2007 (8) TMI 306 - AT - Central Excise

Denial of SSI exemption by invoking larger period - Purchase of factory in middle of financial year demand raised by department in November 1999 for the period 29.11.94 to 31.03.95 on ground that value of clearances of previous manufacturer in that financial year should be added in the value of clearances of appellant - RT-12 return showing the clearances made by the appellant were being regularly filed with the dept. and no objection was taken till Nov. 99 therefore, demand is time barred

Summary

Issues:
1. Benefit of small scale exemption Notification No.1/93.
2. Denial of benefit due to exceeding exemption limit.
3. Imposition of penalty under Rule 173Q.
4. Point of limitation in challenging the demand.

Analysis:

1. The appellant purchased a running factory for manufacturing polyester texturised yarn and obtained registration. They claimed the benefit of small scale exemption Notification No.1/93 by filing a classification list, which was approved by the authorities. The previous factory surrendered its registration, and the appellant was granted a new registration. The appellant started availing the benefit of the notification and filed RT-12 returns regularly.

2. A show cause notice was issued proposing denial of the notification benefit for a specific period due to the clearances made by the previous owner exceeding the exemption limit. The jurisdictional adjudicating authority confirmed the duty demand and imposed a penalty. On appeal, the Commissioner (Appeals) confirmed the duty demand but set aside the penalty under Section 11 AC as it was prior to its enforcement, maintaining the penalty under Rule 173Q.

3. The appellant challenged the demand on the grounds of limitation. The Commissioner (Appeals) observed that the appellant failed to declare the value of clearances made by the previous owner, indicating a suppression of material fact to evade duty. However, the Revenue did not dispute the filing and approval of the classification list by the appellant. The Revenue was aware of the factory takeover by the appellant mid-financial year, and the RT-12 returns were regularly filed without objection. The Tribunal held that the demand was barred by limitation and set it aside, allowing the appeal with consequential relief.

4. The Tribunal's decision was based on the Revenue's awareness of the factory takeover and regular filing of returns by the appellant, indicating no suppression of facts. The demand was deemed time-barred, and the appellant was granted relief on this ground, overturning the duty demand and penalty imposed by the lower authorities.