2015 (4) TMI 314 - AT - Central Excise

SSI Exemption - clubbing of turnover - manufacture of P&P medicines on his own account and as a loan licensee under job work for others - user of logo / brand name - Notification No. 9/03-CE - whether in respect of the goods manufactured in the appellant s factory for the loan licensees, the loan licensees are to be treated as manufacturer or the appellant are to be treated as manufacturer - Held that - Loan Licensee had not been hired any shift or any part of the factory premises of the appellant and similarly the appellant as a Loan Licensee, had not hired any shift or any part of the factory of the other manufacturers. In view of this, it has to be held the appellant had manufactured the goods for Loan Licensees as a job worker only and, therefore, it is the appellant who have to be treated as the manufacturer and since, the goods manufactured for Loan Licensees had been affixed with the Brand Name belonging to the Loan Licensees, and for this reason the same had been cleared on payment of normal duty, in terms of clause 3(a) of the exemption notification, the value of the clearances to Loan Licensees would not be includible for determining the aggregate value of clearances for home consumption. Similarly, in respect of the goods got manufactured by the appellant as a Loan Licensee through other manufacturers, it is the other manufactures, who have to be treated as manufacture and not the appellant more so, when there is no dispute that the duty liability in respect of those goods had been discharged by those manufacturers, Therefore, the value of these clearances also cannot be included for determining the aggregate value of clearances of the appellant for home consumption for determining their SSI exemption - Decided in favour of assessee.

Summary

Issues:
Determining eligibility for SSI exemption under Notification No. 9/03-CE for the period from 01.04.2003 to 31.10.2003 and whether the clearances of goods manufactured for loan licensees and through other manufacturers should be included in the aggregate value of clearances for home consumption.

Analysis:
During the period in question, the appellants were availing the SSI exemption under Notification No. 9/03-CE for manufacturing P&P medicines. The dispute arose as the Department sought to deny the SSI exemption by including the clearances of goods manufactured for loan licensees and through other manufacturers in the aggregate value of clearances for home consumption. The Joint Commissioner confirmed a duty demand against the appellants, which was upheld by the Commissioner (Appeals), leading to the current appeal.

The appellant's counsel argued that the clearances for loan licensees should not be included in the aggregate value for SSI exemption, citing terms of agreements and a judgment by the Hon'ble Gujarat High Court. The counsel emphasized that the loan licensees did not meet the criteria to be treated as independent manufacturers. The Department's representative defended the impugned order, referring to the CBEC manual and the Gujarat High Court judgment, contending that the loan licensees should be considered independent manufacturers.

After considering the submissions, the tribunal found that the loan licensees did not hire any part of the appellant's factory or shift, nor did the appellant hire any part of the manufacturers' factories. Therefore, the tribunal held that the appellant should be treated as the manufacturer for goods produced for loan licensees. As the duty was paid at normal rates for these goods, the value of clearances to loan licensees should not be included in determining the aggregate value for SSI exemption. Similarly, for goods manufactured by the appellant through other manufacturers, those manufacturers should be treated as the manufacturer, and their value of clearances should not be included in the appellant's aggregate value for SSI exemption. Consequently, the impugned order was set aside, and the appeal was allowed.