2017 (6) TMI 1134 - AT - Central Excise

SSI exemption - it appeared to Revenue that Fly Ash or Phospho Gypsum was not purchased and used by M/s Hilite in the manufacture of their final product and therefore they were not eligible to avail the said SSI Exemption - natural justice - Held that - the said Notification 5/1999-CE dated 28/02/1999 entitles the manufacturer to clear goods at nil rate of duty if the said goods are containing more than 25% by weight of Fly Ash or Phospho Gypsum though the entire emphasis by Revenue was only on single commodity i.e. Phospho Gypsum and there was an attempt to establish that Phospho Gypsum was not used whereas there was no discussion on Fly Ash at all in the whole proceedings - Further, we find that Original Authority in Para 4.22 has held that opinion by Dr. Badri Prasad through letter dated 17/09/2007 was only an assumption which gives an impression that the Original Authority has tried to examine technical opinion without seeking any technical opinion from the competent wing of the Department i.e. CRCL. We are of the opinion that this matter needs to be remanded back to the Original Authority with a direction that the said Original Authority should refer said opinion dated 17/09/2007 given by Dr. Badri Prasad to CRCL and seek expert technical opinion about the correctness of opinion given by Dr. Badri Prasad - appeal allowed by way of remand.

Summary

Issues:
- Eligibility for SSI Exemption under Notification Nos.5/1999-CE
- Proper maintenance of accounts as per notification conditions
- Allegations of not using required raw materials for exemption
- Show Cause Notice for duty demand and penalties
- Violation of principles of natural justice in previous order
- Confirmation of demand and penalties in impugned order
- Appeal against the impugned order based on technical opinions
- Imposition of penalties under Rule 209A of Central Excise Rules, 1944
- Decision on remand for seeking expert technical opinion

Analysis:
The case involves appeals against an Order-in-Original passed by the Commissioner of Central Excise & Customs Ghaziabad, concerning the eligibility of a company for SSI Exemption under Notification Nos.5/1999-CE. The company was accused of not using the required raw materials, specifically Fly Ash or Phospho Gypsum, as stipulated in the notification conditions. A Show Cause Notice was issued, leading to the impugned order confirming a substantial duty demand and penalties against the company and individuals associated with it.

The Tribunal observed that the focus of the investigation was solely on Phospho Gypsum, neglecting any discussion on Fly Ash, a key component for the exemption. The Original Authority's dismissal of a technical opinion by Dr. Badri Prasad without seeking expert input from CRCL was deemed inappropriate. Consequently, the matter was remanded back to the Original Authority to refer the opinion to CRCL for a comprehensive technical assessment to determine the presence of Fly Ash or Phospho Gypsum as per the notification requirements.

Furthermore, the Tribunal noted that penalties imposed under Rule 209A of the Central Excise Rules, 1944 were not justified without confiscation of goods. As per the rules, personal penalties are applicable when dealing with goods subject to confiscation. Therefore, the penalties on certain individuals were set aside, and their appeals were allowed. The company's appeal was remanded back to the Original Authority for reconsideration based on the technical assessment from CRCL.

In conclusion, the Tribunal directed the Original Authority to follow the specified procedures, including obtaining the expert opinion from CRCL, providing an opportunity for a personal hearing, and ensuring compliance within specific timelines. The decision emphasized adherence to procedural fairness and expert technical evaluation in resolving the issues related to the eligibility for SSI Exemption and imposition of penalties under the Central Excise Rules.