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2016 (2) TMI 182 - SETTLEMENT COMMISSION CUSTOMS AND CENTRAL EXCISE NEW DELHI

2016 (2) TMI 182 - SETTLEMENT COMMISSION, CUSTOMS AND CENTRAL EXCISE, NEW DELHI - 2015 (326) E.L.T. 389 (Sett. Comm.) - Settlement of a case - Eligibility to avail the benefit of the SSI exemptions No. 8/2003-C.E - benefit of cum duty price - Held that:- The applicant has admitted duty liability on a cum-duty basis. The Revenue has not given any reason as to why cum-duty benefit may be denied. There is also no charge that the applicant cleared goods clandestinely nor is there any charge against .....

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cific charge has been alleged against the co-applicants. The SCN only states that the co-applicants who are partners of the applicant are responsible for any activity in their factory premises. This is not sufficient to establish any culpability.

The Bench accordingly finds that the applicant has made full and true disclosure and has cooperated in the proceeding during the investigation as well as before the Commission. In view of above and the facts and circumstances of the case, the .....

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, 1944 (in short the Act ) for settling the dispute arising out of show cause notice C. No. V(15)/Off/ADJ/CE/123/2013/11860, dated 31-7-2013 (in short the SCN ) issued by the Additional Commissioner of Custom, Central Excise & Service Tax, Kanpur (hereinafter referred to as the Revenue ). Sr. No. Name of the Applicants with address Settlement Application No. Date of filling 1. M/s. Naaz Leather Finishers, 14-A, 150 ft. road, Jajmau, Kanpur - 208010 (UP) (hereinafter referred to as the applic .....

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to as the co-applicant No. 3 ) 4436 1-9-2014 5. Mr. Rais Iqbal, C/o M/s. Naaz Leather Finishers, 14-A, 150 ft. road, Jajmau, Kanpur - 208010 (UP) (hereinafter referred to as the co-applicant No. 4 ) 4437 1-9-2014 2. M/s. Naaz Leather Finisher, 14-A, 150 Ft. Road, Kanpur is a partnership concern and are engaged in the manufacturing of Leather Shoe Upper (falling under CSH No. 6403) for M/s. Bata India Ltd. and also manufacturing finish Leather falling under CSH No. 4107 or 4112 or 4113, 411 .....

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the sale of shoe uppers whereas on scrutiny of balance sheet for the period from 2008-09 to 2011-12, it was found that the applicant was also manufacturing and clearing finished leather falling under CSH No. 4107 or 4112 or 4113, 4114, 4115 of CETA, 1985 but did not include the sale value of finished leather, which is chargeable to nil tariff rate. Further on enquiry the applicant informed that they are manufacturing both the above said excisable items in the same premises. From 2011-12 they ha .....

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classified under Chapter 41 of CETA, 1985 should be included in availing/admissibility of the benefit of said SSI notification. 5. On enquiry from the applicant regarding supply of leather shoe upper to be supplied to M/s. Bata India Ltd. the applicant vide their letter enclosed the purchase order and a leather shoe upper on the inner sole of which Tarun was printed with ink. On perusal, it appeared that the applicant had manufactured said shoe upper in the brand name of Tarun as per the re .....

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tation of the aggregate value of the 4 Crores the value of clearances of finished leather has been taken into account although it attracts nil rate under the tariff but are excisable goods. Therefore no SSI exemption is admissible during 2008-09, 2009-10 and 2010-11. 7. After completion of the investigations, the SCN was issued proposing :- (i) Central Excise duty amounting to ₹ 21,51,725/- for the period 2008-09 to 2010-11 should not be demanded and recovered, from them under proviso .....

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25 of Central Excise Rules, 2002; (v) penalty should not be imposed upon them under Rule 27 of Central Excise Rules, 2002 for not taking registration; 7.1 Penalty was also proposed on the co-applicant No. 1 , 2 , 3 & 4 in the SCN under the Act. 8. The applicant in their settlement application has submitted that the SCN demanded duty of ₹ 21,51,725/- from the applicant, which has been calculated in respect of clearance of leather shoe upper from the financial year 2008-2009 to .....

