2008 (9) TMI 90 - SC - Central Excise

Tribunal rules in favor of paint manufacturer in small scale exemption dispute.

COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD Versus SURCOAT PAINTS (P) LTD.

The Tribunal ruled in favor of the respondent, a paint manufacturer, in a dispute over eligibility for small scale exemption. The Tribunal relied on a ... Eligibility to avail of the benefit of the SSI exemption under Notification No. 175/86, dated 1-3-1986 – respondent is engaged in the manufacture of paints and varnishes - Since the Revenue has accepted the decision given by the Tribunal in Agra Leather Goods case in assessee’s favour, the Revenue is precluded from challenging the similar order passed in respect of another Unit. Since the order passed in that case has attained finality, the present appeal by revenue deserves to be dismissed Issues:1. Eligibility of the respondent for small scale exemption notification.2. Allegations of short payment of duty and misuse of exemption.3. Tribunal's decision and its reliance on a previous case.4. Revenue's acceptance of the Tribunal's decision in a similar case.5. Amendment to the Central Excise Notification.6. Compliance with the Supreme Court's order for depositing the demanded amount.Eligibility of the respondent for small scale exemption notification:The case involved a dispute regarding the eligibility of the respondent, a paint manufacturer, for the small scale exemption notification. The Commissioner, Central Excise, Allahabad, issued a show cause notice alleging that the respondent, M/s. Surcoat Paints Pvt. Ltd., was not entitled to the small scale industry (SSI) benefit as it was considered subsidiary to another undertaking, M/s. Singhal Paints Pvt. Ltd. The Commissioner claimed there was short payment of duty amounting to Rs. 40,33,903.73 due to the alleged misuse of the exemption. The respondent held a permanent registration certificate as a small scale industry and had been availing exemptions under relevant notifications.Allegations of short payment of duty and misuse of exemption:The show cause notice accused the respondent of willfully suppressing facts to avail the small scale industry exemption, violating Central Excise Rules. The Revenue contended that the aggregate value of goods cleared by both Surcoat and Singhal Paints exceeded the threshold for the exemption. The Commissioner confirmed the demand and imposed a penalty, leading the respondent to appeal the decision before the Tribunal.Tribunal's decision and its reliance on a previous case:The Tribunal overturned the Commissioner's order, citing a previous case involving Agra Leather Goods Pvt. Ltd. where it was held that possessing a valid SSI registration certificate entitled the unit to claim the exemption benefit. The Tribunal emphasized that unless the SSI registration was canceled by the competent authority, the benefit could not be denied. The Tribunal's decision was based on the legal entitlement of the respondent to the exemption under the relevant notifications.Revenue's acceptance of the Tribunal's decision in a similar case:The Tribunal highlighted that since the Revenue had accepted the decision in the Agra Leather Goods case, it was precluded from challenging a similar order for another unit. As the decision in the Agra Leather Goods case had become final, the appeal against the respondent's case was dismissed on this ground. The Tribunal emphasized that the Revenue could have taken appropriate action if there were suspicions regarding the genuineness of the SSI certificate.Amendment to the Central Excise Notification:The judgment noted that the Central Excise Notification under which the dispute arose had been amended, and the condition relevant to the case had been deleted. This highlighted a change in the legal framework subsequent to the case proceedings.Compliance with the Supreme Court's order for depositing the demanded amount:Lastly, the judgment mentioned the respondent's compliance with the Supreme Court's order to deposit 50% of the demanded amount and provide security. The respondent had fulfilled this obligation, leading to the release of the deposited amount and relevant documents by the Registry.---