2012 (10) TMI 108 - AT - Central Excise

Extended period of limitation - SSI Exemption - Appellants are having two units - Appellants were availing two exemptions simultaneously for two units - Condition No. 2(iv) of the Notification No. 8/2002 clearly stipulates that where a manufacturer clears the specified goods from one or more factories, the exemption in that case shall apply to the aggregate value of the clearances mentioned against each of serial numbers in the said table and not separately against each factory Held that - Appellants had nowhere brought in the knowledge of the Department at any point of time that the two Units of the Appellant Firm were under the same proprietorship of and were availing exemption under either Notification No. 8/2002 or 9/2002 - facts came to the knowledge of the Department on scrutinizing their records. Therefore, the lower authorities have rightly invoked the extended period of limitation - demands are confirmed

Summary

Issues:
Confirmation of demands under Central Excise Act, 1944 with penalties and interest for simultaneous availment of exemptions under different notifications by two units under the same proprietorship.

Analysis:
The Appellants, owning two units under the same proprietorship, availed exemptions under separate notifications for each unit, leading to demands, penalties, and interest under Section 11AC of the Central Excise Act, 1944. The issue was whether simultaneous availment of exemptions under different notifications by separate units under the same proprietorship was permissible. The Appellants argued that since both units were located in different divisions with separate registration numbers, their clearances should not be clubbed together. They also contended that demands were unsustainable due to regular declarations and returns filing. The Revenue, however, argued that as per the conditions of the notifications, aggregate clearances should be considered for exemption, not separately for each factory. The Revenue further justified invoking the extended period of limitation due to the Appellants' failure to disclose the existence of two units availing separate exemptions.

The Tribunal analyzed the provisions of the notifications and found that as per the conditions, clearances from multiple factories under the same proprietorship should be clubbed for exemption. The Appellants' case lacked merit as both units fell under the same proprietorship. The Tribunal distinguished the case law cited by the Appellants, emphasizing the control of both units by one person. Regarding the limitation issue, the Tribunal noted that the Department was unaware of the dual unit setup availing separate exemptions until scrutinizing records, justifying the extended limitation period invoked by the lower authorities. The Tribunal rejected the Appellants' arguments and confirmed the demands.

Additionally, the Tribunal observed that the lower authorities failed to provide the Appellants with the option to pay reduced penalty within 30 days as per Section 11AC of the Act. Citing a relevant case law, the Tribunal granted the Appellants 30 days to pay duty, interest, and penalty. Failure to comply within the stipulated time would result in a penalty equal to the duty. The Appeals were disposed of with these directions.

The judgment highlighted the importance of compliance with exemption conditions under the Central Excise Act, the implications of simultaneous availment of exemptions by units under the same proprietorship, and the significance of timely payment options under the law.