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2016 (5) TMI 1241 - CESTAT NEW DELHI

2016 (5) TMI 1241 - CESTAT NEW DELHI - TMI - SSI Exemption - wrong valuation - Tread rubber cleared by the appellant was not valued at the rate of 115% (or 110% with effect from 05.07.2003) of the cost of production and when so done, the appellants exceeded the SSI exemption limit prescribed under Notification No.8/2003-CE, dated 01.03.2003 - Willful mis-statement or suppression of facts. - Period of limitation - Demand of duty alongwith interest and imposition of penalty -

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a fides. In the case of Chemphar Drugs Liniments [1989 (2) TMI 116 - SUPREME COURT OF INDIA], the Supreme Court held that some positive other than mere inaction or failure on the part of the assessee or conscious or deliberate withholding of information when assessee knew otherwise, is required before it is saddled with the liability the extended period. In the case of Continental Foundation Joint Venture [2007 (8) TMI 11 - SUPREME COURT OF INDIA], Supreme Court went to the extent of ruling that .....

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at extended period is not invokable in the case of unclear or doubtful legal position.

In view of the above, the allegation of wilful mis-statement or suppression of facts cannot be sustained. It is found that the Show Cause Notice was issued on 22.03.2006 where the demand pertains to the period 2001-02 to 2003-04 and therefore the entire demand is beyond normal period of one year. We may point out that the Notification No.8/2003-CE, dated 01.03.2003 cited in the Show Cause Notice was .....

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of Tribunal was outside of its jurisdiction. Therefore, we refrain from discussing the merits of the case. - Decided in favour of appellant - Appeal Nos. E/2177 & 2180 /2007-EX[DB] - Final Order Nos.51778-51779/2016 - Dated:- 13-5-2016 - MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND MR. R.K. SINGH, MEMBER (TECHNICAL) For the Petitioner : Mr. Abhas Mishra, Advocate For the Respondent : Mr. RK Mishra, DR ORDER PER MR. R.K. SINGH : Appeals have been filed against Orders-in-Appeal dated 20.03.2007 and 23 .....

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Engineering and Industries Pvt. Ltd. (herein-after referred to as appellant No.2) and had availed benefit of Notification No.8/2003-CE, dated 01.03.2003. The appellant No.2 was having one more unit, which was functioning in the name and style of M/s. Waidhan Engineering and Industries Pvt. Ltd., Unit II and manufacturing Tread Rubber falling under Chapter No.40 of Central Excise Tariff Act, 1985. The turnover of both the appellants was clubbed by appellant No.1 for the purpose of eligibility of .....

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of production, it had not properly calculated the aggregate clearances. Essentially, the impugned duty demand of ₹ 7,63,090/- along iwth interest and penalties was confirmed on the ground that the tread rubber cleared by the appellant No.2 was not valued at the rate of 115% (or 110% with effect from 05.07.2003) of the cost of production and when so done, the appellants exceeded the SSI exemption limit prescribed under Notification No.8/2003-CE, dated 01.03.2003. The Commissioner (Appeals) .....

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herefore the value of clearance was not includible for the purpose of computing the exemption limit under Notification No.8/2003-CE. As per Note 9 of Chapter No.40, sub-heading 4008.21 was also applied to plates, sheets and strips, whether or not cut to shape and surface worked or further worked so as to render them fit for resoling or repairing or retreading of rubber tyres. As per clause 3(a) of Notification No.8/2003-CE, dated 01.03.2003 for the purpose of determining the first clearances, cl .....

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y written submissions and indeed conveyed that no written submissions would be submitted by him. 5. We have considered the contentions of both sides and perused the records. 6. It is indeed a fact that in the Show Cause Notice it is mentioned that the appellant No.2 was manufacturing tread rubber falling under CTH 4006.10 of Central Excise Tariff. However, the Commissioner (Appeals) held that tread rubber manufactured by the appellant No.2 was falling under heading 4008.22. Although the classifi .....

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s observed in paras 12 and 13 of the impugned order, as under:- 12. Tread rubber is specifically covered under sub heading 4008.22 of Central Excise Tariff Act, 1985 as plates, sheets and strips, for resoling or repairing or retreading rubber tyres and chargeable to duty. The appellant has claimed the classification of the tread rubber under sub heading 4008.21 which reads plates, blocks, sheets and strip used in the manufacture of sole heels or soles and heels combined for foot wear, chargeabl .....

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t cut to shape and surface-worked or further worked so as to render them fit for resoling or repairing or retreading of rubber-tyres. 13. Looking at the history of classification of tread rubber, the impugned para of note 9 of Chapter 40 is an anachronism, which has outlived its purpose. In the year 1990-91, the sub-heading 4008.21 read as follows:- plates, sheets and strip, for resoling or repairing or re-treading rubber tyres. At that time, the impugned para of note 9 introduced in the same .....

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created and the tread rubber brought within its purview the last part of note 9 of chapter 40, has for all practical purpose, become a dead letter and cannot be relied upon it is in direct conflict with the description under sub heading 4008.22 of Central Excise Tariff Act, 1985 and it chargeable to applicable rate of duty. Being an excisable goods chargeable to duty, the value of clearances of tread rubber are to be taken into account for calculating the exemption and eligibility limit under n .....

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eading of rubber tyres. The Commissioner (Appeals) in para 13 quoted above traced the history of classification of tread rubber and observed that the above referred note 9 of Chapter 40 is an anachronism which has outlived its purpose and has become a dead letter and cannot be relied upon (as) it is in direct conflict with the description under sub-heading 4008.22 of Central Excise Tariff. Be that as it may. The fact remains that the said Chapter note 9 was very much part of the Central Excise T .....

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er CTH 4008.21 which attracted nil rate of duty. In addition, we have already brought out as to how there was a difference of opinion between the departmental authorities issuing the Show Cause Notice and the Commissioner (Appeals) regarding classification of the tread rubber; Commissioner (Appeals) holding it to be classifiable under 4008.22 while Show Cause Notice mentioning its classification under 4006.10, which shows that there was ambiguity in this regard. 9. In the case of Uniworth Textil .....

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iments [2002-TIOL-266-SC-CX], the Supreme Court held that some positive other than mere inaction or failure on the part of the assessee or conscious or deliberate withholding of information when assessee knew otherwise, is required before it is saddled with the liability the extended period. In the case of Continental Foundation Joint Venture [2007 (216) ELT 177 (SC)], Supreme Court went to the extent of ruling that mere omission to give correct information is not suppression of facts unless it .....

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t of the foregoing analysis, the allegation of wilful mis-statement or suppression of facts cannot be sustained. We find that the Show Cause Notice was issued on 22.03.2006 where the demand pertains to the period 2001-02 to 2003-04 and therefore the entire demand is beyond normal period of one year. We may point out that the Notification No.8/2003-CE, dated 01.03.2003 cited in the Show Cause Notice was effective from 01.04.2003 while part of the demand pertains to the period prior to the date of .....

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