2018 (2) TMI 1826 - AT - Central Excise

SSI Exemption - threshold limit for exemption - supply made to the job worker exceeding ₹ 25 lakhs limit - Held that - The N/N. 35/2003 grants exemption up to ₹ 25 lakhs. In the instant case, appellant s job worker M/s. Dinesh Weaving Mills has crossed the limit of ₹ 25 lakhs. When it is so, then the appellant is not entitled to the benefit of exemption under the Notification No. 35/2003, dated 30-4-2003 - In the instant case, the aggregate value is more than ₹ 57 lakhs in the case of job worker M/s. Dinesh Weaving Mills. Thus, the statutory limit of ₹ 25 lakhs has been crossed. When it is so, then the appellant is not entitled for the exemption. Impugned order upheld - appeal dismissed - decided against Appellant.

Summary

Issues: Interpretation of Notification No. 35/2003-C.E. regarding duty liability on raw material supply exceeding limit to job workers.

Analysis:
The appeal was filed against Order-in-Appeal No. 22-2008-C.E., dated 31-1-2008. The appellant, engaged in manufacturing textile fabrics, claimed exemption under Notification No. 35/2003-C.E. for duty liability on raw material supply to job workers exceeding ?25 lakhs. The Department issued a show cause notice based on the appellant's turnover of ?1,45,77,389. The original authority found the clearances within the SSI exemption limit and dropped proceedings. However, the Commissioner (Appeals) observed that one job worker had exceeded the ?25 lakhs limit, leading to duty demand. The appellant challenged this decision in the present appeal.

During the hearing, both parties presented their arguments. The Commissioner (Appeals) held that the total clearance of goods to all job workers should be chargeable to duty, citing Notification No. 35/2003 which grants exemption up to ?25 lakhs. As one job worker crossed this limit, the appellant was deemed ineligible for the exemption. The aggregate value of clearances to the job worker in question exceeded ?57 lakhs, surpassing the statutory limit of ?25 lakhs, thus disqualifying the appellant from the exemption.

The Tribunal found no fault in the Commissioner (Appeals)'s decision and upheld the impugned order, stating that the appellant was not entitled to the exemption under Notification No. 35/2003 due to the job worker's clearances exceeding the prescribed limit. Consequently, the appeal filed by the appellant was dismissed. The order was pronounced and dictated in open court on 6-2-2018.