2016 (1) TMI 845 - AT - Central Excise

SSI Exemption - determination of turnover - Notification No. 8/2003-CE dated 1.3.2003 - excluding certain clearance/turnover from the aggregate clearance computed as per the Notification - Held that - The leaflets manufactured by the appellant are not branded goods since that was not traded as such for purchase by general public. Such fundamental test negates stand of the appellant that it manufactured branded goods. Accordingly, turnover therefrom shall enter into aggregation process to compute the limit prescribed by the Notification stated above. As both the parties were in dispute as to determination of liability under the mandate of the notification, in question, there shall be no penalty on the appellant upon readjudication of the matter proposed by this order. However, duty liability if any arises shall follow interest if such duty is not already paid or short paid. With the aforesaid observations and directions, the matter is remanded to adjudicating authority to re-do the adjudication a fresh. The appellant is entitled to reasonable opportunity of hearing. A reasoned and speaking order is expected to be passed.

Summary

Issues:
1. Entitlement to SSI exemption under Notification No. 8/2003-CE dated 1.3.2003.
2. Manufacturing of dutiable goods and branded printed materials by different units.
3. Utilization of cenvatable input in manufacturing.
4. Coverage under para 2 (vii) and para 3A (a) to (e) of the Notification.
5. Exclusion of turnover of deemed export and non-dutiable goods.
6. Applicability of extended period of limitation.
7. Consideration of Tribunal's decision in Vadapalani Press case.
8. Determination of dutiable and exempted goods turnover.
9. Allowance of CENVAT credit on inputs for dutiable goods.
10. Classification of printed leaflets as branded goods.
11. Penalty imposition and interest liability.

Analysis:
1. The appeal revolves around the entitlement of the appellant to the SSI exemption under Notification No. 8/2003-CE dated 1.3.2003, specifically regarding the exclusion of certain turnover from the aggregate clearance. The appellant claimed benefit based on the clearance of packing materials to units exporting ultimate goods, treated as deemed export.

2. The appellant operated two units, one manufacturing dutiable packing materials and the other producing branded printed materials. The Tribunal's decision in Vadapalani Press case supported the exclusion of turnover related to deemed exports while computing the SSI exemption benefit, emphasizing the separate computation for each unit.

3. The appellant utilized cenvatable input in manufacturing dutiable goods, ensuring entitlement to CENVAT credit if duty liability arises. The plea of not falling under specific paras of the Notification aimed to secure SSI exemption with CENVAT credit allowance.

4. The dispute also involved the extended period of limitation, with the Revenue contending its invocability due to the appellant's awareness of liability. The appellant's argument against the Revenue's interpretation of the Notification's provisions added complexity to the issue.

5. The classification of branded printed materials and the exclusion of their turnover from the SSI exemption limit were crucial points of contention. The appellant's assertion that the extended period was not applicable further complicated the determination of the exemption limit.

6. The Tribunal noted a miscarriage of justice in the adjudication process, criticizing the failure to consider the appellant's reference to the Vadapalani Press case. The necessity for a detailed scrutiny of dutiable and exempted goods turnover and the allowance of CENVAT credit on inputs was highlighted.

7. The Tribunal emphasized the need for a reasoned order addressing all legal and factual pleas raised by the appellant to prevent further litigation. The classification of printed leaflets as non-branded goods for public purchase influenced the aggregation process for computing the exemption limit.

8. The matter was remanded for fresh adjudication, with no penalty imposed pending readjudication. Any duty liability would attract interest if unpaid or underpaid. The appellant was granted a reasonable opportunity for a hearing, ensuring a comprehensive and detailed reconsideration of the issues at hand.