2018 (9) TMI 745 - AT - Central Excise

SSI Exemption - crossing of threshold exemption limit - extended period of limitation - Held that - In the case in hand the respondent in monthly did declare the quantities of exempted goods clearances, though may not have declared the value of clearances. Nothing prevented Revenue from seeking details of value from respondent - there is no ground for invocation of extended period of limitation - Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Denial of SSI exemption to the appellant for exceeding the threshold limit.
2. Allegation of suppressing facts to evade duty and availing ineligible SSI exemption.
3. Interpretation of findings by the First Appellate Authority.
4. Application of the proviso to Section 11A of the Act.
5. Reliance on previous judgments and legal interpretations.

Analysis:
1. The issue in this case revolves around the denial of Small Scale Industries (SSI) exemption to the appellant due to exceeding the threshold limit for the years 2003-2004 to 2006-2007. The Revenue alleged that the appellant had crossed the threshold limit in 2002-2003 and wrongly availed SSI benefit for subsequent years without declaring the value of exempted goods. The Adjudicating Authority confirmed the demands, but the First Appellate Authority set aside the order, noting that the appellant regularly filed returns indicating clearances of vaccines, albeit without declaring their value.

2. The allegation of suppressing facts to evade duty and availing ineligible SSI exemption was challenged by the Revenue, arguing that the appellant's non-declaration of the value prevented the Revenue from knowing about clearances of exempted goods exceeding the threshold limit. However, the appellant contended that they believed non-dutiable vaccines were not excisable goods under the SSI exemption notification and acted in good faith, not intending to evade duty.

3. The interpretation of findings by the First Appellate Authority was crucial in this case. The First Appellate Authority noted that the appellant regularly submitted ER1 returns indicating the quantity of exempted goods cleared, even though the value was not declared. It was highlighted that the department was aware of the manufacture of exempted goods and had the opportunity to verify the value of clearances, shifting the onus to cross-check the facts onto the department.

4. The application of the proviso to Section 11A of the Act was discussed, emphasizing that mens rea is an essential ingredient for invoking the proviso, which was deemed absent in this case. The First Appellate Authority's findings were upheld, stating that the demand was hit by the limitation of time, and the demand was not sustainable.

5. Various judgments and legal interpretations were cited during the proceedings. The Tribunal differentiated the present case from previous rulings, emphasizing the absence of mens rea and the department's ability to verify the value of clearances. The Tribunal rejected the Revenue's reliance on certain judgments and upheld the impugned order, concluding that it was correct, legal, and free from any infirmity.

In conclusion, the Tribunal upheld the impugned order, rejecting the Revenue's appeal and emphasizing the importance of factual findings, good faith actions, and the department's responsibility to verify information in cases involving SSI exemption and duty evasion allegations.