2014 (12) TMI 1318 - AT - Central Excise

SSI Exemption - valuation - Value of cartons supplied by the appellants to the exporter was not being included in the total value of the clearances, for the purpose of SSI exemption benefit - Held that - An identical question was considered in the case of Universal Packaging v. CCE, Mumbai-V 2010 (9) TMI 561 - CESTAT, MUMBAI and it was held that carton/packaging material cleared to exporter, who used the same for packaging of exported material, which was admittedly exported in terms of Rule 19(1) of Central Excise Rules, 2002, has to be held as clearances for export and value of the same is not required to be added in the value of home clearances - appeal allowed - decided in favor of appellant.

Summary

Issues: Interpretation of SSI exemption benefit for carton supplies to exporters.

In this judgment by the Appellate Tribunal CESTAT NEW DELHI, the issue revolved around the interpretation of the SSI exemption benefit concerning cartons supplied by a manufacturing company to an export house for packing export products. The Revenue contended that since the cartons were supplied to an exporter in India and consumed domestically, their value should be included in the total value of clearances for the purpose of SSI exemption benefit. The impugned order confirmed the demand and imposed a penalty based on this view.

Upon review, the Tribunal found that the Commissioner had determined that since the cartons were not exported "as such" and were used in India for exported material, their value should not be excluded from computing SSI benefit/clearances. However, the Tribunal referred to a previous decision in the case of Universal Packaging v. CCE, Mumbai-V, where a similar issue was addressed. In that case, it was held that cartons supplied to an exporter for packaging exported material, which was subsequently exported, should be considered clearances for export. The Tribunal's decision in Universal Packaging was affirmed by the Hon'ble Bombay High Court, reinforcing the principle that such cartons' value should not be added to the value of home clearances for SSI exemption benefit.

The Tribunal highlighted several decisions involving similar issues, emphasizing the consistency in the interpretation of such cases. By relying on precedents and the settled principle established in Universal Packaging, the Tribunal set aside the impugned order and allowed all appeals with consequential relief to the appellants. This judgment underscores the importance of consistent interpretation and application of legal principles in determining eligibility for tax exemptions in manufacturing and export scenarios.