2009 (8) TMI 275 - AT - Central Excise

SSI exemption - Computation of aggregate value of clearances The issue involved in this case is whether for the purpose of computing the aggregate value of first clearances of the final products specified in the SSI Notification the value of the blister packs and game boxes used for packing own manufactured goods should be taken into account. Assessee contending that value of intermediate goods is not includible - respondent never claimed MODVAT credit on their inputs and therefore the amendment brought to Notification No. 67/95-C.E. referred to by the department is of no consequence. That amendment had the effect of denying exemption to an intermediate product captively consumed in the further manufacture of a final product where the manufacturer chose to avail MOD VAT credit on inputs used in the manufacture of their dutiable final products. Packing materials specially designed for toys and games and classifiable under same headings packing materials also to be considered as specified goods for SSI purpose Hence we hold that value of clearance of the blisters and boxes are not to be included in the aggregate value of first clearances of final product specified under Notification No. 8/01-C.E. for the period of dispute. In other words the basis of the demand of duty confirmed by the original authority does not exist.

Summary

Issues:
Challenge against dropping of duty demand and penalty for the period July 2001 to February 2002. Interpretation of SSI exemption Notification No. 8/2001-C.E. regarding computation of aggregate value of first clearances of final products specified in the notification. Classification of blister packs and game boxes as final products or intermediate products for SSI purpose.

Analysis:
1. The appeal by the department contested the dropping of duty demand and penalty. The respondent, engaged in manufacturing Toys and Games, availed SSI exemption under Notification No. 8/2001-C.E. The issue revolved around whether the value of blister packs and game boxes should be included in the aggregate value of first clearances of goods specified in the SSI Notification. The department argued that these items should be considered as final products, making the respondent liable to pay duty on the excess value. The JDR supported the Revenue's stance.

2. The respondent's Counsel referred to the Notification's provisions and cited relevant case laws to argue against adding the value of intermediate products to the aggregate value. They relied on a Supreme Court judgment and a Tribunal decision to support their position. The JDR highlighted an amendment to Notification No. 67/95-C.E. but the Tribunal found no merit in the department's appeal. It was noted that the respondent did not claim MODVAT credit on inputs, rendering the amendment irrelevant in this case.

3. Chapter Note 3 of the Central Excise Tariff Schedule was referenced, indicating that packing materials designed for toys and games are classifiable under the same headings. The Tribunal emphasized that the packing materials were 'specified goods' for SSI purpose, aligning them with toys and games. The decision in Gothi Thermoforming Industries case supported the respondent's position, emphasizing the eligibility for SSI exemption of intermediate products captively consumed in manufacturing final products.

4. Citing the apex Court's judgment in Universal Electrical Industries case, the Tribunal ruled in favor of the respondent, stating that the value of blister packs and game boxes should not be included in the aggregate value of first clearances under Notification No. 8/01-C.E. The lower appellate authority's decision was upheld, dismissing the appeal by the department.