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2015 (7) TMI 66 - AT - Central ExciseWaiver of predeposit - Penalty u/s 11AC - SSI Exemption Notification No.08/2003-CE dated 01.03.2003 - Clubbing of clearances - Held that - On the issue of clubbing of clearances of both these Units, prima facie, we do not find that sufficient reasons had been recorded by the ld. Commissioner in the impugned Order, except following the earlier decision pertaining to the period prior to the present demand notice. Thus, the allegation of clubbing of clearances needs to be examined in detail in the light of evidences produced by both sides, which would be possible only at the time of disposal of the Appeals. In these circumstances, the Applicants could able to make out a prima facie case for waiver of predeposit of the dues adjudged. Accordingly, predeposit of all dues adjudged against the Applicants, are waived and its recovery stayed, during the pendency of the Appeals. - Stay granted.
Issues:
1. Waiver of predeposit of duty and penalty confirmed against the Applicants. 2. Classification of the goods manufactured by the Applicants. 3. Clubbing of clearances of both Units for determining eligibility for SSI Exemption. 4. Invocation of extended period of limitation for issuing show cause notices. 5. Relationship between the two Units and its impact on the case. Issue 1: Waiver of Predeposit The Applicants sought waiver of predeposit of duty and penalty amounting to &8377; 98.94 lakh confirmed against them. The ld. Advocate argued that the demand was confirmed for the period from February 2000 to March 2005, considering both Units as one entity, without extending the SSI Exemption Notification. He contended that the goods manufactured did not result in excisable goods under Section 2(f) of the Central Excise Act, citing pending Supreme Court cases. The Applicants' classification of 'Biri Labels' was also debated, referencing tribunal decisions. The Advocate emphasized that the Department was aware of their activities, precluding the invocation of extended limitation period. The Tribunal found a prima facie case for waiver, staying the recovery of dues during the appeal. Issue 2: Classification of Goods The Revenue argued that the Applicants deliberately misclassified their product as 'Label' instead of 'Wrapper,' impacting their eligibility for SSI Exemption. The ld. Adjudicating Authority concluded that both Units were interconnected, sharing common Directors and engaging in similar manufacturing activities. The Tribunal observed that the Applicants were involved in manufacturing and removing excisable goods falling under specific Chapter Sub-Headings. The dispute over classification and reciprocal interests between Units influenced the decision on SSI Exemption eligibility. Issue 3: Clubbing of Clearances The Applicants contested the clubbing of clearances of both Units for determining SSI Exemption eligibility, asserting the Units were distinct entities. The Tribunal noted the lack of detailed findings on the inter-se relationship between the Units in the impugned Order. The Applicants argued that the clubbing was incorrect, and the extended limitation period for show cause notices was barred. The Tribunal found insufficient reasoning in the Order regarding the clubbing of clearances, indicating the need for detailed examination during the Appeals' disposal. Issue 4: Extended Period of Limitation The Applicants challenged the invocation of the extended limitation period for the show cause notices, citing the Supreme Court's precedent on limitations. They contended that correspondence with the Department and the Department's awareness of their activities precluded the validity of the notices. The Tribunal acknowledged the Applicants' arguments and found merit in their contentions, granting waiver of predeposit and staying the recovery of dues during the appeal process. Issue 5: Relationship Between Units The Revenue highlighted the interconnected nature of both Units, emphasizing common Directors and similar manufacturing activities. This relationship influenced the decision on SSI Exemption eligibility and the clubbing of clearances. The Tribunal acknowledged the Revenue's stance but found the Applicants' arguments regarding the distinct legal and factual existence of the Units compelling, warranting further examination during the Appeals process. This detailed analysis of the judgment from the Appellate Tribunal CESTAT KOLKATA covers the various issues involved in the case, including waiver of predeposit, classification of goods, clubbing of clearances, extended limitation period for show cause notices, and the relationship between the Units. The Tribunal's considerations, legal arguments, and findings provide a comprehensive overview of the complex legal aspects addressed in the judgment.
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