2018 (12) TMI 1028 - AT - Central Excise

Job work for SSI units - Benefit of exemption N/N. 83/94-CE dt. 11.4.1994 - it was alleged that the principal manufacturer though required, but had not filed necessary declaration with their jurisdictional Assistant Commissioner - Held that - The Hon ble Supreme Court judgment in the case of Eagle Flask Industries Ltd case 2004 (9) TMI 102 - SUPREME COURT OF INDIA observed that the declaration prescribed to avail the benefit cannot be considered as a mere formality and to be eligible to the benefit of exemption one must comply with the said condition. In the present case, to avail the benefit of notification No. 83/94-CE dt. 11.4.1994 by the job-worker, the principal manufacturer is required to file necessary declaration under the said notification with the jurisdictional authorities which has not been complied with. Extended period of limitation - penalty - Held that - The Ld. Commissioner (Appeals) in the order recorded that even though the appellant had cleared the said goods without payment of duty no disclosure of such clearance was made by them in the relevant statutory records/ returns. Therefore, invoking of larger period of limitation and imposition of penalty by both authorities below are justified - However, while imposing penalty, both the authorities below, have not extended the benefit to discharge 25% of the penalty imposed under Section 11AC of the Central Excise Act, 1944, to which they are entitled under the said provision. Consequently, the impugned order is modified and benefit to discharge 25% of the penalty imposed is extended to the appellant subject to fulfillment of conditions laid down under Section 11AC of the Central Excise Act, 1944. Appeal allowed in part.

Summary

Issues:
- Benefit of Notification No. 83/94-CE for exemption from duty
- Compliance with conditions of the exemption notification
- Burden of proof on the assessee for claiming exemption
- Imposition of penalty and benefit under Section 11AC of the Central Excise Act, 1944

Analysis:

Issue 1: Benefit of Notification No. 83/94-CE for exemption from duty
The appellant manufactured and cleared excisable goods on job work basis without payment of duty and claimed the benefit of Notification No. 83/94-CE. The appellant argued that the failure of the principal manufacturer to file the necessary declaration should not disentitle them from the exemption. However, the Tribunal did not find merit in this argument citing the judgment in Eagle Flask Industries Ltd case, emphasizing the importance of complying with the conditions of the notification to avail the exemption.

Issue 2: Compliance with conditions of the exemption notification
The Tribunal highlighted that the principal manufacturer's failure to file the necessary declaration as required by the Notification No. 83/94-CE was a crucial procedural infraction that affected the appellant's eligibility for the exemption. Referring to legal precedents, including the Kartar Rolling Mills case, the Tribunal reiterated that non-compliance with the conditions specified in the exemption notification would prevent the extension of the exemption benefits.

Issue 3: Burden of proof on the assessee for claiming exemption
The Tribunal emphasized the principle that the burden lies on the assessee to establish full compliance with all conditions of the exemption notification to claim the benefit of exemption from duty. Citing the judgment in Dilip Kumar & Company case, the Tribunal reiterated that the assessee must demonstrate adherence to all necessary conditions prescribed under the notification to qualify for the exemption.

Issue 4: Imposition of penalty and benefit under Section 11AC of the Central Excise Act, 1944
While upholding the imposition of penalty due to the appellant's failure to disclose the clearance of goods without duty payment in statutory records/returns, the Tribunal modified the order to extend the benefit of discharging 25% of the penalty imposed under Section 11AC of the Central Excise Act, 1944 to the appellant. The Tribunal found that the authorities had not granted this benefit to the appellant, and therefore, the order was adjusted to allow the appellant to avail of this benefit, subject to meeting the conditions specified under Section 11AC.

In conclusion, the appeal was partly allowed, with the Tribunal modifying the order to extend the benefit of discharging 25% of the penalty imposed to the appellant, provided they fulfill the conditions under Section 11AC of the Central Excise Act, 1944.