2002 (4) TMI 159 - AT - Central Excise

Manufacture - SSI Exemption - Value of Clearances - Adjudication - Jurisdiction - Penalty and interest

Summary

Issues:
Appeals against duty and penalty confirmed by impugned order-in-original dated 23-10-98.

Analysis:
The case involved the appellant company engaged in the manufacture of hydrogen gas under CETA sub-heading 2804.19, which floated three front companies to compress and bottle the gas for marketing. Allegations included misusing SSI exemption and evading excise duty. The Commissioner confirmed duty demand, penalty, and ordered confiscation based on control, supply of machinery, and financial assistance provided by the appellant company to the front companies.

The appellant contended that compressing and bottling gas did not amount to manufacturing by the front companies, and there was no evidence of financial flow back to the appellant company. The impugned order was challenged as based on assumptions and presumptions.

The Tribunal noted that compressing and bottling gas did not constitute manufacturing based on precedent. It observed that the front companies were independently registered, filing returns, and availing benefits separately. The Tribunal emphasized the independence and separate status of the front companies, rejecting the clubbing of clearances with the appellant company.

The Tribunal highlighted that without proof of financial flow back, common premises or assistance was insufficient for clubbing clearances, citing relevant case law. It found no evidence of suppression of facts by the front companies to evade duty, noting their registration and disclosure to the excise department.

Regarding jurisdiction, the Tribunal dismissed the challenge, stating the Board's power to transfer cases for adjudication. Penalties on employees/directors of the front companies were deemed unjustified, and the duty confirmed by clubbing clearances was held unsustainable. No retrospective application of penalty or interest was allowed.

Consequently, the impugned order was set aside entirely for all appellants, allowing their appeals with consequential relief as per the law.