2014 (12) TMI 159 - AT - Central Excise

SSI Exemption - Clubbing of the clearances of the excisable goods manufactured - same factory premises - appellants submits that these three appellants are different and distinct legal entities and they have maintained separate records - Held that - Notification No. 8/2003-C.E. grants duty exemption to small scale manufacturers, subject to conditions. The condition stipulated for availing the exemption is that clearances effected by a manufacturer from one or more factories or clearances effected from a factory by one or more manufacturers should be clubbed together for determining the eligibility as well as quantum of exemption. It is not in dispute in the present case that all the three appellants operated from the same factory premises. If that be so, the clearances effected during a financial year by all the three manufacturers have to be clubbed together for determination of eligibility as well as quantum of exemption. Conditions specified in clauses (v), (vi) and (vii) leaves no room for any doubt as to how to compute the exemption. It is a settled position in law that an exemption notification has to be construed strictly and if the conditions of exemption are not satisfied, the benefit cannot be extended. In this factual and legal scenario, we do not find any merits in the contention of the appellants that since they are distinct and different legal entities, their clearances should not be clubbed while determining their eligibility to the exemption. Therefore, prima facie, we are of the view that the appellant has not made out a case for complete waiver of pre-deposit of the dues adjudged against them. In the absence of a prima facie case and reasonable financial position of the appellants and considering the need to protect Revenue s interests, we direct the appellants to make a pre-deposit of 50% of the duty demands confirmed against each of them within a period of eight weeks and report compliance by 21-7-2014. On such compliance, pre-deposit of balance of dues adjudged against the appellants, that is, balance of duty, interest and penalties imposed on the three appellant firms and on Shri Ranjan Kumar Das and Smt. Mousumi Das shall stand waived and recovery thereof stayed during the pendency of the appeals - Partial stay granted.

Summary

Issues:
- Determination of eligibility for duty exemption under Notification No. 8/2003-C.E.
- Clubbing of clearances for multiple legal entities operating from the same premises.
- Invocation of extended period of time for duty demands.
- Financial hardship plea and pre-deposit requirement.

Analysis:

Determination of Eligibility for Duty Exemption:
The case involved three separate legal entities operating from the same factory premises seeking duty exemption under Notification No. 8/2003-C.E. The notification mandates clubbing clearances for eligibility determination. The appellants argued for individual eligibility due to distinct legal entities, but the Tribunal held that clearances must be clubbed for exemption calculation. Exemption conditions were to be construed strictly, and non-satisfaction precluded benefit extension.

Clubbing of Clearances for Multiple Legal Entities:
The appellants contended that being distinct entities, their clearances should not be clubbed. However, since they operated from the same factory, clubbing was necessary for determining eligibility and quantum of exemption. The Tribunal emphasized that the notification explicitly required aggregation of clearances for eligibility assessment, leaving no room for doubt.

Invocation of Extended Period of Time for Duty Demands:
Regarding the invocation of the extended period for duty demands, the department argued that the appellants had not disclosed their activities, justifying the extended period. The Tribunal found this contention sustainable as the department cannot be expected to know undisclosed activities. The notification also allowed for not availing the exemption, supporting the extended period invocation.

Financial Hardship Plea and Pre-deposit Requirement:
The appellants pleaded financial hardship, citing small firm status. However, upon reviewing their balance sheets, the Tribunal found them to be profit-making entities with reasonable financial positions. As a result, a pre-deposit of 50% of the duty demands was directed within eight weeks, with the balance waived upon compliance. This decision aimed to protect the revenue's interests while considering the appellants' financial standing.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal concerning duty exemption eligibility, clubbing of clearances, extended period invocation, and the financial circumstances of the appellants.