2024 (10) TMI 1337 - AT - Central Excise

Classification of goods - soya nuts and wheat puffs - goods cleared below the threshold limit prescribed - benefit of SSI exemption under Notifications 175/86-CE dated 01.03.1986 and 01/93-CE dated 28.02.1993 - HELD THAT - It is undisputed that the appellant was clearing goods most of which were supplied to ICDS which were exempted anyway regardless of the SSI exemption. These have to be excluded from the aggregate value of clearances under the notification in view of the Explanation II. Once the value of these clearances is deducted from the total turnover of the appellant, what remains is the value of dutiable goods during different years which are recorded in the impugned order by the Commissioner. During the entire period the value of such clearances had not exceeded Rs. 7.5 lakhs in any financial year even as per the impugned order. Condition No. 4 stipulates that the assessee must have been registered with the Director of Industries but the proviso therein clarifies that if the value of clearances during the preceding financial year or the current financial year did not exceed and was not likely to exceed Rs.7.5 lakhs, this condition shall not apply. Explanation II clarifies that the value of clearances does not include such clearances whether the goods are exempted by any other notification or are chargeable to nil rate of duty. A perusal of the impugned order says that the year wise values of goods cleared did not exceed Rs.7.5 lakhs in any year. The appellant was entitled to SSI exemption and, therefore, the duty demanded in the impugned order and the consequential penalties cannot be sustained and need to be set aside - the impugned order is set aside - Appeal allowed.

Summary

Issues:
1. Classification of goods for central excise duty.
2. Applicability of SSI exemption notifications.
3. Duty demand and penalty imposition validity.

Detailed Analysis:

1. The appellant, a manufacturer of soya nuts and wheat puffs, appealed against the Order-in-Original confirming a duty demand and penalty imposed by the Commissioner. The matter involved the classification of goods under central excise tariff headings for duty determination. The Tribunal classified soya nuts under CETH 21.07.99 and wheat puffs under CETH 1904.90 for specific types of packaging supplied to the Government. The Tribunal noted that the appellant also supplied wheat puffs in unit containers under a brand name, classifying them under CETH 1904.10. The matter was remanded to the Commissioner for re-quantification of excise duty for goods supplied in unit containers to agencies other than the Government.

2. The order impugned in the appeal confirmed a demand for duty and penalty on soya nuts and wheat puffs sold in unit containers during specific periods. The appellant argued that they were entitled to Small Scale Industry (SSI) exemption under Notifications 175/86-CE and 01/93-CE, as the total value of goods cleared was below the threshold limit specified in the notifications.

3. The appellant contended that despite not being registered as a small scale industry, they were eligible for the SSI exemption due to the value of clearances not exceeding the prescribed limit after excluding exempted goods supplied to the Integrated Child Development Scheme. The Tribunal analyzed the conditions of the SSI exemption notifications and found that the appellant met the criteria for exemption. Consequently, the duty demand and penalties imposed were set aside, granting relief to the appellant.

In conclusion, the Tribunal allowed the appeal, setting aside the duty demand and penalties imposed on the appellant due to their eligibility for the SSI exemption under the relevant notifications.