2017 (12) TMI 893 - AT - Central Excise

N/N. 67/1995-CE, dated 16.03.1995 - clearance of intermediate products, tapes / strips of plastics - It appeared to the department that the said tapes / strips of plastics captively consumed in manufacture of fabrics / sacks are liable to duty - appellant cleared fabrics / sacks (finished goods) claiming SSI exemption under N/N. 8/2003-CE dt. 01.03.2003 as amended - Held that - similar issue decided in the case of Priyal Hosieries, Priya Garments, The Carnataka Knitting Co., M.V. Exports, PVS Knittings, Ajay Vijay Industries, Bhairav Overseas, Anbu Garments, K.N. Tex and Popular Hosiery Factory Versus CCE Coimbatore 2017 (11) TMI 1248 - CESTAT CHENNAI , where it was held that The final products may be made out of the same product or out of different products. Clause (vi) does not contemplate that the manufacturer should manufacture only one final product or that if he manufactures only one product that product itself should be both dutiable and exempted. The intermediate products are eligible for benefit of N/N. 67/95-CE as amended - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of SSI exemption under Notification No.8/2003-CE to intermediate products
- Liability of duty on captively consumed intermediate products in the manufacture of final exempted products

Analysis:

Issue 1: Applicability of SSI exemption under Notification No.8/2003-CE to intermediate products
The case involved M/s.Selvan Enterprises Pvt. Ltd., engaged in manufacturing HDPE sacks and fabrics, claiming SSI exemption under Notification No.8/2003-CE. The department contended that tapes/strips of plastics used in the manufacturing process were not specified goods under the notification, thus liable to duty. The Commissioner (Appeals) upheld the duty demand, leading to the appeal. The appellant relied on a Tribunal order in a similar case, Anbu Garments & Others, where the Tribunal discussed the duty liability of intermediate goods used in the manufacture of exempted final products. The Tribunal in the Anbu Garments case interpreted the legal provisions and held that exemption was available for intermediate products, setting aside the impugned orders. The present case was found to be on all fours with the Anbu Garments case, leading to the allowance of the appeal based on the same legal reasoning.

Issue 2: Liability of duty on captively consumed intermediate products
The Tribunal in the present case analyzed the legal implications of the proviso clause under Notification No.67/1995-CE concerning intermediate products not covered under Notification No.8/2003-CE. The Tribunal distinguished a previous case, M/s.Kunnath Textiles, which did not discuss the proviso's implications as done by the apex court in M/s. Ambuja Cements Ltd. The Supreme Court's interpretation in the Ambuja Cements case was crucial in determining the availability of exemption for intermediate products. The Tribunal, following the Supreme Court's legal position, held that intermediate products in the present case were eligible for the benefit of Notification No.67/95-CE, thus setting aside the impugned order and allowing the appeal with consequential benefits as per law.

In conclusion, the judgment delved into the intricacies of SSI exemption applicability and duty liability on captively consumed intermediate products, drawing parallels with relevant legal precedents to arrive at a decision favorable to the appellant based on sound legal reasoning and interpretation of statutory provisions.