2011 (4) TMI 901 - AT - Central Excise

SSI exemptiom under Notification No. 8/2003-CE dated 1.3.2003 - denial as the procedure requiring to pay the duty on the tin containers manufactured on job-work basis was not followed - Held that The Commissioner (Appeals) has not taken into account the facts as submitted by the appellants into consideration that the procedural infraction should not be reason for denial of benefit of exemption, if otherwise, the manufacturer was eligible and SCN had proposed the value of the tin container @ Rs.39/- per kg whereas the assessee the cost should have been Rs.37/- per kg - stay petition allowed and the matter required to be remanded to the Commissioner (Appeals) for fresh consideration.

Summary

Issues:
Denial of benefit of SSI exemption for goods manufactured on job-work basis due to procedural non-compliance. Calculation of total value of clearances including goods manufactured on job-work basis. Discrepancy in the valuation of tin containers between the appellant and the Commissioner (Appeals).

Analysis:
The appellants, engaged in manufacturing Tin Containers, were availing the benefit of SSI exemption under Notification No. 8/2003-CE but failed to comply with the condition of Notification No. 83/94 regarding the filing of a declaration by the principal for duty liability on goods manufactured on job-work basis. Consequently, the Revenue initiated proceedings to disallow the exemption benefit and recalculate clearances' total value, resulting in demands against the appellant for the years 2005-06 and 2006-07. The original demand was significantly reduced on appeal, with a penalty imposed under Section 11AC of the Central Excise Act, 1944.

In the stay application, the appellant argued that procedural non-compliance should not lead to denial of exemption benefit if the manufacturer is otherwise eligible, citing Tribunal decisions. The Commissioner (Appeals) erroneously assumed that the finished goods were always exempted, disregarding the applicability of decisions during periods when the goods were dutiable. Additionally, a discrepancy arose in the valuation of tin containers, with the appellant contesting the value proposed by the show-cause notice based on documentary evidence, while the Commissioner (Appeals) relied on investigating agencies' cost calculation without considering the appellant's submissions on finished goods' value.

Given the Commissioner (Appeals) failed to consider crucial facts and submissions by the appellant, the Tribunal remanded the matter back for a fresh decision. The Commissioner (Appeals) was directed to reassess the submissions, consider relevant decisions cited by both parties, and provide a reasoned decision after affording the appellants a fair opportunity to present their case. The impugned order was set aside, emphasizing the need for a comprehensive review by the Commissioner (Appeals) on the identified issues.