2004 (5) TMI 179 - AT - Central Excise

Summary

Issues:
- Denial of exemption under Notification No. 9/99-C.E. for the period 1-4-1999 to 6-4-1999
- Denial of exemption under Notification No. 9/2000-C.E. for the period 1-4-2000 to 3-4-2000
- Challenge against penalty imposed under Rule 173Q of the Central Excise Rules, 1944

Analysis:
- The appellants were engaged in the manufacture of excisable goods specified for SSI exemption under Notification No. 9/2003-C.E. The dispute arose due to the failure of the appellants to exercise their option for availing the exemption under the relevant notifications at the beginning of the financial year. The authorities confirmed demands of duty against the appellants for not complying with the conditions of Para 2 of the notifications.

- The appellants argued that they had been availing the benefit of the predecessor-Notification in a bona fide manner and had filed Rule 173B declarations, which they contended should be considered as an exercise of option under the notifications. They relied on a previous Tribunal decision to support their argument. However, the Departmental Representative (DR) contended that the conditions in Para 2 of the notification were substantive requirements and not merely procedural. The DR emphasized that the declarations filed by the appellants for the previous financial year could not substitute for the required option exercise for the relevant financial years.

- The Tribunal endorsed the position taken by the DR, emphasizing that the declarations filed by the appellants for the previous financial year did not have any effect beyond that financial year's end. Therefore, they could not be considered as a valid exercise of option for the succeeding financial years. The demands of duty for the periods in question were upheld due to the appellants' failure to comply with the notification requirements.

- Regarding the penalty imposed on one of the appellants, the Tribunal found no mala fide intention and noted that the belated exercise of option was due to a bona fide mistake. As a result, the penalty was vacated for that appellant. The penalty on other appellants was not imposed, considering similar circumstances. Appeal No. E/526/2003 was disposed of by upholding the demands, while Appeal Nos. E/527 & 528/2003 were dismissed.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, and the Tribunal's decision on each issue, providing a comprehensive understanding of the legal reasoning and outcome of the case.