2018 (8) TMI 883 - AT - Central Excise

SSI Exemption - crossing of threshold limit - Adjudicating Authority did not find favour with the appellant s contention on the trading activities and accordingly confirmed the demand by treating the entire clearances as that of being appellant s own manufactured goods - appellant claimed bonafide belief - Penalty - Held that - The Revenue has allegedly taken into account the traded goods - demand set aside. The appellants crossed the SSI Exemption limit during the period 2006-07 till 2011-12 and were not paying the duties on the excess clearances. In such a scenario, the appellant s belief of bona-fide cannot be appreciated in as much as, the assessee s non-payment of duty continued for a long period and it cannot be said that the appellant was not aware of such limit. In as much as, they themselves were availing the benefit of the SSI Exemption Notification and are expected to know the value of exempted clearances. It is for them to bring to the notice of the Revenue or to start paying duty on their own, once they cross the limit. Appeal allowed in part.

Summary

Issues:
1. Confirmation of demand and penalty by the Commissioner
2. Applicability of SSI Exemption Notification
3. Treatment of clearances exceeding exemption limit
4. Imposition of penalties on different individuals
5. Consideration of traded goods in duty liability
6. Appeal against the impugned order
7. Crossed SSI Exemption limit and duty payment
8. Setting aside penalties and confiscation of goods

Analysis:

1. The judgment involves the confirmation of demand and penalty by the Commissioner, Central Excise, Allahabad, amounting to ?1,33,11,883 along with confiscation of finished goods and raw materials. Penalties of ?20 lakhs on the Managing Director and varying amounts on other individuals were imposed as per Rule 26 of the Central Excise Rules, 2002.

2. The appellant, M/s Hi Tech Medicare Device Pvt. Ltd., availed the benefit of SSI Exemption Notification No. 8/2003-CE, exempting initial clearances up to ?1.5 crores. However, it was alleged that they exceeded this limit, leading to duty payment requirements on clearances beyond the exemption threshold.

3. The appellant argued that apart from manufacturing, they were also engaged in trading activities for other medical devices, which should not incur duty liability. The Adjudicating Authority rejected this claim, treating all clearances as the appellant's manufactured goods, resulting in the confirmation of demands, confiscation, and penalties.

4. The Tribunal referred to a previous order in the same appellant's case, where a similar issue was decided in favor of the appellant. Following this precedent, the Tribunal set aside the part of the impugned order considering the traded goods in the duty liability calculation.

5. Despite setting aside the duty confirmed for traded clearances, the Tribunal upheld the demand of ?18,75,963 for exceeding the exemption limit and imposed penalties accordingly. However, separate penalties on individuals were deemed unjustified, leading to the setting aside of penalties and confiscation of goods.

6. The appellant's argument of bona-fide belief was dismissed as they had crossed the SSI Exemption limit over several years without paying the required duties. The Tribunal emphasized the appellant's responsibility to monitor clearances and duty obligations, rejecting the request to set aside penalties based on the appellant's bookkeeping practices.

7. Ultimately, the Tribunal disposed of all four appeals by upholding the demand of ?18,75,963 for exceeding the exemption limit, setting aside penalties on individuals, and confiscation of goods, based on the detailed analysis and findings presented in the judgment.