2018 (11) TMI 1034 - AT - Central Excise

SSI Exemption - valuation - inclusion of value of supplies made to merchant exporters in the value of clearances - Held that - The issue is decided in the case of JAI JAWALA PROCESSORS VERSUS COMMISSIONER OF CENTRAL EXCISE, ROHTAK 2014 (12) TMI 1318 - CESTAT NEW DELHI , where reliance placed in the case of Universal Packaging v. CCE, Mumbai-V 2010 (9) TMI 561 - CESTAT, MUMBAI and it was held that carton/packaging material cleared to exporter, who used the same for packaging of exported material, which was admittedly exported in terms of Rule 19(1) of Central Excise Rules, 2002, has to be held as clearances for export and value of the same is not required to be added in the value of home clearances. Thus, the clearances to merchant exporters, which itself is not disputed, is to be excluded from the computation of total clearances - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Disputed issue settled in favor of the appellant by Tribunal's decision.
2. Exclusion of value of supplies made to merchant exporters for exemption.
3. Confirmation of demand, interest, and penalties challenged.
4. Sustainability of impugned order in light of Tribunal's earlier decision.

Analysis:

1. The appellant, a manufacturer of printed corrugated boxes, challenged the order-in-original dated 12th February 2010 of the Commissioner of Central Excise, Belapur. The appellant argued that the issue disputed by them stands settled in their favor by the decision of the Tribunal in a previous case. The Learned Counsel for the appellant referred to the Tribunal's decision in Hare Krishna Boxes Pvt Ltd v. Commissioner of Central Excise, Belapur, which set aside the confirmed demand for the earlier period. However, the Learned Authorized Representative for the Revenue pointed out that an appeal by Revenue against a similar decision in Jai Jawala Processors v. Commissioner of Central Excise, Rohtak, had been admitted by the Honorable Supreme Court, without any stay being granted.

2. The dispute centered around the exclusion of the value of supplies made to merchant exporters from the total clearances for the purpose of claiming exemption below the prescribed threshold under notification no. 8/2003-CE dated 1st March 2003. The appellant had been excluding these supplies for the period from August 2007 to December 2008, leading to a demand of &8377;1,06,03,949 under section 11A of the Central Excise Act, 1944. Additionally, interest under section 11AB and penalties under rule 25 and rule 26 of the Central Excise Rules, 2002 were imposed by the adjudicating authority, all of which were challenged in the present appeal.

3. The Tribunal, in light of its earlier decision for a similar period, clarified that clearances to merchant exporters are to be excluded from the computation of total clearances. As the exclusion of these supplies was not disputed and had been settled in favor of the appellant in the previous case, the impugned order confirming the demand, interest, and penalties was deemed unsustainable.

4. Consequently, the appeals were allowed, and the impugned order was set aside in favor of the appellant. The decision was pronounced in court on 06/11/2018 by Member (Technical) Shri C J Mathew.