2011 (5) TMI 382 - AT - Central Excise

SSI Exemption - Notification No.202/88-CE, dt.20.5.88 - Held that - the inputs used in the manufacture of final product, under the claim of exemption benefit of Notification No. 202/88 are required to be duty paid. Admittedly, the appellants have used the ship breaking material as their input. The said ship breaking material was exempted from payment of duty in terms of Sr.No.37 of Notification No. 44/93. - Benefit of SSI exemption denied.

Summary

Issues:
1. Interpretation of exemption notifications under the Central Excise Act.
2. Validity of denial of exemption benefits to the appellants.
3. Allegations of duty evasion and confirmation of duty demand.
4. Applicability of exemption notifications to specific raw materials.
5. Legal interpretation of relevant provisions and notifications.

Analysis:
1. The case involved the interpretation of exemption notifications under the Central Excise Act, specifically Notification No.202/88-CE and Notification No.1/93-CE. The appellants were engaged in manufacturing rolled products of iron and steel falling under Chapter 72 of the Schedule to Customs Excise Tariff Act, 1985, and had availed exemptions during specific periods.

2. The issue arose when the Revenue issued Show Cause Notices proposing to deny the exemption benefits to the appellants based on the use of ship breaking material as raw material, which was exempted from duty payment. The Additional Commissioner observed that the appellants failed to satisfy the conditions of the notifications, leading to the confirmation of duty demands.

3. The adjudicating authority confirmed duty demands and imposed penalties for contravention of law, which were upheld by the Commissioner (Appeals). The appellants challenged these decisions in the present appeal, arguing that the raw materials used were not clearly recognizable as non-duty paid, and hence, they were entitled to the exemption benefits.

4. The appellants contended that the ship breaking material used was exempted under Notification No.45/93-CE, but the Revenue argued that the raw material obtained from ship breaking yards was not duty paid, leading to the denial of exemption benefits. The legal issue revolved around the source of raw materials and the applicability of specific exemption notifications to different types of materials.

5. The Tribunal, after considering submissions from both sides, upheld the denial of exemption benefits to the appellants. It was established that the ship breaking material used by the appellants fell under the exemption category, and the manufacturers had availed the exemption. The Tribunal found no merit in the appellants' contentions and upheld the duty demands as confirmed by the lower authorities.

In conclusion, the Tribunal rejected the appeal, upheld the duty demands, and confirmed the penalties imposed on the appellants for contravention of the law. The judgment clarified the interpretation of exemption notifications, the conditions for availing such exemptions, and the applicability of specific notifications to raw materials used in manufacturing processes.