2017 (2) TMI 369 - AT - Central Excise

SSI exemption - clubbing of clearances - M/s. Protective board does not have manufacturing facility, hence it was contended that whatever sale was made by M/s. Protective Board, it is manufacture of M/s. Protective Packaging Industries - Held that - Shri. Sejpal taken us various job work challans and bills of various job worker from which it prima facie appears that M/s. Protective Board was getting job work done from various manufacturer, however these documents were not verified by the Adjudicating authority. The Commissioner(Appeals) also not given any heed to these evidence therefore this is a fit case for remand to the Original adjudicating authority as the Original adjudicating authority has not verified all these documents and also to ensure that the M/s. Protective Board was engaged in getting job done from job worker as claimed by the appellant - appeal allowed by way of remand.

Summary

Issues:
1. Clubbing of turnover of two proprietary firms for excise duty.
2. Denial of SSI exemption and demand of excise duty.
3. Appellate review of the Commissioner(Appeals) decision.

Analysis:
1. The case involved the clubbing of turnover of two proprietary firms for excise duty purposes. M/s. Protective Packaging Industries, engaged in manufacturing corrugated boxes, and M/s. Protective Board, owned by the son of the proprietor of the former, were under scrutiny. The investigation revealed clearances of corrugated boxes from M/s. Protective Board, which was alleged to lack manufacturing facilities. Consequently, the department contended that the sales by M/s. Protective Board should be considered as the manufacture of M/s. Protective Packaging Industries, leading to the denial of SSI exemption and the demand for excise duty.

2. During the appeal, the appellant argued that the clearances by M/s. Protective Board were actually goods manufactured by various job workers on behalf of M/s. Protective Board. The appellant presented documents related to job workers and bills seized during the investigation to support this claim. However, the original authority did not consider these documents, and the Commissioner(Appeals) did not provide any findings on this crucial evidence. The appellant asserted that the turnover of M/s. Protective Board should not be combined with that of M/s. Protective Packaging Industries if the goods were produced through job work arrangements.

3. Upon reviewing the submissions, the Tribunal found merit in the appellant's argument. It was noted that the documents presented by the appellant indicated that M/s. Protective Board indeed engaged in job work with various manufacturers. As the original adjudicating authority and the Commissioner(Appeals) did not adequately verify these documents, the Tribunal decided to remand the case for fresh adjudication. The Tribunal directed the original authority to verify the job work transactions, examine the books of accounts of M/s. Protective Board, and complete the adjudication within three months from the date of the order. The appellant was granted the opportunity for a personal hearing and to submit additional documents during the fresh adjudication process. The appeals were allowed for remand in these terms.