2006 (6) TMI 362 - AT - Central Excise

Summary

Issues: Denial of exemption under Notification No. 8/2003-C.E. for a soap product due to exceeding prescribed limit based on aggregate value of clearances including another brand's hand-made soap. Interpretation of Para 3 and Para 3A of the Notification for determining aggregate value of clearances.

In this case, the Appellate Tribunal CESTAT, Chennai addressed the issue of denial of exemption under Notification No. 8/2003-C.E. to the assessee for their product, a "Viha"-branded soap, due to exceeding the prescribed limit of Rs. 3,00,00,000/- for the previous year. The Commissioner (Appeals) included clearances of a hand-made "Medimix"-branded soap, belonging to another person and chargeable to "NIL" rate of duty, in the aggregate value of clearances. The Tribunal analyzed Para 3 of the Notification, effective from 1-4-2003, which listed categories of clearances not to be considered for determining the aggregate value of clearances for duty payment. It was observed that Para 3A of the Notification, relevant for the previous financial year, excluded clearances bearing another person's brand name ineligible for exemption. Since "Medimix"-branded soap was ineligible for exemption under Para 4 of the Notification, its clearances should not have been included. Consequently, the aggregate value of clearances was below the limit, entitling the assessee to the benefit of the Notification for the subsequent year.

The Tribunal found that the clearances of "Medimix"-branded soap should not have been considered in the determination of the aggregate value of clearances for the previous year, as it was ineligible for exemption under the Notification. By interpreting Para 3A, the Tribunal concluded that the assessee was prima facie eligible for the benefit of the Notification for the next year. Therefore, the Tribunal granted a waiver of pre-deposit and stay of recovery in respect of the duty amounts, recognizing the error in including the ineligible clearances in the aggregate value calculation. The judgment emphasized the importance of correctly applying the relevant provisions of the Notification to determine the eligibility for exemption based on the aggregate value of clearances, ensuring fair treatment for the assessee.