2024 (6) TMI 184 - HC - Central Excise

Recovery of excise duty - benefit of exemption under notification dated 28.02.1993 denied - levy of penalty as well - demand u/s 11A of the Central Excise Act - HELD THAT - As per the notification providing for full exemption on concessional rate of duty, it has been provided that the said notification shall apply on the aggregate value of clearance of all the excisable goods for whom consumption only in circumstances other than where a manufacturer has one or more factories and from any factory by one or more manufacturer, exceeds Rs. 200 lacs in preceding financial year, the same was increased w.e.f. 01.04.1995 to Rs. 300 lacs vide notification dated 16.03.1995 - the notification would only be granting exemption in the cases where the manufacturers have cleared overall amount less than Rs. 200 lacs/300 lacs as the case may be. If the production from different factories and clearance is altogether more than the said amount, the exemption cannot be allowed. Both the Appellate Authorities are agreed upon to conclude that infact the Jaybee Industries consisting of N. K. Aggarwal and Pardeep Aggarwal as partners was a single partnership firm having two factories one at Bathinda and another at Panchkula and, therefore, they were required to include the factories of goods from both the units and the exemption could not have been claimed on the said basis and the recovery of non-payment of duty for the period from July 1994 to May, 1995 is found to be correct and in order. Applicability of Section 11 A - HELD THAT - The same has not been raised at the stage of appeal below and the same could not be taken up in appeal at present. Appeal dismissed.

Summary

Issues involved: Appeal against order of Customs, Excise & Service Tax Appellate Tribunal confirming demand of duty u/s 11A of Central Excise Act and reduction of penalty amount.

Summary:
The civil appeal challenged an order confirming duty demand u/s 11A of the Central Excise Act, with a reduced penalty, passed by the Commissioner of Central Excise. The appellant contended that two firms, despite having common partners, were separate entities and not a single partnership firm. The appellant argued that the Panchkula firm was entitled to exemption and there was no evasion of duty. Reference was made to legal precedents to support the appellant's case. The appellant also claimed lack of mens rea to evade duty, citing relevant judgments. The respondent supported the order passed by the Apex Court in a related case.

The High Court considered the submissions and reviewed the record. It noted that one firm exceeded the exemption limit and paid duty at the normal rate, while the other firm did not exceed the limit and paid duty at a concessional rate. A show cause notice was issued for recovery of excise duty, which was contested by the appellant. The Additional Commissioner held the appellant was not entitled to exemption and demanded duty along with penalties. The appeal against this order was upheld by the Appellate Authority and partially accepted by CESTAT, reducing the penalty amount.

The High Court analyzed the notification providing for exemption and concluded that the firms were a single partnership firm with two factories, thus not eligible for exemption. It was found that the exemption applied only if the aggregate value of clearance did not exceed a certain limit. The Court upheld the demand for non-payment of duty and dismissed the appeal. The Court also noted that the issue of the applicability of Section 11A was not raised at the lower appeal stage and could not be considered. Consequently, the appeal was dismissed, and pending applications were disposed of.