2018 (1) TMI 630 - AT - Central Excise

Demand in respect of trading activity - It is the submission that demand on the trading activity as dropped by the First Appellate Authority is based on the certificate issued by the Chartered Accountant who had reconciled the entire detail - Held that - It can be seen from the impugned order that the First Appellate Authority in Paragraph 11.2 to 11.7 has categorically recorded the findings in detail after considering the Chartered Accountant Certificate, statements of the various persons recorded, the ledger accounts as produced by the assessee. It is also seen from the said records that Chartered Accountant who had certified that their trading activity is statutory auditor - the First Appellate Authority was correct in dropping the demands of the duty of ₹ 32,76,128/- on a sound reasoning - the appeal filed by the Revenue is devoid of merits and is rejected. SSI exemption - threshold limit - Held that - the demand of the duty liability on the appellant needs to be tested with the plea of the appellant s counsel that they are eligible for SSI Exemption during the relevant period. In order to do so, it is imperative that the adjudicating authority be given an opportunity to decide the matter after considering the submissions of the appellant assessee herein - matter on remand. Appeal allowed in part nad part matter on remand.

Summary

Issues:
Appeal against order-in-appeal, Contraventions of Central Excise Act, Duty liability, Interest, Penalties, Manufacturing and trading activities, Clandestine removal, SSI Exemption eligibility.

Analysis:

1. Contraventions of Central Excise Act:
During a visit by Central Excise Officers, contraventions of the provisions of the Central Excise Act were noted at the factory. Subsequently, a Show Cause Notice was issued alleging non-disclosure of transaction value resulting in duty evasion. The adjudicating authority confirmed the demand with interest and penalties. The appellant contested the notice, explaining the incorrectness of the demand, particularly related to trading activities versus manufacturing activities.

2. Manufacturing and Trading Activities:
The appellant engaged in both manufacturing excisable goods and trading activities such as HDPE bags, fabrics, bobbins, and chemicals. The demand raised was on trading activities, which the appellant contested with evidence, including certificates from a Chartered Accountant reconciling details. The First Appellate Authority upheld a portion of the demand while setting aside another, based on the appellant's submissions and evidence presented.

3. SSI Exemption Eligibility:
The appellant argued for eligibility under the SSI Exemption, stating that the demand fell within the threshold limit. The eligibility for SSI Exemption was not raised before the Adjudicating Authority or the First Appellate Authority. The Tribunal remitted the matter back to the adjudicating authority to reconsider the duty demand in light of the appellant's claim of eligibility for SSI Exemption during the relevant period, emphasizing adherence to principles of natural justice.

4. Judicial Findings:
The Tribunal found the Revenue's appeal devoid of merit, noting that the First Appellate Authority's decision was well-founded, considering various records, including the Chartered Accountant Certificate and statements. The appeal by the appellant was remanded for further consideration on the duty demand and SSI Exemption eligibility, emphasizing the importance of allowing the adjudicating authority to review the matter in accordance with natural justice principles.

In conclusion, the judgment addressed issues related to contraventions of the Central Excise Act, manufacturing and trading activities, and SSI Exemption eligibility, providing detailed analysis and remanding the matter back to the adjudicating authority for further review in line with the principles of natural justice.