2014 (9) TMI 476 - HC - Central Excise

SSI Exemption - Notification No. 16/97-C.E. - Whether the CESTAT is right in upholding the Commissioner (Appeals) view and ruling that there is no suppression of facts with intention to evade duty, when mens rea is evident from the two contradictory declaration filed by the manufacturer for the same financial year - Held that - From the conjoint reading of the orders, which have been challenged in the present Civil Miscellaneous Appeal, it is easily discernible that the respondent has paid excess duty apart from the amount claimed on the side of the appellant. Since the respondent has paid excess duty other than the amount mentioned in the demand notice, it is needless to say that the concurrent orders passed by the authorities referred to above are perfectly correct and the same do not require any interference and the substantial questions of law formulated in the present Civil Miscellaneous Appeal are decided in favour of the respondent and therefore the present Civil Miscellaneous Appeal deserves to be dismissed. Decided against Revenue.

Summary

Issues:
1. Dispute over duty payment for two manufacturing units in different states.
2. Allegations of suppression of facts and intention to evade duty.
3. Interpretation of Notification No. 16/97 regarding SSI benefits.
4. Application of 'manufacturer' concept to multiple units of a single entity.

Analysis:
1. The appellant issued a demand notice to the respondent for duty payment on the grounds of operating two manufacturing units in different states. The demand was confirmed but later set aside by the Commissioner (Appeals) and further upheld by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The appellant challenged these decisions in the present Civil Miscellaneous Appeal.

2. The key legal issue raised was whether there was suppression of facts with an intention to evade duty, as evidenced by contradictory declarations filed by the manufacturer for the same financial year. The appellant argued vehemently that the respondent had intentionally suppressed the existence of its unit in Kerala to avoid duty payment.

3. Another issue revolved around the interpretation of Notification No. 16/97 and the extension of Small Scale Industries (SSI) benefits to the unit against the language of the notification. The CESTAT's decision to grant SSI benefits was questioned based on the specific wording and intent of the notification.

4. The concept of 'manufacturer' was also debated concerning its application to different units of a single entity. The appellant contended that the legislation's intention was for the entity as a whole, not separate units. The CESTAT's interpretation of 'manufacturer' in this context was challenged.

5. The Court examined the orders of the Commissioner (Appeals) and the Final Order passed by the CESTAT. Both orders confirmed that the respondent had paid excess duty and that there was no short levy of duty from the Salvarpatti unit. The Court noted that the demand for differential duty from the unit was barred by limitation, and no suppression of facts was established to evade payment of duty.

6. Ultimately, the Court found that the respondent had paid excess duty beyond the amount claimed by the appellant. As a result, the concurrent orders of the authorities were deemed correct and did not warrant interference. The substantial legal questions raised in the appeal were decided in favor of the respondent, leading to the dismissal of the Civil Miscellaneous Appeal.

7. In conclusion, the Civil Miscellaneous Appeal was dismissed without costs, affirming the decisions of the Commissioner (Appeals) and the CESTAT regarding duty payment, suppression of facts, interpretation of SSI benefits, and the application of the 'manufacturer' concept to multiple units of a single entity.