1999 (11) TMI 324 - AT - Central Excise

Issues Involved:
1. Eligibility for Small Scale Industry (SSI) exemption under Notification No. 175/86.
2. Interpretation of registration under the Industries (Development and Regulation) Act, 1951 (IDR Act) and its implications.
3. Applicability of extended period of limitation for imposing penalties.
4. Jurisdiction of the Superintendent in issuing Show Cause Notices for alleged evasion of duty.

Issue-wise Detailed Analysis:

1. Eligibility for Small Scale Industry (SSI) exemption under Notification No. 175/86:
The primary issue was whether M/s. Vishwa Rattan Refractories (P) Ltd. (VR) was eligible for the SSI exemption under Notification No. 175/86, as amended by Notification No. 244/87. The Department contended that VR was ineligible for the exemption because it was registered with the Director General of Technical Development (DGTD) under the IDR Act, which excluded it from the purview of the exemption. VR argued that their registration with DGTD was for statistical purposes only and did not equate to registration under the IDR Act, which would disqualify them from the exemption.

2. Interpretation of registration under the Industries (Development and Regulation) Act, 1951 (IDR Act) and its implications:
VR contended that the registration under Section 10 of the IDR Act was distinct from registration with DGTD for statistical purposes. They argued that the COB (Carry-on-Business) licence obtained from the Ministry of Industrial Development was not the same as registration with DGTD. The Tribunal majority agreed with VR, noting that the Press Note dated 13-8-1979 clarified the distinction between registration with DGTD for statistical purposes and registration under Section 10 of the IDR Act. The Tribunal found that the registration referred to in Notification 244/87 pertained to registration under Section 10 of the IDR Act, not the statistical registration with DGTD.

3. Applicability of extended period of limitation for imposing penalties:
The Department alleged that VR had wilfully evaded duty by mis-stating their registration status, justifying the invocation of the extended period of limitation for imposing penalties. VR argued that there was no mis-statement or suppression of facts, as their registration with DGTD was for statistical purposes only. The Tribunal majority found that the Department's assumption of mis-statement and deliberate evasion was incorrect due to a misunderstanding of the legal and factual position. Consequently, the extended period of limitation for imposing penalties was not applicable.

4. Jurisdiction of the Superintendent in issuing Show Cause Notices for alleged evasion of duty:
The Department's appeal also challenged the jurisdiction of the Superintendent in issuing the Show Cause Notices for alleged evasion of duty. The Tribunal referred to the decision in Pratap Rajasthan Copper Foils and Laminates Ltd. v. C.C.E., which clarified that only the Collector was competent to issue notices for alleged suppression and mis-statement when invoking the extended period under Section 11A(1) proviso. Following this precedent, the Tribunal found no merit in the Department's appeal on this ground.

Separate Judgments:

Judgment by Member (J):
The Tribunal majority, consisting of Member (J) and the third member, held that VR was entitled to the benefit of Notification No. 175/86. They found that the registration with DGTD for statistical purposes did not equate to registration under the IDR Act, which would disqualify VR from the exemption. The appeals by VR were allowed with consequential benefits, and the Department's appeal was rejected.

Contra Judgment by Vice President:
The Vice President dissented, arguing that VR was registered with DGTD under the IDR Act and, therefore, was not entitled to the SSI exemption under Notification No. 175/86. He emphasized that the notification envisaged registration with DGTD under the Act and that VR's registration for statistical purposes did not change their ineligibility for the exemption.

Final Order:
In light of the majority decision, the two appeals by M/s. Vishwa Rattan Refractories (P) Ltd. were allowed, and it was held that the benefit of Notification No. 175/86 was admissible to them. The Department's appeal was dismissed.

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