2018 (3) TMI 614 - AT - Central Excise

Clandestine manufacture and removal - Blowing Wrapper Cloth - demand for the period November 1981 to July 1986 - Appellant has been contesting the demand prior to 1986 on the ground that there is no evidence of manufacturing the impugned goods prior to this period - Held that - the adjudicating authority has merely relied upon the investigation made earlier but did not give categorical finding as to what are the evidences, on the basis of which it can be said that the assessee was engaged in the processing of goods prior to February 1986. It was imperative on the part of the adjudicating authority that there is no direct evidence to show that such manufacturing was taking place. The Appellant has contended that their goods during the relevant period were entitled for exemption from payment of duty in terms of N/N. 139/77-CE dt 18.6.1977 and 78/82-CE dt 28.2.1982. This aspect has also not been considered by the Commissioner. SSI Exemption - denial on the ground that the Appellant unit was registered as SSI unit only for the product Art Silk and the said SSI registration did not cover Blowing Wrapper Cloth hence the SSI exemption is not available - Held that - the relevant consideration for granting SSI exemption was level of investment and the turnover of the unit and not the product. This aspect ought to be addressed in favor of assessee - matter on remand. Appeal allowed by way of remand.

Summary

Issues:
1. Demand for the period prior to February 1986
2. Classification of goods under tariff item No. 22(i) (b) and relevant exemptions
3. SSI exemption under Notification No. 175/86-CE
4. Consideration of cum duty price and input credit
5. Time-barred demands, penalty, and confiscation of goods

Issue 1: Demand for the period prior to February 1986
The Appellant contests the demand for the period before February 1986, arguing that there is no evidence of processing the goods before this period. They rely on statements suggesting processing from 1984 onwards. The Tribunal's 1996 order also noted the lack of direct evidence for manufacturing before 1986. The goods were classifiable under tariff item No. 22(i) (b) and exempted under Notifications No. 139/77-CE and 78/82-CE. The adjudicating authority failed to provide clear evidence of pre-1986 manufacturing, as required by the Tribunal's findings.

Issue 2: Classification of goods and relevant exemptions
The Appellant asserts that the goods were exempted from duty under Notifications No. 139/77-CE and 78/82-CE before February 1986. The Commissioner did not address this contention, overlooking the Appellant's eligibility for exemption during the relevant period. The classification and exemption status of the goods should have been considered in determining the duty liability.

Issue 3: SSI exemption under Notification No. 175/86-CE
The Appellant was denied SSI exemption for the period March 1986 to July 1986, as the registration covered Art Silk but not Blowing Wrapper Cloth. However, SSI status should be based on investment and turnover, not the specific product. The case is remanded to the adjudicating authority to reconsider the SSI exemption based on the relevant criteria.

Issue 4: Consideration of cum duty price and input credit
The Appellant claims that the benefit of cum duty price and input credit was not extended to them, impacting the duty calculation. They argue that the demands are time-barred as there was no intention to evade duty, thus no penalty or confiscation of goods should be imposed. The adjudicating authority must review these aspects and consider the Appellant's submissions with supporting documents.

Issue 5: Time-barred demands, penalty, and confiscation of goods
The Appellant challenges the demands as time-barred and asserts that no penalty or confiscation should be imposed due to the absence of intent to evade duty. The case is remanded to the adjudicating authority for further consideration and appropriate orders. The Appellant's arguments regarding time limitations, penalty imposition, and confiscation of goods need to be addressed in the final decision.

In conclusion, the Appellate Tribunal remands the case back to the adjudicating authority for a thorough review and decision on the issues raised by the Appellant. The judgment highlights the importance of providing clear evidence, considering exemption notifications, reevaluating SSI eligibility criteria, and addressing the Appellant's claims regarding duty calculation, time limitations, penalty imposition, and confiscation of goods. The case is disposed of with the direction for the adjudicating authority to reconsider and pass an appropriate order in light of the detailed arguments presented by both parties.