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.50 crore. Since in the financial year 2007-08, the applicant s aggregate clearances were below 4 crore and clearance made in the financial year 2008-09 were within the exemption limit of ₹ 1.50 crore, no duty liability was made out against the applicant. Further in the financial year 2008-09 and 2009-10, the aggregate clearances are above 4 crore, as such the applicant is liable for duty from the first clearances and liable for duty ₹ 9,70,242/- only in the financial year 2009-10 an .....

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the applicant may be settled at ₹ 12,290/- under Section 11AB of the Act and the same may be accepted as having been paid upon admitted duty liability. (c) full immunity from imposition of penalty, prosecution and fine may be granted to the applicants. (d) That late fee/penalty for filing of returns may kindly be waived. 9. The applicant was served with notice for proceeding with the application on 4-9-2014 asking about the duty payable has been adjusted from Cenvat credit, and to exp .....

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Bata India Ltd. only without any marking and also manufacturing the finished Leathers chargeable to NIL rate of duty. The applicant being under a bona fide belief that they are eligible for SSI exemption has not taken any registration and by way of SCN, it came to the notice of the applicant that SSI Exemption is not available to them. The applicant during the disputed period had purchased inputs and machinery indigenously and also imported inputs and machinery on payment of Cenvat and/or AED eq .....

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t credit toward the admitted duty liability subject to the approval & directions of the Hon ble Bench. 11. The case was allowed to be proceeded with on 5-9-2014. The report under Section 32F(3) of the Act was called for from the Revenue. 12. The Revenue vide their letter C. No. V(15)Off/Adj/CE/143/2013, dated 20-3-2015 submitted that the main applicant is registered with the Central Excise Department w.e.f. 6-5-2011 having Registration No. AAABFN1189NEM002. They took registration o .....

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ant were manufacturing Tarun brand as per requirement of M/s. Bata India Ltd. Therefore, the goods are branded and not entitled for exemption under Notification No. 8/2003, dated 1-3-2003. The duty liability upon the applicant is from 2008-09 to 2010-11 amounting to ₹ 21,51,725/- and not ₹ 9,70,242/- as claimed by the applicant. Further, the admissibility of Cenvat credit is governed by procedure/documentation as laid down in Cenvat Credit Rules, 2004, which the applicant has not com .....

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ubmitted that the applicant was a manufacturer of finished leather and leather shoe upper for M/s. Bata India Ltd. The applicant was a SSI unit and was under the impression that there was no need for him to take Central Excise Registration as a SSI Unit, The applicant had started paying Central Excise duty on leather shoe upper from 2011-12. The department s contention that all excisable goods cleared from the factory of the applicant was more than ₹ 4 crore for the year 2008-09, 2009-10 a .....

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ut an in-house name of the applicant and therefore, the notification benefit was admissible to them. As such, as against the SCN demand of ₹ 21,51,725/- the applicant had admitted the demand of ₹ 9,72,042/- on a cum duty basis. The ld. Advocate submitted that for the year 2008-09, the benefit of SSI was admissible to them as the clearance in preceding financial year had not crossed the stipulated limit. The ld. Advocate further submitted that it was a case of interpretation of notifi .....

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3-Central Excise, dated : March 01, 2003 Sub : Sections 3, 4, 4A , 5A - SSI exemption related In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) (herein after referred to as the Central Excise Act) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 8/2002-Central Excise, dated the 1st March, 2002, published in the Gazette of India vide number G.S.R. 129(E), dated t .....

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entral Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the First Schedule); and (ii) the special duty of excise specified thereon in the Second Schedule to the said Central Excise Tariff Act, 1985 (herein after referred to as the Second Schedule), as is in excess of the amount calculated at the rate specified in the corresponding entry in column (3) of the said Table : the table of the notification is as follows : TABLE S. No. Value of clearances Rate of duty (1) (2) (3) 1. First .....

