2014 (11) TMI 827 - AT - Central Excise

SSI Exemption - Notification No.8/2003-CE dt.01.03.2003 - Clearance of vitrified tiles - Mis-declaration of goods - Demand of differential duty - Imposition of interest and penalty - whether the confirmation of demand of the duty on the appellant along with interest and penalties imposed by invoking extended period is correct or otherwise - Held that - show cause notice dt.21.01.2010 is barred by limitation and extended period cannot be invoked as the appellant may be guilty of not informing the Department about the manufacturing activity, but it was definitely not a willful suppression or mis-statement with intention to evade duty. On perusal of the records, we find that it was appellant who had approached the Departmental authorities for granting of Central Excise registration on crossing the threshold limit of ₹ 1.5 crores turnover as is envisaged in Notification No.8/2003-CE. We also find from the records that the main appellant had recorded all the manufacturing activities and all clearances in the books of accounts, which is evident from the fact that show cause notice has been issued based upon such records only. On the background of such factual matrix, we agree that the appellant cannot be charged with willful suppression of the fact with intent to evade payment of duty. This our view is due to the fact that the appellant may have mis-read the notification No.8/2003-CE. In our view, the reading of Notification No.8/2003-CE is itself confusing and may be a situation wherein the appellant, as claimed by the ld. Counsel, are not highly literate. extended period can be invoked only when there is an intention to evade payment of duty and not mere failure to pay duty. Their lordships have also held that there should be something more i.e. the assessee must be aware that duty was leviable and it must be deliberately avoiding paying duty. As the appellants themselves had approached the Departmental authorities for granting of licence after crossing the threshold limit - Appellant has made out a case. The impugned order is unsustainable and liable to be set aside. - Following decision of Tamil Nadu Housing Board 1994 (9) TMI 69 - SUPREME COURT OF INDIA - Decided in favour of assessee.

Summary

Issues Involved:
Confirmation of demand of duty, interest, and penalties by invoking extended period based on the SSI exemption eligibility and the appellant's failure to pay Central Excise duty.

Analysis:

Confirmation of Demand of Duty:
The appellant, a manufacturer of vitrified tiles, cleared goods under the guise of exempted goods under SSI exemption without obtaining Central Excise registration or paying duty from February 2007 to September 2008. The appellant believed they were eligible for SSI exemption up to Rs. 1.5 crores under Notification No.8/2003-CE. However, upon crossing the turnover limit in September 2008, they approached the Department for registration. The Department subsequently held that the appellant's products were not covered under the SSI exemption scheme. The appellant contended that the case was fabricated by the Department after they sought registration, denying willful suppression. The Tribunal found that the appellant approached the Department for registration upon crossing the threshold limit, maintaining proper records and clearing goods on invoices. The Tribunal concluded that the appellant's misinterpretation of the notification, lack of willful suppression, and approach to the Department for registration indicated no intention to evade duty.

Extended Period Invocation:
The Tribunal examined whether the extended period for confirming the demand was correctly invoked. It was noted that the appellant's failure to inform the Department about manufacturing activities did not constitute willful suppression or misstatement with an intent to evade duty. The appellant's approach to the Department for registration upon exceeding the turnover threshold was considered significant. Citing the law laid down by the Supreme Court, the Tribunal emphasized that the extended period could only be invoked in cases of intentional evasion of duty. The Tribunal found that the appellant's actions did not demonstrate deliberate avoidance of duty payment. Relying on precedents, the Tribunal held that the appellant's case did not warrant the imposition of duty, interest, or penalties based on the extended period invocation.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals in favor of the appellant. The judgment emphasized the lack of willful suppression, the appellant's approach for registration upon exceeding the turnover limit, and the absence of evidence indicating intentional evasion of duty. The Tribunal found the appellant's case to be valid, overturning the demand of duty, interest, and penalties imposed by invoking the extended period.

This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision based on the facts and legal principles presented in the case.