2003 (3) TMI 101 - SC - Central Excise

Claim of exemption under Notification No. 217/86 Held that - The assessee is a SSI unit and is entitled to exemption under Notification No. 175/86. It is not clear from the record as to whether the same inputs in regard to which exemption under Notification No. 217/86 was claimed by the assessee had gone into the manufacture of final products which are said to have been cleared up to a limit of Rs. 20 lakhs. It will suffice to observe that we leave it open to the Excise authorities to verify the said fact. If the claim of exemption under Notification No. 217/86 is in regard to inputs which have gone into manufacture of the final products which were cleared under Notification No. 175/86 there can be no further demand of excise duty even though the assessee claimed exemption under Notification No. 217/86. But if under Notification No. 175/86 the clearance value of the inputs was already excluded in arriving at the aggregate value of Rs. 20 lakhs and claim for exemption of inputs under Notification No. 217/86 relates to different final products which are exempt under a different notification then the assessee will be liable to pay the duty in demand. We confirm the order of the Tribunal and dismiss these appeals.

Issues:
1. Interpretation of Notification No. 175/86 and Notification No. 217/86 for excise duty exemption.
2. Applicability of exemptions to inputs and final products.
3. Dispute over the clearance value of inputs for computing aggregate value.
4. Verification of inputs used in manufacturing final products for exemption claims.

Analysis:
1. The case involves a dispute over the excise duty exemptions under Notification No. 175/86 and Notification No. 217/86. The assessee, a Small Scale Industry (SSI) unit, claimed exemption under Notification No. 175/86 for goods up to a limit of Rs. 20 lakhs. The issue arose when the authorities demanded excise duty based on the clearance value of certain inputs used in manufacturing final products, which were exempted under Notification No. 175/86.

2. The contention revolved around the applicability of exemptions to both inputs and final products. The Assistant Collector and the Collector (Appeals) upheld the demand, stating that the exemption under Notification No. 217/86 for inputs was not available to the assessee as the final products were already exempted under Notification No. 175/86. The Tribunal, however, allowed the appeals based on a previous order covering a similar dispute.

3. The disagreement also centered on the clearance value of inputs for computing the aggregate value. The Assistant Collector dismissed the assessee's defense regarding Explanation-III of Notification No. 175/86, stating it was not relevant to the dispute. The Tribunal, in line with its previous order, found in favor of the assessee, emphasizing the exclusion of clearance value of inputs while determining the aggregate value for exemption purposes.

4. The judgment highlighted the need for verifying whether the inputs claimed for exemption under Notification No. 217/86 were used in manufacturing final products cleared under Notification No. 175/86. The Court left it to the Excise authorities to ascertain this fact. If the inputs were part of final products cleared under Notification No. 175/86, no further duty demand was warranted, even if the assessee claimed exemption under Notification No. 217/86 for those inputs. Otherwise, duty liability would apply based on the relevant notifications.

In conclusion, the Supreme Court confirmed the Tribunal's decision based on the interpretation of the notifications and the exclusion of inputs' clearance value for excise duty calculation. The judgment emphasized the importance of verifying the usage of inputs in exempted final products to determine duty liability accurately.

← Previous Next →