CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHENNAI REGIONAL BENCH – COURT No. III Excise Appeal No. 40698 of 2017 (Arising out of Orders-in-Appeal Nos. 31&32/2016-CE dated 27.10.2016 passed by Commissioner of Central Excise (Appeals), No. 1, Foulks Compound, Anai Road, Salem – 636

001)

M/s. Vedagiri Paper and Board Pvt. Ltd. ...Appellant No. 17/5, 18/2, NH-47 Main Road, Chinna Vilamalai Village, Nasiyanur, Erode – 638 107.

Versus Commissioner of GST and Central Excise ...Respondent Salem Commissionerate, No. 1, Foulks Compound, Anai Road, Salem – 636 001.

And Excise Appeal No. 41746 of 2018 (Arising out of Orders-in-Appeal Nos. 31&32/2016-CE dated 27.10.2016 passed by Commissioner of Central Excise (Appeals), No. 1, Foulks Compound, Anai Road, Salem – 636

001)

M/s. Shakti Paper Mart ...Appellant No. 17/5, 18/2, NH-47 Main Road, Chinna Vilamalai Village, Nasiyanur, Erode – 638 107.

Versus Commissioner of GST and Central Excise ...Respondent Salem Commissionerate, No. 1, Foulks Compound, Anai Road, Salem – 636 001. APPEARANCE:

For the Appellants : Mr. Niranjan J.V., Advocate For the Respondent : Ms. Anandalakshmi Ganeshram, Authorised Representative CORAM:

HON’BLE MR. P. DINESHA, MEMBER (JUDICIAL)

HON’BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL)

FINAL ORDER Nos. 40287-40288 / 2026 DATE OF HEARING : 12.12.2025 DATE OF DECISION : 23.02.2026 Per Mr. VASA SESHAGIRI RAO The present appeals arise out of a common Order-in-Original No. 02/2016-CX dated 10.05.2016 confirming duty demands against (i) M/s. Vedagiri Paper and Board Pvt. Ltd. (Appellant-1) and (ii) M/s. Sri Sakthi Paper Mart (Appellant-2). Appellant-1, engaged in the manufacture of unbleached paper under Tariff Item 48043100, was registered with Central Excise since 2010 and was availing SSI exemption under Notification No. 08/2003-CE dated 01.03.2003. During the financial year 2013-14, Appellant-1 cleared goods valued at Rs.1,55,89,925/-, exceeding the exemption limit of Rs.1.5 crores, resulting in a proposed duty liability of Rs.37,612/- on the excess clearances.

1.2 With effect from 01.01.2014, Appellant-1 leased the same factory premises to Appellant-2, who manufactured and cleared unbleached paper valued at Rs. 50,57,541/- during January–March 2014 without obtaining registration or payment of duty, claiming separate SSI exemption. The Department invoked Para 2(vi) of Notification No 8/2003-CE, alleging that exemption applies only to the aggregate clearances of all manufacturers operating from the same factory. Accordingly, duty demands of Rs. 37,612/- against Appellant-1 and Rs. 3,18,878/- against Appellant-2, along with interest and equal penalties under Rule 25 and Section 11AC, were confirmed by invoking the extended period under Section 11A(4).

1.3 Appeals filed before the Commissioner (Appeals) were rejected vide Orders-in-Appeal Nos. 31 & 32/2016-CE dated 27.10.2016, upholding invocation of extended period and penalties. Hence, the present appeals.

2. The Ld. Advocate Mr. J.V. Niranjan, appeared for the Appellants and the Ld. Authorized Representative Ms.

Anandalakshmi Ganeshram, appeared for the Revenue.

3. The Ld. Advocate for the appellants submitted that: -

i. The duty liability per se is not disputed, but the challenge is confined to invocation of extended period, confirmation of interest beyond the normal period, and imposition of penalties.

ii. Appellant-1 was regularly filing ER-3 returns and maintaining statutory records, and therefore the Department had full knowledge of clearances. Hence, extended period cannot be invoked.

iii. The omission to pay duty on excess clearance was purely inadvertent due to financial distress and closure of operations, without fraud or intent to evade.

iv. Reliance was placed on:

a. Anand Nishikawa Co. Ltd. v. CCE, 2005 (188) ELT 149 (SC)

b. Padmini Products v. CCE, 1989 (43) ELT 195 (SC)

c. Continental Foundation Jt. Venture v. CCE, 2007 (216)

ELT 177 (SC)

to contend that mere failure or negligence cannot amount to wilful suppression so a