2016 (11) TMI 629 - AT - Central Excise

SSI exemption - job work - whether the manufacturer is entitled to simultaneously avail Cenvat credit and full exemption under Notification No. 8/2003 dt. 01.03.2003? - Held that - reliance placed on the decision of the case Nebulae Health Care Ltd. 2015 (11) TMI 95 - SUPREME COURT where it was held that It becomes apparent that so far as manufacture of branded goods of third party on job work basis by the SSI Unit is concerned, they are to be dealt with differently in the sense that they do not come within the ambit of exemption on which normally excise duty, as per the provisions of the Act, is payable. As a sequitur, it also follows that once excise duty is paid by the manufacturer on such branded goods manufactured, the brand name whereof belongs to another person, on job work basis, the SSI Unit would be entitled to CENVAT/MODVAT credit on the inputs which were used for manufacture of such goods as on those inputs also excise duty was paid. The appellant is entitled to avail the credit and the appellant is entitled for SSI exemption without including the goods manufactured on job work for third party under the brand name - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Appeal against denial of exemption under Notification No. 8/03-CE dated 1.3.2003.

Analysis:
The appellant, engaged in manufacturing P.P. Medicines, availed exemption under Notification No. 8/2003 but also cleared goods affixed with other brand names, availing Cenvat Credit. A show cause notice was issued for violating conditions of the Notification. The Additional Commissioner and Commissioner (Appeals) denied the benefit of the Notification. The appellant appealed, citing the Nebulae Health Care Ltd. case where the Apex Court held that goods manufactured for third parties should not be included in taxable turnover for SSI exemption.

The Tribunal considered the issue and referred to the Nebulae Health Care Ltd. case, emphasizing that the benefit of exemption should be granted to SSI Units for clearances for home consumption only. Goods bearing third-party brand names are not eligible for exemption, and excise duty must be paid on them. The Tribunal concluded that SSI Units manufacturing branded goods for third parties on job work basis are subject to normal excise law provisions, entitling them to Cenvat/Modvat credit on inputs used for such goods. Therefore, the appellant is entitled to SSI exemption without including goods manufactured on job work for third parties under a different brand name. The impugned order was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the Tribunal allowed the appeal, emphasizing that SSI Units are entitled to exemption for goods manufactured for home consumption only, excluding those bearing third-party brand names. The judgment aligned with the Nebulae Health Care Ltd. case, clarifying the treatment of goods manufactured for third parties concerning excise duty and exemption eligibility.