SSI exemption dispute fails where evidence does not link the former proprietor to manufacture or clearance of branded goods.

A central excise duty demand based on alleged misuse of SSI exemption could not be fastened on the former proprietor because the evidence did not link her to the manufacture or clearance of the branded air coolers at the relevant time. The premises and business had already been transferred to a subsequent proprietor before the search, and the goods, packing material and other articles found were under that later proprietor's control. The Department's statements and search material did not reliably establish that the former proprietor had operated the disputed arrangement. The duty demand was therefore unsustainable against her, and SSI exemption could not be denied on the facts proved.

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Issues: Whether the demand of central excise duty could be fastened on the previous proprietor of M/s Zenox Products on the allegation that air coolers bearing the brand name of another concern were manufactured and cleared in breach of SSI exemption under Notification No. 08/2003-CE dated 01.03.2003.

Analysis: The evidence showed that the premises and business had already been transferred to a different proprietor long before the search, and the goods, packing material, and other articles found at the time of search were under the control of the subsequent proprietor. The statements relied upon by the Department did not establish that the previous proprietor had manufactured or cleared branded goods under the disputed arrangement. The material on record, including the search findings and the statements of witnesses, at best pointed to the subsequent proprietor, and not to the previous proprietor against whom the demand was sought to be sustained.

Conclusion: The duty demand could not be sustained against the previous proprietor, and the benefit of SSI exemption could not be denied to her on the facts proved.

Final Conclusion: The Department's challenge failed, and the order relieving the respondent from liability was maintained.

Ratio Decidendi: A duty demand for alleged misuse of SSI exemption cannot be sustained against a former proprietor in the absence of reliable evidence linking that person to manufacture, clearance, or control of the offending goods at the relevant time.

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