2016 (2) TMI 182 - Commission - Central Excise

Tax Bench settles case, imposes duty liability, interest, and penalty, grants immunity from penalties and prosecution.

The Bench settled the case with a total duty liability of Rs. 9,72,042/- and interest of Rs. 12,290/-, appropriated from the applicant's Cenvat credit. A ... Settlement of a case - Eligibility to avail the benefit of the SSI exemptions No. 8/2003-C.E - benefit of cum duty price - Held that:- The applicant has admitted duty liability on a cum-duty basis. The Revenue has not given any reason as to why cum-duty benefit may be denied. There is also no charge that the applicant cleared goods clandestinely nor is there any charge against M/s. Bata India that they procured goods from the applicant without payment of duty. Under the circumstances the Bench holds that in terms of the Supreme Court judgment in the case of Commissioner of Central Excise, Delhi v. Maruti Udyog Ltd. [2002 (2) TMI 101 - Supreme Court ], the benefit of cum-duty is available to the applicant. Late fee, as prescribed, for late filing of returns is to be paid by the applicant. So far as the co-applicants are concerned, the Bench finds that no specific charge has been alleged against the co-applicants. The SCN only states that the co-applicants who are partners of the applicant are responsible for any activity in their factory premises. This is not sufficient to establish any culpability. The Bench accordingly finds that the applicant has made full and true disclosure and has cooperated in the proceeding during the investigation as well as before the Commission. In view of above and the facts and circumstances of the case, the Bench settles the case under Section 32F(5) - immunities to the applicant granted under sub-section (1) of Section 32K of the Act. Issues Involved:1. Eligibility for SSI exemption under Notification No. 8/2003-C.E.2. Classification of 'Tarun' as a brand name.3. Determination of aggregate value of clearances.4. Admissibility of Cenvat credit.5. Imposition of penalties and interest.6. Immunity from prosecution.Issue-wise Detailed Analysis:1. Eligibility for SSI Exemption:The applicant, a partnership concern, engaged in manufacturing leather shoe uppers and finished leather, sought settlement of a dispute regarding excise duty liabilities under Notification No. 8/2003-C.E. The Revenue contended that the applicant exceeded the aggregate value of clearances of Rs. 4 crores in the financial years 2008-09, 2009-10, and 2010-11, rendering them ineligible for SSI exemption. The applicant admitted duty liability of Rs. 9,70,242/- for 2009-10 and 2010-11, arguing that they were eligible for exemption in 2008-09 as their clearances in 2007-08 were below Rs. 4 crores.2. Classification of 'Tarun' as a Brand Name:The Revenue argued that the leather shoe uppers manufactured by the applicant bore the brand name 'Tarun,' making them ineligible for SSI exemption. The applicant countered with a letter from M/s. Bata India Ltd., stating that 'Tarun' was not a brand name of Bata but an in-house name. The Bench accepted the applicant's evidence, noting that the Revenue did not refute this claim.3. Determination of Aggregate Value of Clearances:For 2007-08, the applicant's aggregate clearances were Rs. 3.6 crores, making them eligible for SSI exemption in 2008-09. The Bench found that for 2008-09, the applicant's clearances of leather shoe uppers for Bata were Rs. 1,38,53,264/-, within the Rs. 1.5 crore limit for nil duty under the notification. Hence, no duty liability existed for 2008-09. For 2009-10 and 2010-11, the applicant admitted duty liability as their clearances exceeded Rs. 4 crores in the preceding year.4. Admissibility of Cenvat Credit:The Revenue challenged the applicant's Cenvat credit claim on procedural grounds, as the applicant had not maintained proper records or taken registration until 2011. The applicant provided invoices and import documents as proof of duty-paid goods. The Bench allowed the Cenvat credit, noting that the procedural irregularity could be condoned in settlement proceedings.5. Imposition of Penalties and Interest:The applicant argued for waiver of penalties, claiming no suppression or misdeclaration. The Bench imposed a penalty of Rs. 50,000/- on the applicant for violating the Central Excise Act, 1944, but granted full immunity from penalties to the co-applicants. Interest liability of Rs. 12,290/- was settled, with the applicant required to pay any shortfall within 15 days.6. Immunity from Prosecution:The Bench granted immunity from prosecution to the applicants, subject to payment of the settled duty, interest, and penalty. The order would be void if the applicants were found to have concealed material facts or obtained the order by fraud.Conclusion:The Bench settled the case with a total duty liability of Rs. 9,72,042/- and interest of Rs. 12,290/-, appropriated from the applicant's Cenvat credit. A penalty of Rs. 50,000/- was imposed on the applicant, with full immunity from penalties granted to the co-applicants. Immunity from prosecution was also granted, subject to compliance with the settlement terms.