2017 (12) TMI 6 - AT - Central Excise

Benefit of N/N. 67/95 - intermediate product - captive consumption - denial on the ground that the final products are cleared without payment of duty by availing SSI exemption benefit - Held that - similar issue came up for decision in the case of M/s. Parvenu Industries Ltd. Versus CCE, Tirunelveli 2017 (5) TMI 135 - CESTAT CHENNAI , where it was held that the input was thereby an intermediate manufactured in the factory of the appellant and was not at all covered by the barring clauses contained in (i), (ii) and (iii) and (iv) of Col.2 of the Table appended to the N/N. 67/95-CE dated 16.03.1995 - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of Notification No.67/95-CE regarding exemption benefit for intermediate products captively consumed in manufacturing final products.

Analysis:
The appellants, engaged in manufacturing PP sacks/fabrics, consumed PP tapes and stripes as intermediate products in the manufacture of finished goods. They availed exemption benefit under Notification No.8/2003 from 1.4.2005. However, the department contended that the appellants were not eligible for exemption under Notification No.67/95 as the final products were cleared without duty payment through SSI exemption. A show cause notice was issued, leading to confirmation of demand, interest, and penalties by the original authority and Commissioner (Appeals). The main contention was whether the intermediate products were excluded from the notification's coverage by Sl. No.(viii) of the Annexure. The appellant argued that demanding duty on intermediate products would defeat the purpose of the SSI exemption. The Tribunal referred to the decision in Parvenu Industries Ltd. Vs CCE Tirunelveli, where it was established that the intermediate product used for final goods was not covered by the barring clauses of the notification, thus entitling the appellant to the exemption. The Tribunal emphasized that when the conditions specified in the notification are met, the grant of exemption is undeniable. The Revenue's argument to deny under the proviso failed as the goods were not exempt or subject to nil duty due to the appellant's SSI status. Consequently, the appeal was allowed, setting aside the impugned order.

In a similar case of Priya Hosieries and Others, the Tribunal applied the same rationale and held that the demand was unsustainable. Therefore, the impugned order was set aside, and the appeal was allowed with any consequential relief as per the law. The judgment reaffirmed that intermediate products captively consumed in manufacturing final goods could be eligible for exemption benefits under Notification No.67/95-CE, provided the conditions of the notification were met.