2008 (11) TMI 669 - AT - Central Excise

Valuation - Loan license basis - Held that - the value of the goods manufactured on behalf of the loan licencee which were cleared on payment of duty/are not required to be taken into consideration while computing the value of clearances of the assessee s factory - appeal allowed.

Summary

Issues:
Denial of benefit of Notification No. 9/2002-CE to the appellant.

Analysis:
The appeals before the Appellate Tribunal CESTAT AHMEDABAD were disposed of by a common order as they both arose from the same impugned order denying the benefit of Notification No. 9/2002-CE to the appellant. The appellants were engaged in the manufacture of medicaments falling under Chapter 30 of CETA, 1985, and were manufacturing goods on behalf of loan licensees in addition to their own goods cleared under a small exemption. The authorities below held that the value of goods manufactured on behalf of the loan licensees and cleared on payment of duty should be considered for computing clearance eligibility criteria under the notification. Due to the total clearance value from the appellant's factory exceeding the eligibility criteria, the appellants were denied the benefit of the notification, and duty was confirmed against them along with a penalty.

The Tribunal found that the issue had already been decided in a previous case, M/s. Omega Pharmaceuticals vs. CCE, Surat, 2006 (196) ELT 332 (Tri.-Mumbai). Referring to paragraph 3 (b) of the notification, it was concluded that the value of goods manufactured on behalf of the loan licensees and cleared on payment of duty should not be considered while computing the value of clearances from the assessee's factory. The Commissioner (Appeals) had also extended the benefit to the present appellant in a subsequent order by following the Tribunal's decision in the case of M/s. Omega Pharmaceuticals. Therefore, the impugned order was set aside, and both appeals were allowed with consequential relief granted to the appellant.

This judgment clarifies the interpretation of Notification No. 9/2002-CE regarding the computation of clearance eligibility criteria for availing exemptions. It establishes that the value of goods manufactured on behalf of loan licensees and cleared on payment of duty should not be included in the calculation of the appellant's factory clearances for determining eligibility for the notification's benefits. The decision provides consistency in the application of the notification and upholds the appellant's entitlement to the exemption, as per the Tribunal's previous ruling and the subsequent order of the Commissioner (Appeals).