2016 (12) TMI 787 - AT - Central Excise

Exemption under Notification No.164/87 dt. 10.6.87 - Chapter X Procedure of Central Excise Rules, 1944 - imposition of penalty u/r 209A of the Central Excise Rules, 1944 - Held that - When Revenue makes an allegation, it should ensure that such allegation is based on evidence - The Central Excise Act, 1944 requires that there should be a manufacture of excisable goods in order to invoke Section 3 of the said Act. Meaning of manufacture although has not been given, the definition of manufacturer is provided by Section 2(f) of the said Act. The said Act covers activity resulting in manufacture as taxable event. That Act also deals with the term excisable goods . Such goods should have been emerged in the course of manufacture. There is no whisper in the order as to what was the manufacturing infrastructure facility available with the appellant, M/s.SPT - To enquire further, we proceeded to know whether there was any factory of the appellant SPT in accordance with the provision contained in Section 2(e) of the above Act. There was no such factory in absence of any evidence laid before us. Therefore, in absence of factory and in absence of manufacture so also in absence of any manufacturing activity carried out by appellant, manufacture of excisable goods by SPT is inconceivable. Accordingly, in so far as adjudication relating to M/s.SPT is concerned, that is set aside. The principal appeal succeeds, the secondary appeal of M/s.URL is allowed - appeal allowed.

Summary

Issues:
1. Applicability of Notification No.164/87-CE dt. 10.6.1987 for exemption.
2. Penalty under Rule 209A of the Central Excise Rules, 1944.
3. Manufacturer status of M/s.Southern Press Tolls (SPT).
4. Rejection of additional evidence by Tribunal.

Analysis:

Issue 1 - Applicability of Notification No.164/87-CE:
The matter involved a challenge regarding the applicability of Notification No.164/87-CE for goods cleared to M/s.Universal Radiators Ltd. without following the Chapter X Procedure of Central Excise Rules, 1944. The Hon'ble Supreme Court set aside the Tribunal's order and remanded the case for fresh consideration.

Issue 2 - Penalty under Rule 209A:
The second issue was whether a penalty was leviable on M/s.Universal Radiators Ltd. under Rule 209A of the Central Excise Rules, 1944. The Tribunal had imposed penalties on both M/s.Southern Press Tolls and M/s.Universal Radiators Ltd. The matter was remanded for reconsideration by the Tribunal.

Issue 3 - Manufacturer status of M/s.Southern Press Tolls (SPT):
The High Court considered whether M/s.Southern Press Tolls could be considered a manufacturer in the absence of machinery on the premises. The court also examined the rejection of additional evidence related to the absence of machinery. The matter was remanded to the Tribunal in light of the Supreme Court's order.

Issue 4 - Rejection of additional evidence by Tribunal:
The Tribunal had rejected applications by the appellant to introduce additional evidence regarding the absence of machinery at M/s.Southern Press Tolls. The High Court remanded the case to the Tribunal following the Supreme Court's order for reconsideration.

In the final analysis, the Tribunal found that without evidence of manufacturing infrastructure or activity by M/s.Southern Press Tolls, the manufacture of excisable goods by the company was inconceivable. Consequently, the adjudication related to M/s.Southern Press Tolls was set aside, leading to the success of the principal appeal and the allowance of the secondary appeal by M/s.Universal Radiators Ltd. Both appeals were allowed by the Tribunal.