2015 (5) TMI 21 - AT - Central Excise

Denial of SSI Exemption - Manufacture of branded goods - Held that - Unbranded goods shall not result in denial of SSI exemption. There is nothing apparent from show-cause notice demonstrating that the respondent was instrumentality of the group company to claim SSI exemption. In absence of corporate veil being lifted by the show-cause notice itself that fails to provide a basis for adjudication. Accordingly, entire adjudication fails to stand. Therefore, order of both the authorities sustain and Revenue appeal is dismissed accordingly. - Decided against Revenue.

Summary

Issues:
1. Denial of SSI exemption to the respondent.
2. Allegation of being a group company of Taj Group of Hotels.
3. Validity of the show-cause notice.
4. Reliance on judgments to support contentions.
5. Corporate veil not being lifted in the show-cause notice.

Analysis:

1. The main issue in this case is the denial of the Small Scale Industries (SSI) exemption to the respondent. The Revenue argued that the exemption is not admissible due to reasons mentioned in the show-cause notice. However, the respondent contended that they did not manufacture any branded goods eligible for the SSI benefit. The Revenue claimed that since the appellant is a group company of Taj Group of Hotels, the exemption should be denied.

2. Upon reviewing the show-cause notice, it was found that the appellant supplied goods without any brand name or logo embossed on them. Additionally, goods purchased for supply did not carry any branding. The Revenue later attempted to deny the exemption by stating that the appellant was part of a group company, but this was not clearly specified in the original show-cause notice. The lack of specific allegations and evidence in the notice failed to provide a proper foundation for adjudication.

3. The Revenue relied on two judgments to support their contention that the goods were branded. However, upon examination of these judgments, it was found that they did not establish a link between unbranded goods and denial of SSI exemption. The show-cause notice did not demonstrate that the respondent was an instrumentality of the group company to claim the exemption. Without the corporate veil being lifted in the notice itself, there was no basis for adjudication, leading to the dismissal of the Revenue's appeal.

4. The decision was guided by the principle that the show-cause notice forms the basis of adjudication, as established in various judgments cited, such as Commissioner of Customs, Mumbai Vs Toyo Engineering India Ltd. and others. Since the show-cause notice did not provide clear allegations or evidence to support the denial of the exemption, the entire adjudication was deemed invalid, and the appeal by Revenue was dismissed accordingly.