2017 (1) TMI 1310 - AT - Central Excise

SSI Exemption - determination of turnover - valuation - Whether the value of chassis supplied by the customers are to be included to arrive at aggregate value of clearance of the appellant manufacturer in order to decide on the eligibility for SSI benefit? - Held that - the provisions of N/N. 8/2003 dated 1.3.2003 and N/N. 6/2002-Central Excise dated 1.3.2002, it is clear that the value of the chassis supplied by customers to the manufacturer appellant are not be included to determine the aggregate value of clearances for home consumption. Whether the appellant is entitled to cum-duty benefit, where they had not collected excise duty from their customers? - Held that - The Revenue has not given any acceptable reason for denying the cum-duty benefit to the manufacturer appellant - the manufacturer appellant is entitled to cum-duty benefit, where they are not collecting the duty from their customers. Whether the appellant would be entitled to facility of CENVAT credit on the inputs used in the manufacturing of the goods, when they start paying central excise duty? - Held that - The appellant is making payment of duty of central excise on the manufacture once they crossed the SSI exemption limit. When there is payment of duty for the goods manufactured, there cannot be any reason not to offer the facility of CENVAT credit for the inputs used for such manufacturing. CENVAT credit is available for all the manufacturers who are paying central excise duty on the manufacturing. Therefore, the present appellant also cannot be an exception in this regard. Once the appellant has crossed the SSI exemption benefit and starts paying central excise duty on their manufacturing they would be entitled to the facility of CENVAT credit on the inputs used for their manufacturing. Matter remanded to determine quantification of demand of duty and penalty - appeal allowed by way of remand.

Summary

Issues:
1. Eligibility of SSI appellant exemption value of chassis in aggregate value of clearances.
2. Entitlement to cum-duty benefit when excise duty not collected from customers.
3. Entitlement to CENVAT credit on inputs when paying central excise duty.

Analysis:

Issue 1:
The first issue revolves around whether the value of chassis supplied by customers should be included in the aggregate value of clearances for the SSI benefit. The Tribunal analyzed the relevant notifications and case laws to conclude that the value of chassis supplied by customers should be excluded from the aggregate value of clearances. The appellant, engaged in auto body building, received duty-paid chassis from customers, which should not be considered for determining the SSI benefit eligibility. The Tribunal cited specific provisions from Notification No.8/2003 and Notification No.6/2002-Central Excise to support this conclusion. Additionally, referencing case laws such as Medopharm and Mukul Engineering Works, the Tribunal upheld the appellant's right to exclude the value of chassis.

Issue 2:
The second issue concerns the entitlement of the appellant to cum-duty benefit when excise duty has not been collected from customers. The Tribunal found that the Revenue failed to provide a valid reason for denying the cum-duty benefit to the appellant. Relying on a decision by the Hon'ble High Court of Bombay in Larsen & Toubro Ltd., the Tribunal determined that the appellant is entitled to cum-duty benefit even when excise duty is not collected from customers.

Issue 3:
The third issue addresses the appellant's claim for CENVAT credit on inputs used in manufacturing goods after crossing the SSI exemption limit. The Tribunal emphasized that once the appellant starts paying central excise duty on manufacturing, they should be entitled to the facility of CENVAT credit on inputs used. Referring to the case of Decent Foods (P) Ltd., the Tribunal affirmed that the appellant, upon denial of SSI benefit and payment of duty, should be allowed to avail credit for the duty paid on inputs. The Tribunal highlighted that CENVAT credit should be available to all manufacturers paying central excise duty.

In conclusion, the Tribunal remanded the issue of quantification of central excise duty demand and penalty to the original adjudicating authority for further consideration in light of the observations and findings made regarding the eligibility for SSI benefit, cum-duty benefit, and entitlement to CENVAT credit. The appeal was allowed by way of remand.