's lack of Central Excise Registration and SSI exemption declaration led to the seizure of finished goods. The Commissioner (Appeals) found the respondent eligible for SSI exemption, hence setting aside the confiscation and penalties. The Revenue contended that without a formal declaration for SSI exemption, the goods remained liable for Central Excise duty, and the lack of records further supported the confiscation.

Confiscation and Penalties:
The Assistant Commissioner had ordered the confiscation of seized goods and imposed penalties on the respondent firm and its owner. The Commissioner (Appeals) set aside the penalties on the owner but upheld the firm's eligibility for SSI exemption, leading to the reversal of confiscation and penalties. The Revenue's appeal challenged this decision, emphasizing the importance of a formal declaration for SSI exemption and the lack of records as grounds for maintaining the confiscation and penalties.

Appeal Against Order-in-Appeal:
The Tribunal upheld the Central Excise duty liability on the respondent due to the absence of a formal declaration for SSI exemption, despite eligibility. The lack of records and failure to exercise the option for exemption supported the decision to confiscate the goods and impose penalties on the firm. The order-in-appeal setting aside the penalties on the owner was upheld, as separate penalties on the firm and its proprietor were deemed unnecessary. The Revenue's appeal was partly allowed, reinstating the Assistant Commissioner's order regarding confiscation and penalties on the firm.