2016 (9) TMI 232 - AT - Central Excise

SSI Exemption - manufacture and clearance of finished goods with the brand name belonging to M/s. Gulshan Metal Works - availing benefit of exemption small scale industries and not paying any excise duty - Held that - no effort has been made by Revenue to establish with documentary evidence, the manufacture of such goods in the assessee s premises. What has been done in the quantification of demand is to simply consider all goods seized from various premises with the brand name belonging to M/s. Gulshan Metal Works as having been manufactured in the assessee s premises. This stands effectively countered by the Commissioner (Appeals) in his findings that based on sales tax records, M/s. Gulshan Metal Works has been found to have two manufacturing premises including sharing a part of the machines found installed in the premises of the assessee. We also find that the entire valuation of the goods alleged to have been manufactured and cleared from the assessee s factory with the brand name belonging to M/s. Gulshan Metal Works has been arbitrarily valued on the basis of a price list found during the search at one of the premises. No effort has been made to investigate and ascertain the actual transaction value. The Commissioner (Appeals) has concluded, on the basis of the transaction value claimed by the assessee, that there is no case for demand in-as-much-as the total value is well within the SSI limit during the relevant financial years. The impugned order passed by the Commissioner (Appeals) is a well reasoned order and has given considered findings on all points. In the absence of a thorough investigation going into the aspects of manufacture as well as the clearance of the goods, the demand cannot be upheld. - Decided against the Revenue

Summary

Issues:
1. Revenue's appeal against Order-in-Appeal dated 19.06.2006 passed by Commissioner of Central Excise & Customs (Appeals), Delhi.
2. Allegation of manufacturing and clearing finished goods with a brand name belonging to another entity.
3. Valuation of goods and demand of duty based on seized items with the brand name of another entity.
4. Commissioner (Appeals) setting aside the demands against the respondent/assessee but sustaining proceedings against another entity.
5. Lack of documentary evidence to establish the manufacture of goods in the assessee's premises.
6. Arbitrary valuation of goods without investigating the actual transaction value.
7. Commissioner (Appeals) findings and reasoning in setting aside the demands.

Analysis:
1. The appeal was filed by Revenue against the Order-in-Appeal dated 19.06.2006 by the Commissioner of Central Excise & Customs (Appeals), Delhi. The respondent, a manufacturer of various hardware goods, was availing the benefit of exemption for small-scale industries. After investigations and a Show Cause Notice, demands of duty, penalties, and interest were imposed on the respondent and other connected parties.

2. The Commissioner (Appeals) set aside the demands against the respondent but sustained proceedings against another entity. The issue revolved around the ownership of brand names and the clearance of goods with a brand name belonging to a different entity. The Commissioner found discrepancies in the valuation adopted by the original authority and concluded that the goods' value cleared by the respondent was within the limit for small-scale industries exemption.

3. The Commissioner (Appeals) set aside the demand against the respondent based on various grounds, including the lack of evidence to establish that all goods seized with the brand name of another entity were fully manufactured in the respondent's premises. The valuation method used by the original authority was questioned, and the Commissioner accepted the transaction value claimed by the assessee, determining that it was within the exemption limit.

4. The Tribunal found that Revenue failed to establish with documentary evidence the manufacture of goods in the respondent's premises with the brand name of another entity. The valuation of goods was deemed arbitrary, as it was based on a price list found during a search without investigating the actual transaction value. The Commissioner's reasoned order was upheld, dismissing Revenue's appeal.

5. In conclusion, the Tribunal found the Commissioner (Appeals)'s order to be well-reasoned, with considered findings on all aspects. Due to the lack of thorough investigation into the manufacturing and clearance of goods, the demand could not be upheld. Therefore, the Tribunal dismissed Revenue's appeal, upholding the Commissioner's decision to set aside the demands against the respondent.