2023 (11) TMI 9 - AT - Central Excise

Levy of penalty - Evasion of central excise - wrongful claiming of SSI exemption - abetting M/s. Micro Spares to show separate clearances of goods on paper as units having a separate legal entity - HELD THAT - It was found that the main noticee M/s. Micro Spares has already settled the matter under SVLDR Scheme and were issued Form SVLDRS IV dated 15.6.2020 (discharge certificate for full and final settlement of tax dues). Based on the said certificate, the appeal filed by M/s. Micro Spares was dismissed as settled under SVLDR Scheme. This is a case in which the main noticee has settled the dispute under the SVLDRS Scheme and the issue cannot now been re-opened and examined on merits. Further the co-noticees who were subjected to penalties only, have not filed a declaration under the SVLDRS Scheme before the scheme s closure. Having not done so, their appeal continues to lie before this Tribunal pending disposal. Considering the facts and circumstances of the cases, the discharge given to the main noticee and the clarification given by CBIC regarding co-noticees under the SVLDR Scheme, 2019, it is felt that a reduction in penalty would serve the ends of justice. The impugned order is modified with respect to the appellants and reduce the penalty to Rs.50,000/- (Rupees fifty thousand) each only - appeal allowed in part.

Summary

Issues involved:
The issues involved in this case include evasion of central excise duty, abetting in suppressing the value of clearances, imposition of penalty under Rule 25 of Central Excise Rules, 2002, and the applicability of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Evasion of Central Excise Duty:
The appellants, sister concerns of M/s. Micro Spares, were suspected of evading central excise duty by not disclosing the actual value of clearances and wrongly claiming SSI exemption despite exceeding the exemption limit. It was revealed that the appellants did not have manufacturing facilities and collaborated with M/s. Micro Spares to show separate clearances of goods on paper as entities with distinct legal standing. The department issued a Show Cause Notice proposing to club all their clearances for duty demand, leading to the imposition of a penalty of Rs.10 lakhs each on the appellants for abetting in suppressing clearances.

Applicability of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The main noticee, M/s. Micro Spares, settled the matter under the SVLDR Scheme and received a discharge certificate for full and final settlement of tax dues. The appellants, as co-noticees, believed that they would also be discharged automatically upon the main noticee's settlement. However, they failed to file a declaration under the SVLDR Scheme before its closure. The Tribunal considered the clarification by CBIC regarding co-noticees under the SVLDR Scheme and decided to reduce the penalty imposed on the appellants to Rs.50,000 each, emphasizing that a reduction in penalty would serve the ends of justice.

Conclusion:
In conclusion, the Tribunal modified the impugned order and reduced the penalty on the appellants to Rs.50,000 each, taking into account the settlement by the main noticee under the SVLDR Scheme and the circumstances of the case. The appeals were disposed of accordingly.