2019 (3) TMI 1040 - AT - Central Excise

SSI Exemption - removal of brass scrap by the appellants - penalty u/r 25 of CER, 2002 - Held that - There is no illegality as they have cleared brass scrap under the cover of challans declaring it under N/N. 83/94-CE and 84/94-CE dated 11.04.1994 - The case that whether M/s. Senor Metal Pvt. Limited is eligible for SSI exemption under N/N. 8/2003-CE, the eligibility of said notification is concerned with M/s. Senor Metal Pvt. Limited alone. The removal of brass scrap under N/N. 83/94-CE and 84/94-CE was correctly availed by the appellant for the reason that their final product i.e. brass wire was covered under SSI N/N. 8/2003-CE. Therefore, there is absolutely no mistake or violation of any provision on the part of the appellant. There is no reason that why appellants are liable to penalty under Rule 25 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against imposition of penalty under Rule 25 of Central Excise Rules, 2002 in connection with demand of Central Excise duty confirmed against M/s. Senor Metal Pvt. Limited.

Detailed Analysis:

Issue 1: Imposition of Penalty under Rule 25
The appeals were directed against an order imposing a penalty of ?50,000 on each appellant under Rule 25 of the Central Excise Rules, 2002, related to the demand of Central Excise duty confirmed against M/s. Senor Metal Pvt. Limited. The appellants supplied brass scrap on a job work basis to M/s. Senor Metal Pvt. Limited under specific notifications for SSI exemption. The goods manufactured from the scrap were denied the SSI exemption, leading to the imposition of penalties on the appellants.

Issue 2: Arguments by Appellant and Revenue
The appellant's representative, a Chartered Accountant, argued that the appellants had not violated any provisions and had cleared the scrap under the applicable exemption notifications. It was emphasized that any lapse in meeting the eligibility criteria for the exemption lay with M/s. Senor Metal Pvt. Limited, the manufacturer of the final products. On the other hand, the Revenue's representative supported the findings of the impugned order, linking the penalties to the demand confirmed against M/s. Senor Metal Pvt. Limited.

Issue 3: Tribunal's Analysis and Decision
The Tribunal carefully considered the submissions and reviewed the facts. It was established that the appellants were suppliers of scrap used in the manufacture of final products, sent to M/s. Senor Metal Pvt. Limited for conversion. The appellants had cleared the scrap under the relevant notifications correctly. The Tribunal clarified that the eligibility for the SSI exemption rested solely with M/s. Senor Metal Pvt. Limited. As the appellants had followed the necessary procedures and were not involved in any evasion of duty, the penalties under Rule 25 were deemed unjustified. Consequently, the Tribunal set aside the penalties imposed on all appellants and allowed the appeals.

In conclusion, the Tribunal ruled in favor of the appellants, highlighting their compliance with the exemption notifications and lack of involvement in any duty evasion by M/s. Senor Metal Pvt. Limited. The penalties under Rule 25 were revoked, emphasizing the appellants' innocence in the matter.