2022 (8) TMI 1249 - AT - Central Excise

Tribunal Upholds Duty Demand, Reduces Penalties for Appellants

M/s. Van Shah Fragrance Pvt. Ltd., Shri Shiw Bhagwan Sharma and Shri Pawan Kumar Sharma Versus Commissioner of Central Excise, Shillong

M/s. Van Shah Fragrance Pvt. Ltd., Shri Shiw Bhagwan Sharma and Shri Pawan Kumar Sharma Versus Commissioner of Central Excise, Shillong - TMI Issues Involved:1. Eligibility for SSI Exemption under Notification No. 8/2002-CE and 8/2003-CE.2. Determination of turnover limit for SSI Exemption.3. Invocation of extended period of limitation under Section 11A(1) of the Central Excise Act, 1944.Detailed Analysis:1. Eligibility for SSI Exemption under Notification No. 8/2002-CE and 8/2003-CE:The appellants claimed SSI exemption, arguing that they did not use the 'Gulab' brand name before December 1, 2006. However, the tribunal found that the brand name 'Gulab' was used since March 2003, based on statements from directors and purchasers. The tribunal emphasized that the SSI exemption is not applicable to goods bearing a brand name of another person, as per the notifications. The tribunal upheld the findings of the Commissioner, who had detailed that the brand name was registered to a partnership firm, not the appellant, thus disqualifying them from the SSI exemption.2. Determination of Turnover Limit for SSI Exemption:The tribunal noted that the appellant's turnover exceeded Rs. 1 crore in the years 2003-04 and subsequent years, which disqualified them from SSI exemption. The tribunal confirmed that since the appellant was not eligible for SSI exemption due to the use of the 'Gulab' brand name, the question of when the turnover limit was crossed became irrelevant. The turnover figures were significantly higher than the exemption threshold, reinforcing the ineligibility for SSI exemption.3. Invocation of Extended Period of Limitation under Section 11A(1) of the Central Excise Act, 1944:The appellants argued that they were under a bona fide belief that their products were not dutiable and that any duty paid would be refunded under Notification No. 32/1999-CE, making the issue revenue-neutral. The tribunal rejected this argument, stating that the appellants did not disclose their production and clearance activities to the department until August 23, 2006, indicating suppression of facts. The tribunal found that the appellants' claim of bona fide belief was not substantiated by any legal advice or judicial pronouncements. The tribunal cited Supreme Court precedents emphasizing that bona fide belief must be based on reasonable grounds and not merely on self-opinion.The tribunal also referred to the larger bench decision in Jay Yushin, which clarified that revenue neutrality must be established based on the facts of each case and cannot be presumed. The tribunal concluded that the extended period of limitation was rightly invoked due to the appellants' willful misstatement and suppression of facts with intent to evade duty.Conclusion:The tribunal dismissed the appeal of Appellant 1, confirming the denial of SSI exemption and upholding the demand for duty and penalties. The penalties on Appellants 2 and 3 were reduced from Rs. 2 lakh to Rs. 50,000 each, as previously decided by the tribunal. The tribunal's decision was based on detailed analysis and substantial evidence, affirming the findings of the lower authority.