2018 (8) TMI 1673 - AT - Central Excise

Principles of Natural Justice - relied upon documents not provided to appellant to defend their case - SSI Exemption - Held that - It is the contention of the appellant that they have not been served with the relied upon the documents along with show cause notice so that they can defend their case - the matter must be remanded back to the Original Authority to reconsider the issue afresh after following the principles of natural justice - appeal allowed by way of remand.

Summary

Issues:
Alleged misuse of SSI exemption by manufacturing and clearing branded goods, violation of principles of natural justice, use of unregistered brand name, eligibility for SSI exemption, extended period of limitation, use of machinery for manufacturing, burden of proof on the Department.

Analysis:

1. Misuse of SSI Exemption:
The appellants were accused of wrongly availing the benefit of SSI exemption by manufacturing and clearing branded goods bearing the name of another entity. The Central Excise Authorities found that the appellants were supplying branded biscuits to a bakery using the bakery's name and availing the SSI exemption. The lower authority confirmed the demand for duty along with interest and imposed penalties, although confiscation of goods was not ordered.

2. Violation of Principles of Natural Justice:
The appellants contended that the orders were passed in violation of natural justice as they were not provided with relied-upon documents essential for determining correct duty liability and defending their case. The Tribunal acknowledged this argument and remanded the matter back to the Original Authority for reconsideration following the principles of natural justice.

3. Use of Unregistered Brand Name:
The appellants argued that the name used on the goods was not a registered brand name and had geographical significance, hence not eligible for SSI exemption. However, the Department asserted that even unregistered brand names of other entities disqualify the appellant from SSI exemption under the relevant Notification.

4. Eligibility for SSI Exemption:
The Department contended that the appellants were not eligible for SSI exemption as they used machinery for manufacturing goods from 2003 onwards. The Tribunal noted that expenses related to machinery operation were evident from the accounts, leading to the denial of SSI exemption.

5. Extended Period of Limitation:
The Department invoked the extended period of limitation due to the suppression of facts regarding the clearance of branded goods and use of machinery until the investigation was initiated. The Tribunal upheld the invocation of the extended period based on the suppression of relevant information by the appellants.

6. Burden of Proof:
The burden was on the Department to establish that the brand name used by the appellants belonged to another entity. The Tribunal considered the evidence presented by both parties and concluded that the matter required further examination in light of the principles of natural justice.

In conclusion, the Tribunal disposed of the appeals by remanding the matter back to the Original Authority for a fresh consideration, emphasizing the importance of adhering to the principles of natural justice in the adjudication process.