2018 (1) TMI 13 - AT - Central Excise

SSI exemption - N/N. 8/03-CE - effect of rescinded notification - main contention of the appellant is that they continued to avail notification in question under mistaken belief and inadvertently that the said notification was holding the field during the relevant period - difference of opinion - Held that - As there are contrary views and difference of opinion between the Members, therefore, the matter be placed before the Hon ble President to appoint the Third Member for resolving the issues Whether in view of Revenue neutral situation, the benefit of N/N. 8/03-CE should be extended to the assessee and the appeal be allowed, as held by the Member (Judicial)? - matter referred to Third Member.

Issues Involved:
1. Applicability of Notification No. 8/03-CE and 9/03-CE.
2. Whether the appellant fulfilled the conditions of Notification No. 8/03-CE.
3. Revenue neutrality and its impact on the demand of duty.
4. Imposition of penalty under Section 11AC.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 8/03-CE and 9/03-CE:
The appellant, engaged in the manufacture of pesticides, was availing the benefit of Notification No. 9/03-CE, which allowed a concessional rate of duty at 16% if credit was availed. However, this notification was rescinded effective from 1.4.2005, which the appellant did not realize and continued to avail credit and pay duty at the concessional rate till July 2006. A show cause notice was issued demanding differential duty for this period.

2. Whether the appellant fulfilled the conditions of Notification No. 8/03-CE:
The appellant argued that in the absence of Notification No. 9/03-CE, they could have availed the benefit of Notification No. 8/03-CE, which provided a nil rate of duty for SSI units, provided no credit was availed. The adjudicating authority and Commissioner (Appeals) rejected this claim, citing that the appellant had availed credit, thus violating the conditions of Notification No. 8/03-CE. The Member (Technical) emphasized that the appellant did not fulfill the condition of not availing credit, making them ineligible for the benefits of Notification No. 8/03-CE.

3. Revenue neutrality and its impact on the demand of duty:
The Member (Judicial) pointed out that the appellant's situation was revenue-neutral as the credit availed was used for payment of duty, and any remaining credit was reversed. This meant that no undue benefit was derived, and the conditions of Notification No. 8/03-CE were effectively met. Therefore, the demand for differential duty should not be upheld, and the benefit of Notification No. 8/03-CE should be extended to the appellant.

4. Imposition of penalty under Section 11AC:
The Member (Technical) noted that the appellant's mistake appeared to be bona fide, stemming from their previous practice of availing concessional duty under Notification No. 9/03-CE. Consequently, the penalty was deemed unjustified and was set aside.

Separate Judgments Delivered by the Judges:
The Member (Judicial) concluded that the benefit of Notification No. 8/03-CE should be extended due to the revenue-neutral situation, and the appeal should be allowed with consequential relief. Conversely, the Member (Technical) upheld the demand for duty and interest but set aside the penalty, emphasizing the appellant's failure to meet the conditions of Notification No. 8/03-CE. Given the conflicting views, the matter was referred to the Hon'ble President for the appointment of a Third Member to resolve the difference of opinion.

DIFFERENCE OF OPINION:
1. Whether the benefit of Notification No. 8/03-CE should be extended to the appellant due to the revenue-neutral situation, as held by the Member (Judicial).
2. Whether the demand for duty and interest should be upheld due to non-fulfillment of Notification No. 8/03-CE conditions, as held by the Member (Technical).

← Previous Next →