2009 (2) TMI 187 - AT - Central Excise

Tribunal grants relief to appellants in SSI exemption case, penalties deemed invalid

The Tribunal ruled in favor of the appellants in a case concerning the applicability of SSI exemption under Notification No. 9/2002-C.E. The appellants ... SSI exemption – excess availment of SSI exemption – Addition of value of goods cleared as a job worker – held that - The demand arises on account of including the value of clearances made by the appellants as a job worker during the material period in the aggregate value of clearances to determine clearances qualified for the SSI exemption. Vide Final Order No. 724/07, dt. 12-6-07, this Bench decided the impugned clearances under these 36 invoices to be eligible for exemption under notification No. 214/86-C.E. Value of these clearances therefore did not require to be included to determine the first clearances eligible for exemption. – demand and penalty set aside. Issues:1. Applicability of SSI Exemption under Notification No. 9/2002-C.E.2. Correct determination of duty on clearances of final product Sodium Silicate.3. Validity of penalty imposed.Analysis:Issue 1: Applicability of SSI Exemption under Notification No. 9/2002-C.E.The appellants had availed CENVAT credit and the concessional effective rate under Notification No. 9/2002-C.E. for first clearances up to a certain value. However, it was found that they wrongly availed exemption for clearances starting with the wrong invoice number. The original authority determined that the appellants short paid duty on clearances made during a specific period. Upon further examination, it was revealed that the value of clearances covered by a set of invoices was excluded, affecting the determination of duty liability under the notification.Issue 2: Correct determination of duty on clearances of final product Sodium SilicateThe appellants had a previous Final Order (No. 724/07) where it was established that clearances covered by 36 invoices, which were the subject of the current dispute, were eligible for exemption under a different notification (No. 214/86-C.E.). The value of these clearances was deemed not includible in the aggregate value for determining first clearances eligible for the concessional rate under Notification No. 9/2002-C.E. Therefore, the demand for full duty on these clearances was deemed unsustainable.Issue 3: Validity of penalty imposedAfter analyzing the case records and submissions, it was concluded that the demand and penalty imposed on the appellants were not sustainable. The impugned demand arose from including the value of clearances made by the appellants as a job worker in the aggregate value for determining SSI exemption eligibility. However, based on the previous Final Order, it was determined that these clearances were eligible for a different exemption, rendering the demand and penalty unsustainable.In conclusion, the Tribunal set aside the impugned order, ruling in favor of the appellants. The judgment highlighted the importance of correctly interpreting notifications and ensuring accurate determination of duty liability based on the specific provisions of the law.