2018 (11) TMI 7 - AT - Central Excise

SSI exemption - clubbing of clearances - both the units were proprietary concern of Smt. Vidya D. Agrawal - N/N. 214/86 - Time limitation - Held that - Admittedly, the show cause notice stands issued for the period beyond the normal period of limitation. Further, the appellant was following the procedure of Notification No.214/86 and was admittedly doing the job work for the principal manufacturer. Non-filing of declaration by the principal manufacturer cannot be held to be a suppression or misstatement on the part of the job worker so as to justifiably invoke the longer period of limitation. The demand having been raised beyond the period of limitation is totally time barred and is required to be set aside - appeal allowed - decided in favor of appellant.

Issues:
1. Clubbing of clearances of two manufacturing units for duty calculation.
2. Exclusion of job work value from total clearances.
3. Application of small scale exemption notification.
4. Challenge on the point of limitation for demand confirmation.
5. Interpretation of Notification No.214/86 for job work activities.
6. Duty liability of job worker in case of exempted final product.
7. Requirement of declaration by principal manufacturer for duty payment.
8. Imposition of penalties on manufacturing units.
9. Appeal against Commissioner (Appeals) decision.

Analysis:
1. The case involved the clubbing of clearances from two manufacturing units owned by the appellant for duty calculation purposes. Revenue initiated proceedings to confirm a demand of approximately ?23 lakhs for the period 2004-05 to 2007-08 due to the units being proprietary concerns of the same individual.

2. The appellant contended that the value of job work done by them should be excluded while calculating total clearances to fall within the small scale exemption limit. The adjudicating authority accepted this contention based on various High Court decisions and exempted the units from the demand.

3. The Revenue challenged the adjudicating authority's decision before the Commissioner (Appeals), who reversed the decision. The Commissioner held that duty liability falls on the job worker if the final product of the principal manufacturers is exempted. He emphasized the necessity of declarations by principal manufacturers for duty payment on final products.

4. The Commissioner (Appeals) also noted that investigations continued till 2008, justifying the issuance of the show cause notice within the one-year limitation period. He imposed penalties on the manufacturing units but not on the proprietor.

5. The appeal before the Appellate Tribunal primarily focused on the limitation aspect. The Tribunal found that the show cause notice was issued beyond the normal limitation period. Non-filing of declarations by the principal manufacturer was not considered suppression or misstatement by the job worker, leading to the demand being time-barred and set aside on this ground alone.

6. The Tribunal concluded that the appellant, following the procedural aspects of Notification No.214/86, had a bona fide belief in not including the value of clearances in total clearances for duty calculation. Therefore, the demand raised beyond the limitation period was deemed time-barred, leading to the appeal being allowed with consequential relief to the appellant.

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