2008 (7) TMI 816 - AT - Central Excise

SSI Exemption - Computation of clearances - inclusion of export value in the value of clearances - Held that - if the export values are required to be included in the value of clearances for home consumption, then the duty paid on such exports, when they were still within the exemption limit of ₹ 50 lakhs, is required to be treated as deposit and the appellant s duty liability is required to be re-quantified by treating the entire clearances in chronological order and such duty deposits are required to be adjusted against the appellant s duty liability - matter remanded for re-quantification of duty.

Summary

Issues Involved:
Interpretation of small scale exemption Notification No. 38/97-C.E. regarding the inclusion of export clearances in computing total clearances for home consumption and the consequent duty liability.

Detailed Analysis:

1. Issue of Clearances Calculation:
The appellants, engaged in manufacturing Aluminium Chloride and Copper alloys, availed the small scale exemption under Notification No. 38/97-C.E., paying duty at a reduced rate until clearance of Rs. 50 lakhs for home consumption. However, the Revenue contended that the value of export clearances must be added to compute total clearances, exceeding Rs. 50 lakhs. This discrepancy led to a duty demand of Rs. 29,750 against the appellants, along with interest and penalty. The question arose whether export clearances should be considered in determining the aggregate value of clearances for duty calculation.

2. Argument and Precedent Reference:
The appellant's representative argued that if export clearances were to be included, the benefit of the lower duty rate should apply to them. Citing a Tribunal decision in CCE v. Marutham Textiles, it was contended that duty paid on exports within the exemption limit should be treated as deposits, to be adjusted against future duty liabilities. This argument highlighted the need to re-quantify the duty liability based on a chronological assessment of all clearances, including exports.

3. Judgment and Remand:
The Tribunal acknowledged the validity of the appellant's argument, emphasizing that duty paid on exports within the exemption limit should be considered as deposits. Consequently, the impugned order was set aside, and the matter was remanded to the original Adjudicating Authority for re-quantification of duty. The re-assessment was instructed to consider the entire clearances in chronological order, adjusting duty deposits against the appellant's duty liability. This decision aimed to rectify the duty calculation discrepancy arising from the inclusion of export clearances in the total clearances for home consumption.

In conclusion, the judgment addressed the nuanced issue of duty calculation under a small scale exemption notification, emphasizing the treatment of duty paid on exports within the exemption limit as deposits to be adjusted against future duty liabilities. The decision provided clarity on the inclusion of export clearances in computing total clearances for duty purposes, ensuring a fair assessment of duty liability for the appellants.