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2017 (6) TMI 971 - AT - Central ExciseSSI exemption - N/N. 8/2003-CE dt. 01/03/2003 - CENVAT credit - Department took the view that the appellant will not be eligible for the benefit of SSI Notification in view of the fact that CENVAT credit on inputs stand availed by the appellant - whether the appellant will be entitled to avail the benefit of SSI exemption under N/N. 08/2003 in the circumstances in which they have availed CENVAT Credit on inputs but have reversed the amount at the rate of 10% in terms of Rule 6(3)(b) of the CCR 2004? - Held that - In terms of the N/N. 8/2003, the SSI benefit will be eligible only if no CENVAT credit is availed - the CENVAT credit on inputs stand availed for those which are used commonly for branded and other goods. The appellant has made a feeble attempt to satisfy the condition of the notification by reversing an amount @ 10% of the value exempted goods, as provided in Rule 6(3) of the CENVAT Credit Rules 2004 - the prescription made in CENVAT Credit Rules cannot be imported into the conditions of N/N. 8/2003 - the appellant has failed to satisfy the conditions specifically prescribed in para 2(iii) of the N/N. 8/2003 - Appeal dismissed - decided against appellant.
Issues Involved:
1. Eligibility for SSI exemption under Notification No.8/2003-CE. 2. Availment and reversal of CENVAT credit on inputs. 3. Compliance with conditions of SSI Notification No.8/2003. 4. Applicability of Rule 6(3)(b) of CENVAT Credit Rules, 2004. 5. Interpretation of relevant case laws. Detailed Analysis: 1. Eligibility for SSI Exemption under Notification No.8/2003-CE: The core issue is whether the appellant is entitled to the benefit of SSI exemption under Notification No.8/2003-CE despite availing CENVAT credit on inputs. The appellant cleared tyres under their own brand name and the brand name of JK Tyres Ltd. For tyres cleared under their own brand name, they claimed SSI exemption, reversing 10% of the value of tyres as per Rule 6(3)(b) of the CENVAT Credit Rules, 2004. 2. Availment and Reversal of CENVAT Credit on Inputs: The appellant availed CENVAT credit on inputs and reversed 10% of the value of tyres cleared under SSI exemption. The department contended that availing CENVAT credit disqualifies the appellant from SSI exemption. The appellant argued that the reversal of 10% fulfills the condition of the notification, referencing the Supreme Court decision in Chandrapur Magnet Wires (P) Ltd., which supports eligibility for SSI exemption upon reversing the CENVAT credit. 3. Compliance with Conditions of SSI Notification No.8/2003: The department's stance, supported by the Commissioner (Appeals), was that the appellant contravened the conditions of Notification No.8/2003 by availing CENVAT credit, thus disqualifying them from SSI exemption. The appellant's claim of compliance by reversing 10% was rejected, as the notification explicitly states that no CENVAT credit should be availed to qualify for exemption. 4. Applicability of Rule 6(3)(b) of CENVAT Credit Rules, 2004: The appellant's reliance on Rule 6(3)(b) to justify the reversal of 10% was scrutinized. The tribunal held that the prescription in CENVAT Credit Rules cannot override the specific conditions of Notification No.8/2003. The appellant's attempt to use Rule 6(3)(b) to satisfy the notification's conditions was deemed invalid. 5. Interpretation of Relevant Case Laws: The tribunal analyzed various case laws cited by both parties. The appellant cited Franco Italian Co. Pvt. Ltd. and Asha Rubber (P) Ltd., which support eligibility for SSI exemption upon reversing CENVAT credit. However, the tribunal emphasized the Supreme Court's decision in Nebulae Health Care Ltd., which clarified that manufacturers cannot simultaneously avail Modvat credit and SSI exemption. The tribunal concluded that the appellant failed to meet the conditions of Notification No.8/2003, thus upholding the department's view. Conclusion: The tribunal upheld the impugned order, concluding that the appellant is ineligible for SSI exemption under Notification No.8/2003 due to availing CENVAT credit on inputs. The appeal was dismissed, affirming the department's duty demand and penalty imposition. The tribunal emphasized that compliance with the specific conditions of the notification is mandatory, and the appellant's reversal of 10% under Rule 6(3)(b) does not suffice.
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