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ions, namely :- (vii) the aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers, does not exceed rupees three hundred lakhs in the preceding financial year, (amended to rupees four hundred lakh vide Notification No. 10/2005-C.E., dated 1-3-2005) 13.1 The effect of the notification is that if an assessee has an aggregate value of clearances of excisable goods of less than 4 crores .....

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t of this exemption in terms of paragraph 4; The brand name or trade name is explained as under : Explanation. - For the purpose of this notification (A) brand name or trade name means a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such sp .....

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ial year, at nil rate of duty for the first aggregate value of clearances of ₹ 1.5 crores. 13.2 In the instant case, the Revenue has inter alia contended that the applicant is not eligible to avail the benefit of the SSI exemptions under the aforesaid notification on the ground that (a) the aggregate value of clearances, as per the balance sheets of the applicant, were more than 4 crores in the financial years 2008-09, 2009-10 and 2010-11 and as such was not eligible to avail the bene .....

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e year 2008-09. 13.4 As this point it is necessary to assess the evidence with regard to the contentions on brand name Tarun as it has a material bearing on the computation of aggregate value of clearance in the year 2007-08 and therefore on the eligibility of the applicant to avail the notification benefit in the year 2008-09. 13.5 The revenue has cited the procurement order dated 8-1-2013 from Bata India to contend that Tarun is a brand name belonging to M/s. Bata India. The applican .....

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during the hearing and had not sought any exemption from attendance at the hearing. In the absence of any refutation on this issue, the Bench accepts the evidence of M/s. Bata India that they do not own or sell any product under the brand name Tarun . 13.6 Accordingly the Bench holds that for the year 2007-08, the aggregate clearance of ₹ 3.6 crore, made the applicant eligible for availing benefits of the Notification 8/2003-C.E. in the financial year 2008-09. 13.7 Both the Reve .....

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by the Revenue for the year 2008-09, out of the aggregate clearance of ₹ 6,28,07,551/- crore, the value of clearance for the leather shoe upper for M/s. Bata India was ₹ 1,38,53,264/- crore. As such the applicant were well within the overall limit of clearance of ₹ 1.5 crore, where the duty under the Notification 8/2003-C.E. was NIL. The finished leather goods were in any case subject to NIL rate of duty. The applicant has therefore rightly contended that the there was no duty .....

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ey have done so only when M/s. Bata India wanted cenvatable invoices for their purchases, the applicant has argued that they had not taken registration earlier as they were under a mistaken belief that as the goods were not subjected to any duty they did not require any registration. This argument is not believable as they well aware of the Notification 8/2003-C.E. and their eligibility for the exemptions contained therein. Part knowledge and selective ignorance is a poor argument. The Bench acc .....

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ore is not eligible for availing Cenvat credit. The applicant on the other hand has produced invoices for their domestic purchase where payment of central excise duties is clearly shown. The applicant has also produced copies of Bills of entry and related documents as proof of import of capital goods. The scheme of Cenvat credit envisages avoidance of cascading effect of taxation and duty paid goods are procured, the assessee is allowed to avail credit of duty paid. The Revenue has not questione .....

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. The Bench accordingly allows availment of Cenvat credit on duty paid documents relating to capital assets procured domestically and through import. 13.10 The applicant has admitted duty liability on a cum-duty basis. The Revenue has not given any reason as to why cum-duty benefit may be denied. There is also no charge that the applicant cleared goods clandestinely nor is there any charge against M/s. Bata India that they procured goods from the applicant without payment of duty. Under the .....

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ho are partners of the applicant are responsible for any activity in their factory premises. This is not sufficient to establish any culpability. 13.12 The Bench accordingly finds that the applicant has made full and true disclosure and has cooperated in the proceeding during the investigation as well as before the Commission. In view of above and the facts and circumstances of the case, the Bench settles the case under Section 32F(5) of the Act on the following terms :- Central Excise Duty .....

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