2023 (4) TMI 711 - AT - Central Excise

Benefit of SSI exemption denied - repeated/Duplicate bills wrongly considered twice - value of Non-Manufactured goods wrongly considered as dutiable or not - demand of Energy cess - penalty under section 11AC of CEA, 1944 - interest under section 11AA of CEA, 1944 - HELD THAT - The submission of the appellant that non-manufactured goods were wrongly considered as dutiable goods and duty was confirmed thereon has been examined. During the entire period the value of the goods which were traded and the value of goods, which were manufactured were taken separately and were indicated in the Annexure to the SCN and duty was demanded only on the value of the manufactured goods - no central excise duty was payable at all. It is a well settled principle that manufacture involves change, but every change is not manufacture. Manufacture requires that a new distinct marketable goods should be produced. In this case, the raw material which the appellant was using was steel sheets, as known in the market. What the appellant was producing were MS Shuttering Plates, MS Round Shuttering Plates, MS Crash Bar Plates, MS Hunch Plates, MS Trusses, MS Jali, MS Bar, MS Pier Cap Set, MS Concrete Bucket etc. which are different products known to the market. The appellant is not selling its final products as steel sheets but as these products. There is no mechanism prescribed under the Act for any process to amount to manufacture. So long as a new and distinct commodity known to the market is produced, the process amounts to manufacture and not otherwise - the appellant was manufacturing goods using steel sheets and, therefore, there is no infirmity in the appellant being charged to central excise duty. Demand of energy cess - HELD THAT - The clean energy cess was chargeable along with the education cess and higher education cess along with the excise duty. The appellant has not produced any law under which it was exempted from payment of clean energy cess. Therefore, this ground cannot be accepted. The appellant contested the demand of interest. Payment of interest is mandatory under section 11AA and, therefore, the same cannot be set aside. Penalty imposed under section 11AC - HELD THAT - The appellant had not taken registration and had not paid central excise duty nor had disclosed its activities to the department. Its only the investigation which revealed the activities of th appellant. In view of this, the appellant had evaded central excise duty while suppressing facts. Accordingly, the mandatory penalty under section 11AC needs to be upheld. The appeal is partly allowed to the extent of deduction of excise duty on the two sets of duplicate invoices.

Summary

Issues involved:
The issues involved in the judgment are denial of SSI exemption, consideration of non-manufactured goods as dutiable, demand of energy cess, inclusion of repeated/duplicate bills, confirmation of penalty under section 11AC, and confirmation of interest under section 11AA.

Denial of SSI Exemption:
The appellant contended that it was wrongly denied the SSI exemption for the year 2014-2015. However, upon examination, it was found that the appellant was not denied the benefit of SSI exemption as the taxable value was correctly calculated after considering the turnover and the applicable exemption limit.

Consideration of Non-Manufactured Goods:
The appellant argued that non-manufactured goods were wrongly considered as dutiable, but the tribunal observed that central excise duty was demanded only on the value of the manufactured goods. The process undertaken by the appellant involved manufacturing distinct marketable goods from raw materials, thereby justifying the imposition of central excise duty.

Demand of Energy Cess:
The appellant challenged the demand of energy cess, claiming it was not sustainable under the law. However, the tribunal noted that clean energy cess was chargeable along with other cess and excise duty, and since no exemption law was produced by the appellant, this ground was not accepted.

Inclusion of Repeated/Duplicate Bills:
The appellant raised concerns about repeated or duplicate bills being considered twice. The tribunal examined specific instances provided by the appellant and found duplication in some invoices, leading to the deduction of excise duty on those duplicate invoices. However, in other cases, where separate invoices were issued for the same quantity of goods to the same party on different dates during different financial years, no duplication was found.

Confirmation of Penalty under Section 11AC:
The appellant contested the penalty imposed under section 11AC, arguing that it was wrongly confirmed. The tribunal, considering the appellant's failure to register, pay central excise duty, or disclose activities to the department, upheld the penalty under section 11AC due to the evasion of central excise duty by the appellant.

Confirmation of Interest under Section 11AA:
The appellant disputed the confirmation of interest under section 11AA. However, the tribunal stated that payment of interest is mandatory under the law and cannot be set aside, thereby upholding the imposition of interest.

Conclusion:
The tribunal partly allowed the appeal by deducting excise duty on duplicate invoices and upheld the rest of the impugned order. The appeal was disposed of with consequential relief to the appellant, with the order pronounced in open court on 17/04/2023.