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2010 (1) TMI 504 - AT - Central ExciseSSI Exemption - Clubbing of clearance - Since OHPL ODPL and OLPL during the period from April 1999 to September 1999 had made clearance of specified goods from their respective factory premises which are now part of factory premises of appellant thus liable to be clubbed. Held that - denying the exemption but on the ground of limitation held that department had in its record the precise figures regarding the value of clearance made by predecessor units during April 1999 to 13.09.1999 period but still when the classification declaration claiming the exemption under Notification No. 9/99-C.E. was made no objection was raised. No allegation of collusion between department officers and appellant. Duty demand not sustainable as elements for invoking the proviso to section 11A(1) are not present. Neither penalty is imposable.
Issues Involved:
1. Eligibility for concessional rate of duty under Notification No. 9/99-C.E. 2. Clubbing of clearances from different manufacturers. 3. Invocation of extended period under proviso to Section 11A(1) of the Central Excise Act. 4. Imposition of penalty under Section 11AC of the Central Excise Act and Rule 26 of the Central Excise Rules, 2001. Issue-wise Detailed Analysis: 1. Eligibility for Concessional Rate of Duty under Notification No. 9/99-C.E.: The appellant company, which started manufacturing P&P medicines in October 1999, acquired the plant and machinery from M/s. Shimal Investment & Trading Company in September 1999. This plant and machinery were previously operated by three separate units-OHPL, ODPL, and OLPL-at the same premises (X-60, X-61, and X-62, Okhla Industrial Area, Phase-II, New Delhi). These units had amalgamated with M/s. Shimal Investment & Trading Company and ceased operations before the appellant took over. The appellant availed concessional duty rates under Notification No. 9/99-C.E. for the period from October 1999 to 6-12-99. However, the Central Excise officers contended that the appellant was not eligible for these rates because the combined clearances of OHPL, ODPL, and OLPL during the financial year 1999-2000 exceeded the threshold limit for concessional duty rates. The officers argued that the clearances of the previous manufacturers (OHPL, ODPL, and OLPL) should be clubbed with those of the appellant, making the appellant liable for duty at the normal tariff rate of 16%. 2. Clubbing of Clearances from Different Manufacturers: The Tribunal examined Clause (V) of para 2 of Notification No. 9/99-C.E., which states that where specified goods are cleared by one or more manufacturers from a factory, the exemption applies to the aggregate value of clearances, not separately for each manufacturer. The Tribunal considered the definition of "factory" under Section 2(e) of the Central Excise Act, which includes any premises where excisable goods are manufactured. Since the appellant's factory at X-60, X-61, and X-62, Okhla Industrial Area, Phase-II, New Delhi, was previously operated by OHPL, ODPL, and OLPL, the clearances of these units during April 1999 to September 1999 had to be clubbed with the appellant's clearances for determining eligibility for concessional duty rates. The Tribunal concluded that the appellant's factory was the same as the factories of OHPL, ODPL, and OLPL, and therefore, the clearances of these units during April 1999 to September 1999 should be considered for determining the appellant's eligibility for concessional duty rates. Since the combined clearances exceeded the threshold limit, the appellant was not eligible for concessional duty rates. 3. Invocation of Extended Period under Proviso to Section 11A(1) of the Central Excise Act: The show cause notice dated 2-9-02 was issued to the appellant, proposing to deny the benefit of concessional duty rates and demanding differential duty for the period from October 1999 to 6-12-99. The notice invoked the extended period under proviso to Section 11A(1) of the Central Excise Act, alleging wilful misstatement and suppression of facts by the appellant. The Tribunal found that the appellant had filed a classification declaration and a letter to the Deputy Commissioner, stating that they had not made any clearances from their factory till date. However, the Department was already aware that OHPL, ODPL, and OLPL had made clearances from the same premises during April 1999 to September 1999. The Tribunal referred to the Supreme Court's judgments in Pushpam Pharmaceuticals Company v. CCE, Bombay and Continental Foundation Jt. Venture v. CCE, Chandigarh-I, which held that suppression of facts must be deliberate to evade payment of duty. The Tribunal concluded that the Department's knowledge of the previous clearances and the absence of any objection to the classification declaration indicated that there was no wilful misstatement or suppression of facts by the appellant. 4. Imposition of Penalty under Section 11AC of the Central Excise Act and Rule 26 of the Central Excise Rules, 2001: The Tribunal held that since the duty demand was time-barred, the penalties imposed on the appellant company under Section 11AC of the Central Excise Act and on Dr. Sushil Khanna, Executive Director of the appellant company, under Rule 26 of the Central Excise Rules, 2001, were not sustainable. The Tribunal emphasized that the elements for invoking the proviso to Section 11A(1) were not present, and therefore, the penalties could not be justified. Conclusion: The Tribunal concluded that while the appellant was not eligible for concessional duty rates under Notification No. 9/99-C.E. during the period from October 1999 to 6-12-99, the duty demand was time-barred due to the absence of wilful misstatement or suppression of facts. Consequently, the penalties imposed on the appellant company and its Executive Director were also set aside. The appeal was allowed, and the impugned order was set aside.
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