2008 (6) TMI 506 - AT - Central Excise

Summary

Issues:
1. Denial of SSI exemption notification to the appellant due to repacking activity.
2. Interpretation of the agreement between the appellants regarding repacking.
3. Affixing labels on repacked containers affecting eligibility for exemption notification.

Analysis:
1. The case involved appeals arising from a common Order-in-Appeal confirming a demand on the appellant for repacking Formic Acid received in bulk. The appellant contended that being situated in a rural area, they were exempted by Notification No. 1/93 dated 1-3-1993. The appellant argued that as independent manufacturers in a rural area, they should not be denied the benefit of the SSI exemption notification. The authorities had based their decision on an agreement between the appellants, but the appellant asserted that they were independent units and not related. The Tribunal noted that the appellant's repacking activity qualified as a manufacturing process under Chapter Note 11 to Chapter 29 of the Central Excise Tariff. The Tribunal found no evidence to support the authorities' denial of the exemption notification, set aside the demand confirmation, and allowed the appeals.

2. The respondent defended the order by highlighting that the appellant was repacking Formic Acid as per an agreement and affixing labels indicating the repacking was done by another entity. The respondent argued that this practice disqualified the appellant from the benefit of the notification, regardless of their rural location. However, the Tribunal found that the appellant's rural location, independent status, and the nature of the repacking activity supported their eligibility for the exemption notification. The Tribunal emphasized that the mere affixing of labels did not negate the appellant's entitlement to the notification.

3. Upon reviewing the submissions and lower authorities' findings, the Tribunal confirmed that the appellant, as an independent unit in a rural area, engaged in a manufacturing process by repacking the Formic Acid. The Tribunal emphasized that the absence of evidence suggesting the appellant was a dummy unit or related to the supplier supported granting them the benefit of the exemption notification. The Tribunal concluded that affixing labels did not impact the appellant's eligibility for the notification. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the appeals.