2017 (10) TMI 1176 - AT - Central Excise

SSI exemption - dummy units - clubbing of clearances - Held that - After allowing the benefit of cum-duty-price, the matter was remanded to the adjudicating authority for the limited purpose of re-calculation of the duty, but, we find that the adjudicating authority has misinterpreted the said direction and reconsidered the whole issue again and held that the appellants are not eligible to the benefit of cum-duty-price. Also on the issue of penalty, this Tribunal after recording the fact that penalty cannot be imposed on the dummy unit, directed the adjudicating authority to pass an appropriate order keeping in mind that penalty cannot be imposed of dummy unit. This direction has also not been followed. To calculate the exact amount of duty, after extending the benefit of cum duty price, the matter needs to be remanded to the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
Appeal against OIA, availing SSI exemption wrongly, demand notice for duty recovery, penalty imposition, remand by Tribunal for re-calculation of duty, penalty on partner and dummy unit, benefit of cum-duty price, sustainability of penalties imposed.

Analysis:
The case involved three appeals against an OIA passed by the Commissioner (Appeals) of Central Excise-AHMEDABAD-I. The appellants had wrongly availed the SSI exemption benefit by floating dummy units, leading to non-payment of duty amounting to ?1,78,909 during 1996-1997. The demand notice for duty recovery and penalty imposition was confirmed on adjudication, including personal penalties on co-noticees. The Tribunal remanded the case to the adjudicating authority for re-calculation of duty considering the cum-duty price benefit and appropriate penalty imposition. However, the authorities did not follow the Tribunal's direction, leading to a second round of litigation before the Tribunal.

The appellant's representative argued that the Tribunal's direction for re-calculation of duty after allowing the cum-duty-price benefit was not followed by the authorities. They contended that penalties imposed on the partner and the dummy unit were unsustainable in law, citing relevant judgments. The Revenue supported the findings of the Ld. Commissioner (Appeals).

The Tribunal noted that the adjudicating authority had misinterpreted its direction and reconsidered the entire issue instead of re-calculating the duty after allowing the cum-duty price benefit. It was observed that penalties imposed on the partner and the dummy unit were unsustainable in light of legal precedents. The Tribunal set aside the penalties imposed on the partner and the proprietress of the dummy unit, directing the adjudicating authority to recalculate the duty after extending the cum-duty price benefit and allowing the appellant to discharge 25% of the penalty on fulfillment of specified conditions.

In conclusion, the appeal filed by the partner and the proprietress was allowed, penalties were set aside, and the appeal by the dummy unit was remanded for re-calculation of duty with the benefit of cum-duty price. The appellant was granted the benefit of discharging a portion of the penalty upon meeting the conditions specified under the Act.