2004 (1) TMI 135 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 1/93-C.E. regarding duty payment for specified goods.
2. Whether marking goods with a specific brand name constitutes an exercise of option under the Notification.
3. Consideration of a disclaimer by a third party regarding the brand name.
4. Evaluation of an explanation for payment of duty due to a clerical error.
5. Examination of the plea of limitation in the demand of duty.

Analysis:
1. The case involved the appellants, a Small Scale Industrial (SSI) unit, manufacturing "S. Sand" and "P.F. Resin," availing concession under Notification No. 1/93-C.E. The dispute arose when duty was paid at full Tariff rate for goods cleared under specific brand names not eligible for SSI benefit. The department contended that a consignment marked "MA" constituted an exercise of option under the Notification, leading to a demand for duty on subsequent clearances. The original authority upheld the demand and imposed a penalty, which was partially reduced by the Commissioner (Appeals).

2. The main issue was whether marking goods with the brand name "MA" for a specific consignment amounted to opting out of the SSI exemption under the Notification. The Tribunal noted that the appellants had consistently paid duty at Tariff rate for goods under ineligible brand names. A letter from the consignee disclaiming ownership of the brand "MA" supported the appellants' claim that the marking was for identification purposes only. The Tribunal accepted the explanation that the duty payment on the disputed clearance was due to a clerical error, as the appellants had not formally opted out of the exemption.

3. The Tribunal found no conclusive evidence to reject the appellants' explanation and noted that the first proviso to the Notification did not explicitly provide for a deemed exercise of option. The Tribunal emphasized that the clearance in question was an isolated incident, and the plea of error by the accounting clerk should have been accepted by the authorities. The lack of substantial grounds to refute the error plea led the Tribunal to overturn the decision and allow the appeal.

4. Additionally, the plea of limitation was raised regarding the demand for duty, with the show cause notice issued beyond the normal period. The extended period of limitation was invoked based on alleged mis-declaration, which was not substantiated in this case. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellants.