2007 (10) TMI 157 - AT - Central Excise

Demand abetment in evasion appellant getting semi-finished goods from X even these goods had been taken on RG 1 by appellant & cleared on payment of duty after further finishing, clearance of those goods by X were eligible for SSI exemption u/n 214/86 no abetment by appellant

Summary

Issues:
1. Whether the appellants were liable to pay duty on clearances made by one appellant to another.
2. Whether the value of certain goods should be included in determining the aggregate value of clearances for availing exemption.
3. Whether the appellants abetted duty evasion.
4. Whether penalties imposed on the appellants were justified.

Analysis:

1. The case involved M/s. Princess Polymers Private Limited (PPPL) and M/s. Ampol India (P) Ltd (Ampol) who were engaged in the manufacture and clearance of cushion gum and rubber solution, availing exemptions under Notification No.1/93 and Notification No.4/97-CE. The department alleged that Ampol had clandestinely removed manufactured excisable goods, exceeding the exemption limit, and demanded duty. The Commissioner found that Ampol had cleared goods to PPPL, attracting duty liability, and PPPL was accused of abetting duty evasion. Duties and penalties were imposed on both appellants.

2. The appellants argued that the goods cleared were semi-finished and not excisable, cleared after further processing by PPPL. They contended that the value of these goods should not be added to determine the aggregate value of clearances for exemption eligibility in the subsequent year. The Tribunal found that the goods were semi-finished, eligible for exemption under Notification No.214/86, and the value need not be included in calculating the aggregate value. As per the Mangalore Chemicals & Fertilizers Ltd. case, failure to follow procedural conditions should not negate exemption eligibility if substantive conditions are met. Therefore, the demand for duty on clearances in the subsequent year was deemed unsustainable.

3. The appellants submitted that they provided details of clearances to the department, precluding allegations of suppression. They argued against invoking a larger period for scrutiny. The Tribunal noted the timely submission of information and rejected the department's claim of suppression, emphasizing that a larger period could not be invoked.

4. After reviewing the records and arguments, the Tribunal concluded that the clearances made by Ampol were eligible for exemption, and there was no abetment of duty evasion by PPPL. Consequently, the demands and penalties imposed on both appellants were set aside, and the appeals were allowed based on the legal principles and factual findings presented during the proceedings.