2018 (2) TMI 1096 - AT - Central Excise

SSI Exemption - dummy unit - Revenue entertained a view that the assessee-appellant had split up the turnover in the name of another unit M/s.The Coastal Paper Packaging which is held to be fictitious unit, in order to have lesser turnover accounted for the purpose of availing the said SSI exemption - Held that - Admittedly no notice was issued making allegation about the legal status of M/s.The Coastal Paper Packaging. The lower authorities held the said units as fictitious. Though the appellant strongly contested on merit and established the legal status and independence of M/s.The Coastal Paper Packaging, since no notice was issued to them, the whole proceedings are in violation of principles of natural justice. The proceedings without notice to one of the parties and holding the adverse view against such party is not sustainable. Appeal allowed - decided in favor of assessee.

Issues:
1. Eligibility of SSI exemption under Notification No.8/2000-CE for the years 2001-02 to 2002-03.
2. Allegation of splitting turnover in the name of a fictitious unit to avail SSI exemption.
3. Proceedings against M/s. The Coastal Paper Packaging without issuing notice.
4. Dispute over export turnover and differential duty.
5. Appeal by Revenue against remand direction and its grounds.
6. Admissibility of submission regarding export turnover.

Analysis:

1. The main issue in the appeals was the eligibility of the assessee for the Small Scale Industry (SSI) exemption under Notification No.8/2000-CE for the years 2001-02 to 2002-03. The Revenue alleged that the assessee had split their turnover with a fictitious unit to qualify for the exemption.

2. The dispute centered around the allegation that the assessee had split up the turnover with a fictitious unit, M/s. The Coastal Paper Packaging, to reduce the turnover and avail the SSI exemption. Penalties were imposed on individuals associated with this unit based on investigations confirming it as fictitious.

3. The consultant for the assessee argued that the proceedings were flawed as no notice was issued regarding M/s. The Coastal Paper Packaging. The absence of a notice against the unit was deemed a violation of natural justice, rendering the proceedings unsustainable, as highlighted in previous tribunal decisions.

4. The Revenue's appeal against the remand direction to examine export turnover was deemed unsustainable. The counsel pointed out that a similar case had been contested in the High Court and the Revenue's appeal had been dismissed, indicating no grounds for their appeal in the present case.

5. The Tribunal found a serious legal infirmity in the proceedings due to the lack of notice to M/s. The Coastal Paper Packaging. Citing principles of natural justice, the Tribunal held that proceedings without notice to a party and holding an adverse view were not sustainable, referencing relevant tribunal decisions.

6. Considering the legal infirmity and the basis of the Revenue's appeal, the Tribunal concluded that the appeal by the Revenue was not sustainable. Consequently, the appeals of the appellant-assessee were allowed with any consequential relief as per law, while the Revenue's appeal was dismissed.

This detailed analysis of the judgment covers the various issues involved in the case, highlighting the key arguments and decisions made by the Tribunal.

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