Tribunal Upholds SSI Exemption in Clandestine Removal Case

The Tribunal upheld the Commissioner (Appeals) order granting SSI exemption benefit and setting aside the demand for clandestine removal of goods along with the penalty. The Tribunal emphasized that even in cases of alleged clandestine removal, if the SSI exemption criteria are met, the benefit must be allowed. The decision was based on specific dealer confirmations and relevant case laws, supported by a Punjab and Haryana High Court judgment. The Tribunal found no legal infirmity in the order and rejected the appeal, dismissing cross-objections as comments to the Revenue's appeal.

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Issues involved: Appeal against Commissioner (Appeals) order granting SSI exemption benefit and setting aside demand for clandestine removal of goods along with penalty.

Clandestine removal of goods issue: The department alleged clandestine removal of dutiable cotton cone yarn as cotton hank yarn, leading to demand confirmation and penalty imposition. Commissioner (Appeals) considered specific dealer confirmations and upheld SSI exemption benefit claim for the first time before the adjudicating authority, citing relevant case laws and Circular No. 387/90/98-JC to set aside penalty under Section 11AC.

SSI exemption eligibility: Revenue contended that SSI exemption should not have been granted based on clearances for 1994-95, arguing that the manufacturer was aware of the exemption at the time of clearance. Tribunal upheld the exemption, emphasizing that even in cases of alleged clandestine removal, if SSI exemption criteria are met, the benefit must be allowed. Reference was made to a Punjab and Haryana High Court judgment supporting this stance.

Decision: Tribunal found no legal infirmity in the Commissioner (Appeals) order, upholding the SSI exemption benefit and rejecting the appeal. Cross-objections were dismissed as comments to the Revenue's appeal.

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