2018 (10) TMI 822 - AT - Central Excise

100% EOU - SSI Exemption - use of brand name - Alleging that the product attracts normal rate of duty@ 16% in terms of Sr. No. 3 of Notification 23/2003-CE dated 31.3.2003, as the pickle was cleared bearing brand name in unit containers, being not exempted during the period 28.2.2005 to 28.2.2006, demand made. Whether the appellant is entitled to avail the benefit of Notification No. 23/2003-CE (Sr. No. 4)? Held that - The learned Commissioner (Appeals) taking into consideration the fact that such notification is not available to pickles being cleared in unit containers affixing the brand name upheld the order of the adjudicating authority - it is correctly held that in respect of branded pickles put up in unit container cleared and sold by the appellant during the period 28.02.2005to 28.02.2006 are liable to duty @ 16% instead of 9% as correctly held in the Order in Original (OIO). Time bar - Held that - When the fact of goods bearing a brand name and put up in unit container is. not declared in returns, there is no way a Central Excise Officer can know about it. CERA or internal audit, if done, as claimed by assessee would not come to his rescue as audits are done on basis of selection and do not cover entire gamut of activities or documents - Moreover if documents are not revealing the correct status, the auditors will also not be able to know the reality by scrutinizing them. Therefore, the appellant is liable for penal action under Section 11 A(1) of the Central Excise Act, 1944. Appeal dismissed - decided against appellant.

Summary

Issues:
- Interpretation of Notification No. 23/2003-CE regarding duty exemption for pickles cleared in unit containers bearing a brand name.
- Applicability of penalty under Section 11 A(1) of the Central Excise Act, 1944 for incorrect declaration in ER-2 returns.

Interpretation of Notification No. 23/2003-CE:
The case involved an appeal against a demand notice for Central Excise duty on pickles cleared under brand names into the domestic tariff area (DTA) by an EOU. The issue was whether the appellant was entitled to the benefit of Notification No. 23/2003-CE (Sr. No. 4). The Commissioner (Appeals) upheld the demand, stating that pickles in unit containers bearing a brand name were not exempted under the said notification. The appellant's claim of exemption was rejected, and duty @ 16% was imposed. The factory manager's statement admitting the duty liability further supported this decision. The appellant's failure to declare the brand name and packing status in ER-2 returns intentionally led to incorrect exemption claims, justifying the duty imposition.

Applicability of Penalty under Section 11 A(1):
The Tribunal found no contrary evidence presented by the appellant. The failure to disclose crucial information in ER-2 returns, such as goods being branded and packed in unit containers, shifted the onus of correct declaration to the appellant. The incomplete information hindered the Central Excise Officer's ability to assess the correct duty liability. The Tribunal emphasized that audits and internal checks are limited by the information provided, and penal action under Section 11 A(1) of the Central Excise Act, 1944 was deemed appropriate due to the deliberate non-disclosure of relevant facts. Consequently, the appeal was dismissed, and the impugned order was upheld.

This detailed analysis of the judgment highlights the key issues of interpretation of duty exemption notifications and the imposition of penalties for incorrect declarations, providing a comprehensive overview of the Tribunal's decision.