2015 (11) TMI 665 - AT - Central Excise

Export of goods by SSI units against form H - Fraudulent availment of SSI Exemption - Notification No. 8/2003 dated 1/3/2003 - Floating of dummy unit - Clubbing of clearances - Held that - Appellant has not disputed the issue of clubbing of both units before adjudicating authority. - Appellant have produced all the records such as form H and other sales documents before adjudicating authority and considering those documents, original authority has extended the benefit of deduction of value of goods exported through merchant exporter strictly in terms of Circular dated 26/5/1996 and 25/7/2002. In both the Circulars, Board has categorically clarified that in case of goods cleared form exempted unit for the purpose of export through merchant exporter form H provided by the buyer can be considered as proof of export. In view of the clear Board circular adjudicating authority has correctly allowed deduction of value of goods exported through merchant exporter. - No infirmity in the order, as original authority has only followed the Board Circular in correct perception and allowed the deduction of value of exported goods from the aggregate value of both units. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues involved:
1. Clubbing of units for availing SSI exemption
2. Deduction of export value from total aggregate value for excise duty calculation
3. Applicability of Board Circulars on proof of export
4. Correctness of the Commissioner(Appeals) decision

Issue 1: Clubbing of units for availing SSI exemption
The case involved M/s. S.V. Mestry Engg. Works and M/s. Shree Swami Samarth Engineering, where a show cause notice was issued alleging fraudulent availing of SSI exemption through a dummy unit. The original authority held that both units should be clubbed for excise duty calculation. The Commissioner(Appeals) confirmed the demand, imposing penalties. The appellant argued that only the demand over the threshold limit should be confirmed. The original authority allowed deduction of export value through a merchant exporter, following Board Circulars. The Tribunal found no infirmity in the original order and set aside the Commissioner(Appeals) decision.

Issue 2: Deduction of export value for excise duty calculation
The appellant contended that the value of goods exported through a merchant exporter should be deducted from the total aggregate value for excise duty calculation. The original authority allowed this deduction based on Board Circulars, reducing the demand. The Commissioner(Appeals) disagreed, leading to the appeal. The Tribunal upheld the original authority's decision, citing the clear guidance in the Board Circulars for deduction of exported goods' value from the aggregate value.

Issue 3: Applicability of Board Circulars on proof of export
The appellant relied on Board Circulars dated 26/5/1996 and 25/7/2002, stating that form 'H' provided by the buyer could be accepted as proof of export for goods cleared from an exempted unit. The Commissioner(Appeals) rejected the deduction of export value, claiming the Circulars applied only to manufacturer exporters. The Tribunal disagreed, emphasizing that the Circulars allowed proof of export through a merchant exporter, supporting the appellant's position.

Issue 4: Correctness of the Commissioner(Appeals) decision
The Tribunal reviewed the submissions and records, finding that the original authority correctly applied the Board Circulars in allowing the deduction of exported goods' value. The Tribunal criticized the Commissioner(Appeals)'s reasoning for not considering the Circulars, as they clearly permitted deduction in cases of goods cleared from exempted units through merchant exporters. Consequently, the Tribunal set aside the Commissioner(Appeals) decision and upheld the original authority's order, allowing the appeal.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's decision based on the interpretation of relevant laws and circulars.