2019 (3) TMI 606 - AT - Central Excise

SSI Exemption - alleged clearances in excess of the ceiling permitted for exemption from duties - the entire amount in dispute has been remitted with interest along with 25% of penalty too has been deposited - Held that - The appellant had failed to intimate the commencement of production in September 2007. Though it is claimed that they had not effected any manufacture prior to that mere submission to that effect does not suffice to support this claim. It is doubtlessly impossible for any entity to establish a non-event but considering the capability of machining and finishing parts of automobiles in the factory of manufacture such a claim cannot be accepted without other evidence. This is more so as the appellant had sought for and obtained registration under Central Excise Rules 2000 only after investigation was undertaken by central excise authorities - The link between the dropping of proceedings initiated against one of the suppliers of castings to the appellant and the claim for excluding that portion from the total clearance allegedly effected without payment of duty by appellant cannot overcome the test of logic and reason. Reduced benefit of penalty - Held that - It is on record that the duty liability has been discharged along with interest and that the lower authorities had not extended the privilege of reduced payment of penalty under section 11AC(1)(d) of Central Excise Act 1944. Appeal allowed in part.

Summary

Issues:
Challenge to order confirming demand of central excise duties, imposition of penalty, alleged manufacturing activities, exemption limit under notification, clubbing of total value of goods, clandestine clearances, reliance on statements, lapse of time between investigation and show cause notice, duty liability crystallization, failure to intimate production commencement, registration under Central Excise Rules, exclusion of portion from total clearance, reduced penalty privilege.

Analysis:

The appeal challenges the order confirming a demand of central excise duties, interest, and penalty imposed under the Central Excise Act, 1944. The dispute revolves around alleged manufacturing activities of 'CI castings' and 'motor vehicle parts' during 2007-08, exceeding the exemption limit specified in notification no. 8/2003-CE dated 1st March 2003. The appellant contends that until September 2007, they only supplied castings to job-workers, not engaging in manufacturing. Subsequently, they claim to have carried out machining on automobile parts. The appellant argues that the total value of goods for the entire year was incorrectly clubbed by lower authorities, pushing them beyond the exemption limit. The appellant highlights that the charges were based on allegations against other suppliers, which were set aside, and insists on excluding these values to reduce duty liability.

The appellant relies on legal precedents to challenge the enforceability of the demand. They argue that the time lapse between investigation completion and the issuance of a show cause notice is fatal to the proceedings. The appellant emphasizes that the lower authorities failed to consider this aspect, questioning the basis of the demand. However, the Authorized Representative contends that the duty liability was correctly determined based on admitted activities of the appellant. The failure to notify the commencement of production in September 2007 is highlighted, with authorities doubting the claim of no manufacturing activity before that date. The appellant's registration under Central Excise Rules post-investigation raises suspicions regarding the claim of non-manufacturing activities.

The Tribunal rejects the appellant's arguments, emphasizing the duty liability discharge with interest and the denial of reduced penalty privilege by lower authorities. The Tribunal upholds the duty demand and interest while extending the facility of reduced penalty under section 11AC(1)(d) of the Central Excise Act, 1944 to the appellant. The decision underscores the importance of compliance and evidence in challenging duty liabilities and penalties under the Central Excise Act, 1944.