2013 (12) TMI 29 - AT - Central Excise

Eligibility for SSI Exemption under Notification No. 1/93 - Parts of Wick Kerosene Stoves captively consumed in the manufacture of kerosene stoves - Whether parts of kerosene stove would be eligible for exemption which would be covered under Explanation 6 to Notification No.1/93 Held that - The kerosene stove is classified under sub-heading no.7321, which is a specified good under Notification No.1/93 Relying upon Elso Machines Pvt. Ltd. Vs Collector of Central Excise 1988 (11) TMI 107 - SUPREME COURT OF INDIA Where inputs which are specified goods, are used within the factory of production for further manufacture of finished goods which are also specified goods, the clearance of such inputs for such use shall not be taken into account for the purposes of calculating the aggregate value of clearances under this notification. There appears to be a rationale behind this Explanation; firstly, when the value of the finished goods, which are exempted under different notifications, is to be excluded, having regard to the wording of Explanation II, on the same analogy, the value of inputs which are being used for manufacture of finished goods are also excluded as both are specified goods, subject, of course, to the limit of the notification - Secondly, the notification provides relief to small scale industries; when the inputs which enjoys the exemption under the notification have already been dealt with, there is no reason why the value of the same inputs again be added for the purposes of aggregate value Thus the assessee would be entitled to the benefit of Explanation III while computing the aggregate value for the purposes of availing exemption under the notification Decided against Revenue.

Summary

Issues:
Interpretation of exemption notifications for parts of kerosene stoves, applicability of Explanation 6 to Notification No. 1/93-C.E., demand of duty on captively consumed parts, consideration of legislative history and case law precedents.

Analysis:
The appeal before the Appellate Tribunal CESTAT Chennai involved a dispute regarding the eligibility for exemption of parts of kerosene stoves captively consumed in the manufacture of such stoves. The case originated from a show-cause notice proposing duty demand, interest, and penalty for a specified period following the withdrawal of a previous notification. The original authority confirmed the duty demand and penalty, which was later set aside by the Commissioner (Appeals), leading to the Revenue's appeal.

The crux of the matter revolved around the interpretation of various notifications, notably the transition from Notification No. 181/88-C.E. to subsequent notifications like No. 64/94-C.E. and No. 41/94-C.E. The Revenue contended that no exemption was in place for parts of kerosene stoves during a specific period, contrary to the Commissioner (Appeals) who relied on case law precedents, including the Universal Electrical Industries case upheld by the Supreme Court.

The Tribunal delved into the legislative history and relevant provisions, particularly Explanation 6 to Notification No. 1/93-C.E., which exempts specified goods used in further manufacturing within the factory. The Tribunal cited the Universal Electrical Industries case and the subsequent Supreme Court decision, emphasizing the strict interpretation of notifications and the exclusion of specified goods' clearances for calculating aggregate value under the notification.

Furthermore, the Tribunal referenced the Vindhyachal Process Corporation case to support the exclusion of captively consumed inputs from aggregate value calculation under the notification. Ultimately, the Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal based on the established legal principles and precedents.

In conclusion, the judgment reaffirmed the application of Explanation 6 to Notification No. 1/93-C.E. for parts of Wick Stoves used in their manufacture, in line with case law and statutory provisions. The decision highlighted the importance of consistent interpretation of exemption notifications and the exclusion of captively consumed inputs from aggregate value calculations, leading to the dismissal of the Revenue's appeal.