2014 (7) TMI 734 - AT - Central Excise

Confiscation of goods - Availment of SSI Exemption - Seizure of goods on the basis that same were not accounted in C.E. Records - Department contends that the clearances of the appellant were far in excess of the threshold limit for SSI exemption - Held that - Confiscation of the goods seized from the premises of M/s Shree Ganesh Plywood and M/s Ply Care would be sustainable only if the allegation of duty evasion against M/s Shree Ganesh Plywood by wrongly availing the SSI exemption and grossly under reporting the value of the goods manufactured and cleared by them is upheld. If this allegation is not upheld and it is found that the value of clearances of M/s Shree Ganesh Plywood were well within the SSI exemption, they would neither be required to take Central Excise registration nor would be required to maintain the statutory records. Thus, the issue involved in these appeals is linked with the facts and issues involved in the show cause notice dated 09/05/2012 issued to M/s Shree Ganesh Plywood and both the matters should have been adjudicated together. When the allegation of wrong availment of SSI exemption by under reporting the value of the goods manufactured and cleared is yet to be adjudicated, M/s Shree Ganesh Plywood cannot be accused of not obtaining Central Excise registration and not maintaining the RG-1 register and other statutory Central Excise records - Matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
Confiscation of goods under Rule 25 (1) of the Central Excise Rules, 2002 for not being accounted for in the RG-1 register, validity of SSI exemption claimed by M/s Shree Ganesh Plywood, underreporting of production and clearances, imposition of penalties, appeal against order-in-appeal No. 38-40/CE/DLH/2013, waiver of pre-deposit for final disposal of appeals.

Confiscation of Goods and SSI Exemption:
The main issue in this case revolved around the confiscation of goods from the premises of M/s Shree Ganesh Plywood and M/s Ply Care under Rule 25 (1) of the Central Excise Rules. The appellant argued that if they were within the threshold limit of the SSI exemption, they were not obligated to obtain Central Excise registration or maintain statutory records. The appellant contended that the confiscation of goods would only be justified if the allegation of underreporting production and clearances to wrongly avail the SSI exemption was proven. The Tribunal noted that the proceedings initiated under a show cause notice dated 09/05/12 alleging duty evasion and underreporting were yet to be adjudicated. As such, the Tribunal set aside the impugned order and remanded the matter to the Commissioner for fresh adjudication, emphasizing that both show cause notices should be considered together.

Penalties and Adjudication:
The appellant challenged the penalties imposed on them under Rule 25 of the Central Excise Rules. The Tribunal observed that the validity of the penalties was intricately linked to the issue of SSI exemption and underreporting of production. Since the core allegation of wrongly availing the SSI exemption was still pending adjudication, the Tribunal deemed it premature to uphold the penalties. Consequently, the Tribunal directed that the adjudication process must consider all relevant factors, including the pending show cause notice dated 09/05/12, to ensure a comprehensive and coherent decision on the penalties imposed.

Appeal Against Order-in-Appeal:
The appeals were filed against the order-in-appeal No. 38-40/CE/DLH/2013 dated 21/03/2013, where the Commissioner (Appeals) dismissed the appeals. The appellant contested the dismissal, highlighting the ongoing proceedings related to the SSI exemption and underreporting of production. The Tribunal, after considering the arguments from both sides, concluded that the pending adjudication of the show cause notice dated 09/05/12 significantly impacted the validity of the confiscation of goods and penalties. Therefore, the Tribunal set aside the order-in-appeal and remanded the matters for fresh adjudication by the Commissioner, emphasizing the need for a comprehensive assessment considering all relevant factors.

Waiver of Pre-deposit for Final Disposal:
Although the matters were initially listed for hearing of stay applications, the Tribunal, after hearing the appeals, decided to proceed with final disposal with the consent of both parties. The requirement of pre-deposit was waived, allowing for a thorough examination of the issues at hand. This decision facilitated a comprehensive review of the case, ensuring that all relevant aspects were considered for a just and informed final disposal of the appeals.

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