2017 (5) TMI 556 - AT - Central Excise

SSI exemption - exemption limit - case of appellant is that Since the aggregate assessable value on which excise duty was confirmed is much below the threshold limit under SSI exemption, the appellants was entitled for the same and therefore no excise duty would arise - Held that - as per the final confirmation of demand the amount comes to ₹ 1.90 lakhs. If this is so, then the aggregate value of the excisable goods is very much below the SSI exemption limit. Both the lower authorities have not considered this submission of the appellants. I am therefore, of the view that the demand is not sustainable on the ground that the appellants are entitled for SSI exemption - demand set aside. Extended period of limitation - Held that - the plea of the appellants that as per their bonafide belief the furniture manufactured by them is not excisable is found to be correct - extended period not invocable - the demand is not sustainable on limitation also. Penalty also set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Non-payment of excise duty on furniture manufactured by the appellants.
2. Eligibility for SSI exemption.
3. Interpretation of dutiability on furniture.
4. Whether demand is time-barred.
5. Consequential penalty on the director of the company.

Analysis:
1. The case involved the appellants being charged for non-payment of excise duty on both fixed and loose furniture they manufactured at the client's site. The demand was initially set at ?8,34,855, but through various stages, it was reduced to ?1,94,416 as some furniture was found to be non-dutiable. The appellants contended that they believed the furniture was not excisable, and thus, the demand was hit by limitation due to no suppression of fact.

2. The appellant argued for eligibility under the Small Scale Industries (SSI) exemption due to the aggregate assessable value being below the threshold. The Tribunal agreed, noting that the demand of ?1.90 lakhs was well below the SSI exemption limit. The Tribunal found merit in the appellant's claim that their belief in non-dutiable goods was genuine, citing a similar case where no malafide intention or suppression of fact led to the dropping of the demand.

3. The issue of dutiability on the furniture was a key point of contention. The Tribunal acknowledged the complexity of determining which furniture items were excisable and the interpretation of excisability. It was highlighted that the demand reduction from ?8,34,855 to ?1,94,416 indicated a significant portion of the furniture being non-dutiable, supporting the appellant's argument of a genuine belief in non-excisable goods.

4. Regarding the limitation period, the Tribunal found in favor of the appellants, stating that no suppression of fact was involved, and the demand was primarily due to the interpretation of excisability. Citing a precedent, the Tribunal held that the extended period could not be invoked in such circumstances, further supporting the appellants' position.

5. Lastly, the Tribunal addressed the consequential penalty on the director of the company, noting that since the demand was set aside, the penalty was also not sustainable. Consequently, the appeal of the director was allowed along with the main appeal, resulting in the modification of the impugned order in favor of the appellants.