2004 (1) TMI 266 - AT - Central Excise

Summary

Issues Involved:
1. Computation of total value of clearances for SSI Notification benefit.
2. Verification of figures provided for clearances.
3. Clubbing of clearances from multiple manufacturers operating from the same premises.
4. Exclusion of value of clearances manufactured by loan licensees.
5. Adoption of value under Section 4 of the Central Excise Act versus Notification No. 245/83.
6. Liability for differential duty and eligibility for SSI exemption.

Issue-wise Analysis:

1. Computation of Total Value of Clearances for SSI Notification Benefit:
The Commissioner (Appeals) held that for computing the total value of clearances for SSI Notification No. 175/86-C.E., the valuation must be done in terms of Section 4 of the Central Excise Act, 1944. The value of duty-paid branded goods manufactured by loan licensees in M/s. Medopharm's factory should not be added to the assessable value. This decision was based on various Court and Tribunal judgments.

2. Verification of Figures Provided for Clearances:
The Revenue contended that M/s. Medopharm had furnished the value of clearances under Section 4 for goods cleared under Notification No. 245/83, and these values were not provided to the adjudicating authority initially. The Revenue argued that these figures needed verification, requesting a remand to the original authority for this purpose. However, the Commissioner (Appeals) had scrutinized all documents, including the Chartered Accountant's Certificate, and verified the figures before accepting them.

3. Clubbing of Clearances from Multiple Manufacturers Operating from the Same Premises:
The Revenue argued that since multiple manufacturers operated from M/s. Medopharm Pharmaceuticals' premises, the value of clearances of specified goods manufactured by all units should be clubbed. The High Court had previously held that the clearances from a factory by one or more manufacturers should be aggregated. However, the Commissioner (Appeals) found that the clearances of branded goods by loan licensees should not be clubbed with those of M/s. Medopharm Pharmaceuticals.

4. Exclusion of Value of Clearances Manufactured by Loan Licensees:
The Commissioner (Appeals) held that the value of clearances of specified goods bearing a brand name of another person, which are not eligible for exemption, should not be included in the aggregate value of clearances. This was in line with Explanation III in Para-4 of Exemption Notification No. 175/86 as amended by Notification No. 1/93-C.E. The Commissioner found that the loan licensees had manufactured their own branded goods, paid duty, and cleared them separately, and thus their clearances should not be added.

5. Adoption of Value under Section 4 of the Central Excise Act versus Notification No. 245/83:
The Commissioner (Appeals) rejected the lower authority's view that only the value determined under Notification 245/83 should be considered. Instead, he held that the value must be determined under Section 4 of the Central Excise Act for the purpose of computing the aggregate value of clearances under Notification 175/86. This was supported by Tribunal judgments in cases like Libra Drugs (India) Ltd. v. C.C.E., Pune, and Space Foods (P) Ltd. v. C.C.E., Madras.

6. Liability for Differential Duty and Eligibility for SSI Exemption:
The Commissioner (Appeals) found that for the year 1986-87, M/s. Medopharm and M/s. Medopharm Laboratories were liable for differential duty as their clearance value exceeded the prescribed limit. However, for other years, the total clearance value was within the SSI limit, making them eligible for SSI exemption. The Commissioner also noted that the lower authority's computation included clearances by loan licensees, which should not be counted for SSI exemption eligibility.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s order, finding no merit in the Revenue's appeals. The figures and details provided by the assessees were verified and accepted. The Commissioner (Appeals) correctly applied the law and case precedents, confirming that the valuation for SSI exemption purposes should be under Section 4 and excluding the value of branded goods cleared by loan licensees. The appeals were rejected, and the cross-objections filed by the assessee were disposed of accordingly.