2005 (10) TMI 156 - AT - Central Excise

Summary

Issues:
1. Whether the appellant correctly availed the benefit of Notification 9/2002 and 9/2003 for manufacturing P & P Medicines and other formulations on behalf of loan licensees.
2. Whether the value of clearances made on behalf of loan licensees should be considered for determining the aggregate value of clearances for SSI exemption.
3. Whether the appellant contravened the provisions of rule 4 of the rules and is liable for penal action.

Analysis:

Issue 1:
The appellant, a manufacturer of excisable goods, availed the benefit of Notification 9/2002 and 9/2003 for manufacturing P & P Medicines and other formulations on their own account and on behalf of loan licensees. The Revenue authorities objected to this, claiming that the appellant did not consider the value of clearances of goods manufactured on behalf of loan licensees while computing their own clearances under Notification 9/2003-C.E. The authorities demanded duty and penalty based on this discrepancy. The appellant argued that they were entitled to the benefit under the notifications, supported by relevant legal provisions and judgments, including the definition of 'manufacturer' for loan licensees. The Tribunal found in favor of the appellant, stating that the provisions of the notifications supported their contention, and there was no need to include the value of clearances made on behalf of loan licensees for determining the aggregate value of clearances.

Issue 2:
The Tribunal considered whether the value of clearances made on behalf of loan licensees should be included in determining the aggregate value of clearances for SSI exemption. The Tribunal referenced legal precedents and settled law to support their decision. They noted that the value of goods manufactured at another manufacturer's factory from raw materials supplied by loan licensees should not be added to the value of goods cleared for determining the total value of clearance for exemption. Relying on previous decisions, the Tribunal concluded that the orders of the lower authorities were not valid, and the appellant and the loan licensees were allowed to set aside the impugned orders.

Issue 3:
Regarding the contravention of rule 4 of the rules and the appellant's liability for penal action, the Tribunal did not find merit in the Revenue authorities' claims. The Tribunal allowed the appeals of the appellant and the loan licensees, setting aside the orders imposing duty, penalty, and interest. The Tribunal's decision was based on a thorough analysis of the legal provisions, relevant judgments, and settled law regarding the manufacturing activities of the appellant and the treatment of clearances made on behalf of loan licensees.

In conclusion, the Tribunal ruled in favor of the appellant and the loan licensees, setting aside the demands of duty, penalty, and interest imposed by the Revenue authorities. The judgment provided a detailed analysis of the issues involved, citing legal provisions, judgments, and precedents to support the decision in each aspect of the case.