2018 (11) TMI 1750 - AT - Central Excise

SSI Based exemption - exemption to branded goods - factory situated in Rural area - demand alongwith interest and penalty - extended period of limitation - HELD THAT - The learned adjudicating authority has not accepted the certificate issued from the Tahsildar regarding the appellant s factory being situated in rural area considered the other evidences - the learned adjudicating authority has not followed the decisions of this Tribunal cited. The issue regarding benefit of Notification No. 8/2003 for the unit being located in rural area is to be granted at the strength of certificate issued by the Tahsildar, who is the competent person to certify the same. This Tribunal has occasion to examine this issue vide the various decisions referred - in this case the certificate has been issued by the Sarpanch and Tahsildar regarding the factory being located in the rural area the same cannot be ignored while deciding the eligibility for the benefit of N/N. 8/2003-CE. Appeal allowed - decided in favor of appellant.

Issues:
1. Confirmation of demand under Section 11A(1) of Central Excise Act, 1944 invoking the extended period.
2. Imposition of interest under Section 11AB and equal penalty under Section 11A(1A) of the Act.
3. Imposition of penalty under Rule 26(1) of Central Excise Rules, 2002.
4. Eligibility to avail benefit of exemption notification 08/2003-CE based on rural area classification.
5. Disallowance of Rural Area Benefit as per Notification No. 8/2003-CE.
6. Adjudication based on CESTAT remand order and subsequent appeal.

Detailed Analysis:

1. The appeal arose from an Order-in-Original confirming a demand under Section 11A(1) of the Central Excise Act, 1944, along with interest under Section 11AB and penalty under Section 11A(1A). The impugned order was passed in accordance with a CESTAT remand order, reconfirming the demand and disallowing the Rural Area Benefit under Notification No. 8/2003-CE. The appellants challenged this decision before the tribunal.

2. The appellant, engaged in manufacturing Silent DG Sets, claimed SSI exemption under Notification No. 8/2003-CE during a specific period. The issue arose as the appellant used the brand name of another company, leading to a dispute regarding eligibility for the SSI benefit based on the rural area classification. The initial adjudication did not address the rural area aspect, but upon remand by the Tribunal, the adjudicating authority confirmed the demand, prompting the appeal.

3. The appellant contended that the adjudicating authority disregarded a certificate from the Tahsildar certifying the factory's rural area status and failed to consider relevant precedent decisions supporting the SSI benefit claim. The appellant cited various cases where the benefit of Notification No. 8/2003 was upheld based on similar certificates, arguing that the impugned order was unsustainable.

4. The Revenue, represented by the DR, supported the findings in the impugned order, emphasizing the rejection of the Tahsildar's certificate and reliance on specific provisions to deny the SSI benefit based on the rural area classification.

5. Upon hearing both parties and reviewing the evidence, the tribunal found that the adjudicating authority erred in not giving due weight to the Tahsildar's certificate confirming the factory's rural area status. Citing previous tribunal decisions, the bench emphasized the importance of such certificates in determining eligibility for the SSI benefit under Notification No. 8/2003-CE. Relying on the principle established in Sanchez Healthcare P. Ltd. case, the tribunal set aside the impugned order, granting consequential relief as per law.

6. Ultimately, the tribunal held that the impugned order was unsustainable and set it aside, providing consequential benefits as per legal provisions. The decision was pronounced in open court, concluding the appeal process.

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