2011 (2) TMI 714 - AT - Central Excise

Demands, interest and penalty - SSI - Benefit of Rule 173GG / 173GG (1) - The assessees being SSI unit, are availing exemption under a notification which is based upon the value of clearances in a financial year, therefore, assessees are not required to pay duty in respect of all clearance of goods on fortnightly basis - Reliance placed by the Revenue on Circular No.547/43/2000-CX. dt. 11.9.2000 to the effect that if in any unit, which may also be owned by small scale manufacturer, only branded goods for others are manufactured on which normal rate of duty is payable, then benefit of Rule 173GG / 173GG (1) cannot be claimed, is contrary to the provisions of relevant Rules and, therefore, cannot be relied upon for the purpose of holding that assessees were required to pay duty on fortnightly basis - Decided in favour of assessee.

Summary

Issues: Interest demanded for delayed duty payment on fortnightly basis, penalty imposition based on non-compliance with duty payment rules.

In this judgment by the Appellate Tribunal CESTAT, Chennai, the issue revolved around the demand for interest from the assessees due to their failure to pay duty on a fortnightly basis as required by Rule 173G (1) (a) of the Central Excise Rules, 1944. The assessees had instead paid the duty on a monthly basis, resulting in a delay. A penalty of Rs.3000/- was imposed in one of the appeals covering a specific period. The Tribunal examined Rule 173G (1) (a), which mandates duty payment by manufacturers during specific fortnights of the month. However, the assessees, being Small Scale Industry (SSI) units availing exemption based on the value of clearances in a financial year, were not obligated to pay duty on a fortnightly basis. The Tribunal highlighted that the Revenue's reliance on Circular No.547/43/2000-CX was misplaced, as it contradicted the relevant Rules. The Circular's assertion that duty payment should be made on a fortnightly basis even by SSI units manufacturing branded goods for others was deemed incorrect. Consequently, the Tribunal set aside the interest demands and penalty, ruling in favor of the assessees in both appeals. The judgment emphasized the importance of adhering to the specific provisions of the law and rejected interpretations that deviated from the statutory framework. The decision underscores the significance of accurately applying legal provisions to determine obligations related to duty payment schedules, especially in cases involving exemptions for SSI units based on annual clearances.