2016 (1) TMI 839 - AT - Central Excise

Improper availment of benefit of small scale exemption under notification no. 8/98 dated 2nd June, 1998 - demand and interest thereof along with penalties imposed - whether the lower authorities were correct in including an amount received by the appellant for discharge of duty liability on the allegation that the said amount was received for manufacturing activity or otherwise? - Held that - On perusal of the invoices, it transpires that the main appellant had in few invoices rectified the MS plates, as per drawings and instructions, did machining of M.S. plates, repair and took trial of the work carried out on the die for delamination and repaired the die on job work basis. This document indicated that main appellant had carried out the repairing work as the dies received by them from the customers and to our mind, both the lower authorities misdirected their findings without appreciating the factual matrix. Since the amounts received by the main appellant is for the repairing/reconditioning of old used dies and machinery metal part we hold that the amounts on which duty liability is confirmed along with interest is incorrect and should not have been included for discharge of duty liability as the said amount is not for any manufacturing activity. Since we are setting aside the demand of the duty liability, question of interest and penalty on both the appellants does not arise.

Summary

Issues:
Confirmation of demand of duty for the period 1998-99, 1999-2000 on M/s. Rosana tools, interest, penalties, and penalty imposed on Shri Paul D'Souza.

Analysis:
The appeals were against the confirmation of duty demand, interest, and penalties on M/s. Rosana tools for the period 1998-99, 1999-2000. The revenue alleged that the main appellant wrongly claimed small-scale exemption benefits and did not declare the correct assessable value. The main appellant argued that they also undertook repair and rectification activities apart from manufacturing. The lower authorities did not consider the evidence presented by the main appellant, leading to a dispute regarding the nature of the amounts received by them.

The main issue was whether the amounts received by the main appellant were for manufacturing activities or for repair and reconditioning. The main appellant was engaged in manufacturing dies and moulds, as well as repairing them for customers. The lower authorities were criticized for not properly appreciating the evidence and misdirecting their findings. Invoices provided by the main appellant clearly showed that they were involved in repairing and reconditioning old dies and machinery parts, separate from their manufacturing activities.

The Tribunal found that the amounts received by the main appellant were for repairing and reconditioning old dies and machinery parts, not for manufacturing activities. Therefore, the duty liability confirmed along with interest was deemed incorrect. Consequently, the demand for duty liability, interest, and penalties on both the main appellant and Shri Paul D'Souza was set aside. The impugned order was overturned, and the appeals were allowed with any consequential relief deemed necessary.