2012 (10) TMI 225 - HC - Central Excise

Penalty denial of benefit of exemption notification - SSI unit manufacturing biscuits in the brand name of Priya Glucose V - Since they did not cross the limit of Rs. 30 lacs in 1997-98, as envisages under Notification No. 16/97-C.E., dated 1-4-1997 (Annexure A/3), they did not apply for registration under the Central Excise Law - appellant replied to the aforesaid notice and stated that the Firm was entitled for exemption under the Notification of Annexure A/3 dated 1-4-1997, as being a small scale industry they did not cross the limit of Rs. 30 lacs, their brand name is Priya Glucose V , and not Priya which is owned by M/s. Priya Food Products Ltd. - Held that - On comparison of labels of the goods manufactured by the appellant and the goods manufactured by other manufacturers, has observed that Priya is written in the same way on the goods of the appellant as written on the goods manufactured by M/s. Priya Food Products Ltd., - to claim benefit of a notification, a party must strictly comply with the terms of the notification. If on wording of the notification, the benefit is not available then by stretching the words of the notification or by adding words to the notification benefit cannot be conferred - in favour of the respondent-department

Summary

Issues:
Appeal under Section 35G of the Central Excise Act against the penalty imposed on the appellant for exemption claimed based on a bona fide interpretation and application of the exemption notification.

Detailed Analysis:

1. Facts and Background:
The appellant, a private limited company manufacturing biscuits, appealed against the penalty imposed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) for allegedly not crossing the turnover limit of Rs. 30 lakhs in 1997-98 as per Notification No. 16/97-C.E. The appellant claimed exemption under the said notification, stating they did not exceed the limit and were eligible for the exemption.

2. Decision of Additional Commissioner:
The Additional Commissioner, Central Excise, Raipur, dropped the proceedings against the appellant, concluding that there was no sufficient evidence to link the appellant with another company using a similar brand name. The Commissioner held that the appellant was entitled to the exemption under the notification.

3. Decision of Commissioner (Appeals) and CESTAT:
The Excise Department's appeal was allowed by the Commissioner (Appeals), confirming the duty amount, imposing penalties, and confiscating goods. The CESTAT upheld this decision, leading to the appellant's appeal dismissal.

4. Arguments and Counter-Arguments:
The appellant contended that they were entitled to the exemption benefit under the notification, emphasizing the lack of evidence connecting them to the other company. In contrast, the respondent argued that the labels on the goods showed similarities, relying on Supreme Court precedents to deny the exemption.

5. Judicial Analysis and Precedents:
Upon review, the CESTAT found similarities in the labels of goods manufactured by the appellant and another company, leading to the denial of the exemption. The court cited Supreme Court judgments emphasizing strict compliance with notification terms to claim benefits, setting aside previous decisions favoring the appellant.

6. Conclusion:
Based on established legal principles and precedents, the court upheld the CESTAT's decision to impose and confirm the penalty on the appellant, denying them the benefit of the exemption notification. The appeal was dismissed in favor of the respondent-department, ruling against the appellant-assessee.

This detailed analysis of the judgment highlights the issues, factual background, decisions of relevant authorities, arguments presented, judicial analysis, and the final conclusion reached by the court, providing a comprehensive understanding of the legal proceedings and outcomes.