2024 (12) TMI 1092 - AT - Central Excise

SSI Exemption - bona-fide belief that the value of Branded Goods (whether exempt or otherwise) was not to be included while computing the cap limit of Rupees four crores - impugend order passed without properly appreciating the facts and the law - violation of principles of natural justice - Invocation of Extended period of limitation. Extended period of limitation - HELD THAT - The department issued first show cause notice (SCN-1) on 09.04.2009 for the period January 2008 to March 2008 without invoking the extended period of limitation but subsequently on 19.08.2009, the department issued another show cause notice (SCN-2) for the period April 2007 to December 2007 by invoking the extended period of limitation, and both the show cause notices arose out of the same audit report. We find that it is a settled position of law that in a subsequent show cause notice arising out of the same audit report, the allegation of suppression cannot be alleged and extended period of limitation cannot be invoked in view of the various decisions relied upon by the appellant. SSI exemption as per N/N. 8/2003-CE - HELD THAT - It is found that if the department s view that such branded medicaments are exempted in terms of Notification No. 4/2006 cannot be accepted inasmuch as the condition 3A(b) refers to the clearance of branded goods which are specifically excluded from the benefit of Notification No. 08/2003. The fact that same are entitled to some other exemption notification, will not change the complexion of the said provisions of (b) of Para 3A of the Notification and taking the view as advanced by the Revenue, would amount to introduce a new condition or to change the unambiguous wording of such clause, which is not permissible in law. The impugned order is not sustainable on limitation as well as on merits and is liable to be set aside - Appeal allowed.

Issues:
1. Whether the impugned order rejecting the appeal and upholding the Order-in-Original is sustainable in law.
2. Whether the demand confirmed by invoking the extended period of limitation is valid.
3. Whether the appellant's interpretation of the cap limit under Notification No. 8/2003-CE is correct.
4. Whether the penalty imposed is justified.

Detailed Analysis:

1. The judgment involves two appeals challenging a common order passed by the Commissioner (Appeals) rejecting the appellant's appeal and upholding the Order-in-Original. The appellant, engaged in manufacturing pharmaceutical products, was availing the benefit of Notification No. 8/2003-CE and clearing goods at NIL rate of duty. The issue arose when it was alleged that the appellant exceeded the cap limit for SSI exemption, leading to demand and penalty. The appellant contended that the branded goods' value should not be included in the cap limit calculation, which formed the basis of the dispute.

2. The appellant argued that the extended period of limitation was wrongly invoked, citing legal precedents that prohibit issuing multiple show cause notices on the same facts. The appellant emphasized that suppression of facts must involve deliberate non-disclosure to evade duty, which was not the case here. The appellant relied on various decisions to support the contention that the demand based on the extended period of limitation was unsustainable.

3. The appellant further contended that the branded goods manufactured for other entities were not eligible for the exemption under Notification No. 8/2003-CE. The appellant argued that the interpretation of the notification's conditions supported their position, and any exemption under a different notification did not alter this exclusion. The Tribunal's decision in a similar case was cited to strengthen this argument, highlighting that the department's view was impermissible under the law.

4. Regarding the penalty imposed, the appellant argued that since the demand itself was not sustainable, no penalty should be levied. The appellant maintained that when the demand lacks merit, the penalty cannot stand. The appellant's position was supported by the argument that the penalty should be commensurate with the demand's validity, which, in this case, was found to be unsustainable.

In conclusion, the Tribunal found in favor of the appellant on all issues raised. The impugned order was deemed unsustainable both on limitation and merits. The appeals were allowed, providing the appellant with consequential relief as per the law. The judgment emphasized the importance of correct interpretation of legal provisions and adherence to established legal principles in tax matters.

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