2017 (7) TMI 553 - AT - Central Excise

SSI exemption - rural area - use of brand name - whether the assessee who is eligible for the rural area benefit under N/N. 8/2000-CE and N/N. 8/2003-CE can opt not to avail it, so as not to include the value of clearances of goods manufactured with the brand name of another, in the aggregate value of clearances to enable him to avail the SSI benefit of the notification? - Held that - Sub-clause (a) of Para-3 categorically states that for the purpose of determining the aggregate value of clearances for home consumption the clearances bearing the brand name of another person which is ineligible for grant of exemption only cannot be included. Since the clearances bearing the brand name of Brittania Industries is eligible for exemption based on rural clearances and the value of such clearances also has to be included in the aggregate value of clearances. When so determined, the value of clearances exceeds ₹ 4 crores/Rs. 3 crores and therefore in our view the duty demand raised is right and proper - appeal dismissed - decided against appellant.

Summary

Issues:
Whether the assessee can opt not to avail the rural area benefit under specific notifications to exclude the value of clearances of goods manufactured with another brand name from the aggregate value of clearances to avail SSI benefit.

Analysis:
The case involved the question of whether an assessee, eligible for rural area benefit under Notification No. 8/2000-CE and No. 8/2003-CE, can choose not to avail it to exclude the value of clearances of goods manufactured with another brand name from the aggregate value of clearances. The appellants manufactured biscuits under their own brand name and also with the brand name of another company, clearing them without duty payment. The notifications exempt specified goods from duty payment up to a certain value, excluding goods manufactured with another brand name. The dispute arose as the appellants did not avail the rural area exemption for goods manufactured with another brand name, leading the department to include those clearances in the aggregate value calculation, making the appellants ineligible for the exemption. The appellants argued that they should not be compelled to avail an exemption not chosen by them, citing a Supreme Court judgment on optional benefits. However, the department contended that, as per the notification, if goods are eligible for exemption, their value must be included in the aggregate clearance calculation.

The Tribunal analyzed the provisions of Notification No. 8/2003-CE, emphasizing that the manufacturer must opt for the exemption before the first clearance and cannot withdraw the option during the financial year. The Tribunal differentiated this case from the cited Supreme Court judgment, stating that the notification must be followed entirely or not at all, without the option to selectively avail its benefits. As the appellants chose to pay duty on goods with another brand name and claimed SSI exemption for their own brand, contrary to the notification's requirements, the value of clearances for both types of goods had to be considered in the aggregate value calculation. Consequently, the total clearances exceeded the prescribed limit, rendering the appellants ineligible for the exemption. The Tribunal upheld the duty demand, concluding that the appellants cannot selectively observe the notification's provisions and dismissed the appeals.

In conclusion, the Tribunal held that the appellants cannot pick and choose which parts of the notification to follow, and the value of clearances for all goods, including those with another brand name, must be considered for determining eligibility for the exemption. The Tribunal found the duty demand justified and dismissed the appeals, emphasizing compliance with the notification's provisions in their entirety.