2017 (10) TMI 134 - AT - Central Excise

Tribunal upholds demand for SSI exemption misuse, directs re-computation with cum-duty price benefit.

M/s Aero Dynamics Private Limited Versus C.C.E. -Ahmedabad-I

M/s Aero Dynamics Private Limited Versus C.C.E. -Ahmedabad-I - TMI Issues Involved:1. Wrong availment of SSI exemption by creating dummy units.2. Classification and marketability of the product.3. Computation of demand and cum-duty price benefit.Issue 1: Wrong Availment of SSI Exemption by Creating Dummy UnitsThe appellant was accused of wrongfully availing the benefit of SSI exemption Notification No.01/93-CE dated 01.03.1993 by not correctly disclosing their gross turnover value. It was alleged that the clearance value was distributed among three dummy units. The Tribunal, in the first round of litigation, remanded the case for re-quantification of the demand after extending the cum-duty price benefit. The de novo adjudication confirmed the duty and directed recovery of interest. The appellant did not dispute the clubbing of the value of clearances of dummy units before the Tribunal in the first round of litigation. It was their plea that the computation of demand was incorrect as the Revenue considered the value of the entire humidification plant, including various parts and components manufactured and cleared by them.Issue 2: Classification and Marketability of the ProductThe appellant contended that the product was wrongly classified under Chapter 84.79 of the Central Excise Tariff Act and argued that the items were neither marketable nor excisable. The appellant referred to the Supreme Court's decision in Collector of Central Excise Jaipur vs Man Structurals Ltd., which classified fabrication items under Heading 7308.50 of CETA, 1985. The appellant argued that piping and ducting used in the humidification plant were structures and not subject to excise duty. The Tribunal found that raising the issue of leviability of duty on parts and components of the humidification plant at this stage was not sustainable as the remand order was specific to re-computation of demand limiting it to parts and components.Issue 3: Computation of Demand and Cum-Duty Price BenefitThe appellant argued that the Commissioner erred in not extending the benefit of cum-duty price in the computation of the demand, despite specific directions from the Tribunal. The Tribunal found that the Commissioner wrongly applied the judgment of the Supreme Court in Amrit Agro Industries Ltd. The Tribunal held that the appellant was eligible for the benefit of cum-duty price, as determined in the first round of litigation. The Tribunal remanded the appeal to the adjudicating authority to allow the cum-duty price benefit and compute the demand accordingly.Conclusion:The Tribunal concluded that the demand was correctly issued for wrong availment of SSI exemption by the appellant through dummy units. The issue of leviability of duty on parts and components of the humidification plant could not be raised at this stage. The Tribunal directed the adjudicating authority to re-compute the demand by extending the cum-duty price benefit to the appellant. The appeal was allowed by way of remand to the extent mentioned.