2008 (2) TMI 729 - AT - Central Excise

Summary

Issues:
- Whether clearances between a manufacturing unit and its sister Export Oriented Undertaking (EOU) should be considered in the computation of aggregate value of clearances for Small Scale Industries (SSI) purpose.
- Whether the demand for duty on the manufacturing unit based on such clearances is justified.
- Interpretation of relevant SSI Notifications (8/2003-C.E. and 9/2003-C.E.) and case law precedent (TANSI v. Commissioner of Central Excise, Chennai) in the context of the present case.

Analysis:
1. Consideration of Clearances for SSI Purpose:
The judgment revolves around the issue of whether clearances between a manufacturing unit and its sister EOU should be included in calculating the aggregate value of clearances for SSI purpose. The appellant, a manufacturing unit, had cleared products to the EOU without considering these clearances in their calculations. The lower authorities demanded duty based on these clearances, contrary to the appellant's position. The appellant relied on the decision in TANSI v. Commissioner of Central Excise, Chennai, where two units owned/controlled by the State Government were treated as separate units for SSI purpose. The appellant argued against clubbing the EOU's export clearances with their own clearances for duty calculation purposes.

2. Justification of Duty Demand:
The lower authorities demanded duty of over Rs. 7 lakhs along with education cess from the appellant based on the inclusion of clearances to the EOU in the computation of aggregate value. The appellant contested this demand, citing the provisions of relevant SSI Notifications (8/2003-C.E. and 9/2003-C.E.) that expressly provided for not considering such clearances. The Tribunal found a prima facie case for the appellant against the impugned demand after examining the Notifications and the case law precedent, leading to a waiver of pre-deposit and stay of recovery as requested by the appellant.

3. Interpretation of SSI Notifications and Case Law Precedent:
The judgment delves into the interpretation of SSI Notifications (8/2003-C.E. and 9/2003-C.E.) and the applicability of case law precedent in the context of the dispute. The learned Consultant relied on the provisions of these Notifications and the decision in TANSI case to argue against the inclusion of EOU clearances in the duty calculation for the manufacturing unit. The Tribunal, after considering these aspects, found merit in the appellant's case and granted relief by waiving pre-deposit and staying recovery of the demanded amount.

This comprehensive analysis of the judgment highlights the key issues, arguments presented, legal interpretations made, and the ultimate decision rendered by the Tribunal in favor of the appellant based on the provisions of relevant Notifications and case law precedent.