2010 (8) TMI 343 - AT - Central Excise

CESTAT Upholds SSI Exemption: Paying Full Duty Doesn't Affect Concessional Rates

COMMISSIONER OF CE, KANPUR Versus AK CHEMICALS (P) LTD.

The Appellate Tribunal CESTAT, NEW DELHI dismissed the appeal in a case concerning the interpretation of Notification No. 9/99-C.E. The tribunal held that ... Exemption - SSI exemption under Notification No. 9/99-C.E. dated 28th February 1999 - interpretation of a notification should be to make the notification effective rather than meaningless - allegation only to the effect that assessees paid more than what was due and payable - it cannot be said to amount to violation any of the terms in condition of the notification nor mere payment of higher amount of duty can be said to defeat the very purpose of the notification – Appeal dismissed Issues:1. Interpretation of Notification No. 9/99-C.E. regarding availing of SSI exemption.2. Allegation of paying duty over and above prescribed rate under the notification.3. Legal implications of excess payment of duty on availed benefits.Issue 1: Interpretation of Notification No. 9/99-C.E.:The case involved assessees engaged in manufacturing Acid Slurry and Spent Acid, availing SSI exemption under Notification No. 9/99-C.E. The dispute arose when the department noticed that the assessees cleared final products at concessional rates under the notification but paid full duty on some consignments. The Commissioner (Appeals) set aside the order confirming the demand, emphasizing that once a manufacturer opts for the exemption under the notification, they cannot opt out during the financial year. The assessees had declared their intention to avail the notification's benefits and paid concessional duty for their first clearance. The notification did not specify that paying full duty on some consignments would withdraw the option for concessional rates.Issue 2: Allegation of paying duty over prescribed rate:The show cause notices alleged that the assessees, after opting for the exemption under the notification, paid duty exceeding the prescribed rate, which could benefit consignees by passing on higher credit. However, the notices did not include such charges, and the Adjudicating Authority did not find any such violation by the assessees. The Commissioner (Appeals) observed that mere possibility of passing credit cannot be a ground for denying the notification's benefit or concluding that the assessees opted out of the scheme.Issue 3: Legal implications of excess payment of duty:The Apex Court decisions cited emphasized resolving ambiguity in favor of revenue but did not apply to the present case as no doubt existed regarding the notification's terms. The court clarified that excess payment of duty, if any, does not violate the notification's conditions. The decisions highlighted that if any condition of a notification is not fulfilled, the party would not be entitled to its benefit. The law laid down in the judgments focused on interpreting notifications to achieve their intended purpose and not defeating their objectives. The court concluded that the assessees paying more duty than due did not violate the notification's terms or defeat its purpose, dismissing the appeal.This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the legal reasoning applied by the Appellate Tribunal CESTAT, NEW DELHI in this case.