2017 (7) TMI 521 - AT - Central Excise

SSI exemption - dummy units - it was alleged that the unit had floated fictitious non-existent companies so as to manipulate the purchase production and sales details and kept their clearances well within the exemption limit of ₹ 1 crore - Held that - appellant concedes that the details had not been produced by the appellant in such proceedings, and in case the fact of these export clearances are considered, there would be a substantial change in the aggregate value of clearances and on this count, matter may be remanded for reconsideration on the basis of Form-H certificates evidencing export - matter on remand. CENVAT credit - credit on the date of crossing the exemption limit - Held that - the adjudicating authority will consider the claim of the appellant on the matter of eligibility of cenvat credit. The penalty imposed under Section 11AC will be recalculated based on the eventual duty liability that will be arrived at by the authority in such adjudication. Appeal allowed by way of remand.

Summary

Issues: Alleged non-eligibility of SSI exemption, duty liability, penalties under various provisions of the law, consideration of export clearances, cenvat credit eligibility.

The judgment pertains to the alleged non-eligibility of Small Scale Industries (SSI) exemption for the appellant due to suspicions of manipulating purchase, production, and sales details by creating fictitious companies. The original authority, in a de novo adjudication, confirmed a duty liability of ?5,21,702 along with interest and penalties. The Commissioner (Appeals) set aside the penalty enhancement under Section 11AC but upheld the rest of the original authority's order, leading to the current appeal.

During the hearing, the appellant's advocate highlighted additional grounds of appeal, specifically mentioning the exclusion of export clearances under Form-H certificates in the calculation of clearances. The advocate conceded that these details were not initially provided but argued for a remand based on the potential impact of including these export clearances on the aggregate value of clearances. Additionally, the advocate raised concerns about the denial of cenvat credit eligibility despite submitting supporting documents, requesting a remand with appropriate directions.

The Revenue's representative countered by pointing out the calculation of clearances, suggesting that export clearances might have been considered in the calculation. Regarding cenvat credit eligibility, the representative referred to the procedure outlined in the Cenvat Credit Rules, emphasizing that the lower authorities had already addressed this aspect.

After hearing both sides and reviewing the records, the Bench concluded that a remand was necessary due to the new submissions regarding export clearances not previously presented to any lower authority. The matter was remanded to the original authority for a fresh consideration. The adjudicating authority was instructed to factor in the value of export clearances supported by evidence and to evaluate the appellant's claim for cenvat credit eligibility, considering the Revenue's arguments. The recalculated penalty under Section 11AC would be based on the revised duty liability determined during the fresh adjudication.

Ultimately, the appeal was allowed for remand as per the specified terms, and the Miscellaneous Application was disposed of accordingly.