2011 (7) TMI 264 - AT - Central Excise

Demand interest and penalty - SSI exemption - Whether the appellants were entitled for availing exemption under Notification No.8/2003-CE dated 1.3.2003 in respect of certain goods while availing cenvat credit in relation to some other goods - Held that - clause 3 3A and 4 of the said notification would disclose that the manufacturers are not debarred from availing the benefit under the said notification in relation to the goods other than the goods which are excluded from the benefit of the said notification while simultaneously seeking to avail the benefit of cenvat credit or modvat credit in relation to such excluded goods provided they are cleared on payment of full duty - Hence the impugned orders cannot be sustained and are liable to be set aside and proceedings against the appellants be quashed with consequential relief .

Summary

Issues: Whether the appellants were entitled to avail exemption under Notification No.8/2003-CE dated 1.3.2003 while availing cenvat credit in relation to certain goods.

Analysis:
1. The appeals before the Appellate Tribunal CESTAT, New Delhi involved a common question of law and facts, and were heard together. The appeals arose from orders passed by the Commissioner (Appeals) in Gurgaon, where penalties and demands were confirmed against the appellants.

2. The main issue in all appeals was whether the appellants could avail exemption under Notification No.8/2003-CE while also claiming cenvat credit for different goods. The lower authorities had denied the exemption, stating that the appellants cannot simultaneously benefit from the exemption and cenvat credit for different types of products.

3. The appellants argued that the branded goods should not be excluded from the exemption if the brand name belonged to the manufacturer. They relied on a Tribunal decision in Cure Quick Remedies P. Ltd. case, which supported their claim. The Department did not dispute this contention, acknowledging that the issue had been settled in favor of the assessee in the mentioned case.

4. The Tribunal's decision in Cure Quick Remedies P. Ltd. case clarified that goods bearing another person's brand name, cleared by paying full duty, are not entitled to the exemption. However, goods manufactured under the manufacturer's brand name can avail the exemption even if cenvat credit is claimed for duty-paid inputs used in their production.

5. The Tribunal highlighted that the benefit of the exemption accrues to specified goods through the manufacturer, and there is no restriction on availing cenvat credit for excluded goods while claiming the exemption for other goods. The Tribunal distinguished this case from previous judgments where manufacturers had to choose between different benefits, emphasizing that no such restriction existed under Notification No.8/2003-CE.

6. Considering the precedent set by Cure Quick Remedies P. Ltd. case, the Tribunal concluded that the impugned orders denying the exemption to the appellants were not sustainable. The orders were set aside, and proceedings against the appellants were quashed with consequential relief. The appeals were disposed of accordingly.