2023 (10) TMI 1457 - AT - Central Excise

Eligibility of exemption Notification No. 03/2005 as superseded by N/N. 12/2012 in respect of hot rolled Patta Patti - Imposition of penalty on the partner of the firm. Eligibility of exemption N/N. 03/2005 as superseded by N/N. 12/2012 in respect of hot rolled Patta Patti - HELD THAT - From the Notification particularly the Sr. No. 203 which provides the exemption to Pattas and Pattis subject to any process other than cold rolling which means if the Patta or Patti are cleared which has not undergone the process of cold rolling , the same goods are covered under exemption Sr. No 203 subject to falling under Chapter heading 7219 or 7220. In the present case the goods in question is hot rolled Patta or Patti falling under Chapter 72201290. The hot rolled Pattas and Pattis are undisputedly does not undergo the process of cold rolling therefore, irrespective of any other process carried out to manufacture HR Pattas and Pattis , the exemption is clearly admissible to such goods. From the clarification, Central Excise Tariff Conference by the Central Board of Excise and Customs by Instruction F. No. 96/85/2015-CX.I dated 07.12.2015, it was made absolutely clear that all the process prior to cold rolling stage is eligible for exemption from duty under Sr. No. 203 of Notification No. 12/2012 dated 17.03.2012. In the present case the Hot Rolling process is admittedly the process which is taken place prior to the process of cold rolling, therefore, in view of the clarification, the Hot Rolled Pattas and Pattis are clearly covered under the Notification No 12/.2012- CE dated 17.03.2012 under Sr. No. 203. Imposition of separate penalty on the partner - HELD THAT - Where there is a case against the partnership firm, no separate penalty on the partner cannot be imposed for the reason that the partnership firm is consisting of partners, therefore, imposing separate penalty on the partners will be double jeopardy on the same partner. This has been settled by the Hon ble Gujarat High Court that separate penalty on the partner cannot be imposed in case of PRAVIN N. SHAH VERSUS CESTAT 2012 (7) TMI 850 - GUJARAT HIGH COURT . Moreover, since the appellant firm is eligible for exemption notification, there is no question of penalty. The appellant are legally eligible for exemption Notification No. 12/2012- CE (203) and consequential demand of excise duty cannot be sustained - the impugned orders are set aside - Appeal allowed.

Summary

Issues:
1. Eligibility of exemption under Notification No. 03/2005 for hot rolled Patta Patti.
2. Imposition of penalty on the partner of the firm.

Analysis:
Issue 1:
The case involved the appellants engaged in manufacturing SS Hot Rolled Patta Pattii and SS Cold Rolled Patta Patti, claiming exemption under Notification No. 03/2005 for hot rolled Patta Patti. The dispute centered around whether the benefit of exemption applied to hot rolled Patta Patti without undergoing cold rolling. The Adjudicating Authority confirmed the demand for Central Excise duty, interest, and penalty, invoking a larger period of limitation. The appellants contended that the hot rolled Patta Patti did not undergo cold rolling and thus qualified for the exemption. They cited a board circular and legal precedents to support their claim. The Revenue reiterated the findings of the impugned order.

Upon careful consideration, the Tribunal analyzed the relevant exemption Notification No. 12/2012, specifically Sr. No. 203, which exempted pattis and pattas not subjected to cold rolling. The Tribunal referred to a clarification indicating that all processes before cold rolling were eligible for exemption. As the hot rolled Patta Patti did not undergo cold rolling, the Tribunal concluded that the appellants were entitled to the exemption. Additionally, the Tribunal noted that separate penalty on the partner of the firm could not be imposed, especially when the firm was eligible for the exemption notification, thereby rejecting the demand for excise duty.

Issue 2:
Regarding the penalty on the partner, the Tribunal concurred with the appellant's argument that imposing a separate penalty on the partner of a partnership firm would amount to double jeopardy. Citing legal precedents, including a decision by the Hon'ble Gujarat High Court, the Tribunal emphasized that since the appellant firm qualified for the exemption notification, penalizing the partner was unwarranted. Consequently, the Tribunal set aside the impugned orders, allowing the appeals with any consequential relief as per the law.

In conclusion, the Tribunal ruled in favor of the appellants, holding them legally eligible for the exemption under Notification No. 12/2012-CE (203) for hot rolled Patta Patti and dismissing the demand for excise duty. The judgment was pronounced in open court on 11.10.2023.