2023 (9) TMI 564 - AT - Central Excise

SSI Exemption - removals were effected before granting Registration Certificate on 04.12.2006 - all the three consignments of finished goods were manufactured out of inputs on which no Cenvat Credit was taken - HELD THAT - Appellant were availing the benefit of Notification 8/2003 dated 01.03.3003 and clearing the goods without payment of duty, as the value of clearance of goods manufactured by them in the Financial Year 2006-07was below the threshold limit of Rs 1.5 Crores. They took registration on 30.11.2006, but the Registration Certificate was received by them only on 04.12.2006. In the meantime, they started availing the credit. The present issue pertains the duty liability on 3 invoices dated 30.11.2006, 01.12.06 and 03.12.06. The Appellant cleared the goods under these three invoices without payment of duty as they were still availing the benefit of Notification 8/2003 dated 0103.2003. The Appellant was eligible for exemption of Notification 8/2003 dated 01.03.2203 as their value of clearances in the Financial year 2006-07 was much below the threshold limit of Rs 1.5 Crores. The Appellant claimed that they have taken Registration on 30.11.2006, but the Registration Certificate was received only on 04.12.2006. In the impugned order, central excise duty has been demanded on the two invoices dated 01.12.06 03.12.06, on the ground that they have started taking Cenvat credit w.e.f 01.12.2006 - It is observed that credit on stock of inputs lying in the factory as on the date of registration was admissible as per Para 5 of the Instruction contained in Ministry s F. No. 345/2/2000-TRU dated 29.08.2000. Thus, duty cannot be demanded on the goods cleared vide invoices dated 01.12.06 03.12.06 only on the ground that they have availed Cenvat credit before that clearances. The demand confirmed in the impugned order is not sustainable. Since, demand of duty is not sustainable, the question of demanding interest and imposing penalty does not arise - the impugned order set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are related to the demand of Central Excise duty on the clearance of goods by the Appellant without payment, alleged suppression of facts, intent to evade payment of duty, availing benefit of Notification 8/2003, Registration Certificate, Cenvat credit, imposition of penalty under Section 11AC of the Central Excise Act, 1944, and demand of interest under Section 11AB.

Issue 1: Demand of Central Excise duty and suppression of facts
The Appellant, engaged in the manufacture of Copper coated welding wire, cleared goods without payment of duty below the threshold limit of Rs 1.5 Crores, availing the benefit of Notification 8/2003. Proceedings were initiated against them for clearing goods without payment of duty. The demand of duty was based on the allegation of suppression of fact with an intent to evade payment of duty as certain clearances were not shown in the monthly ER-1 filed. The Assistant Commissioner confirmed the demand for some clearances and dropped it for others, imposing a penalty and demanding interest. On appeal, the Commissioner upheld the demands. The Appellant contended that the clearances were exempted as per the notification since they were effected before the Registration Certificate was granted.

Issue 2: Availing Cenvat credit and Registration Certificate
The Appellant argued that they received the Registration Certificate after the alleged clearances and started availing the Cenvat credit only after a specific date. They claimed that the duty liability was wrongly imposed as they were eligible for exemption under Notification 8/2003 due to the value of clearances being below the threshold limit. The Appellant maintained that they did not utilize any credit before a certain date and that the demand for duty was not sustainable. They highlighted that the credit on stock of inputs as on the date of registration was admissible as per relevant instructions.

Judgment Summary:
The Appellant was found to be eligible for exemption under Notification 8/2003 as their clearances were below the threshold limit. The demand of duty was based on the Appellant allegedly availing Cenvat credit before a specific date. However, it was observed that the Appellant did not utilize any credit for clearances before the Registration Certificate was received. The Tribunal held that there was no infirmity in availing the Cenvat credit before the date of registration, as per relevant instructions. Consequently, the demand of duty was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal filed by the Appellant.