2010 (1) TMI 379 - AT - Central Excise

SSI Exemption- The assessees herein who are manufacturers of calcium carbide had purchased M/s. Sangavi Industries, a proprietary concern. Department club the value the clearances of Sangavi Industries and of the appellants in terms of clause (b) of para 2 of the Notification No. 1/93-C.E., dated 28-2-1993. Commissioner (Appeals) confirm it but only reduce the penalty to the extent of Rs. 2000/-. Held that- the assessees are covered by clause (b) of para-2 of the notification. Therefore, there is no legal infirmity in the impugned order which accordingly uphold. The appeal is therefore dismissed

Summary

Issues: Interpretation of Notification No. 1/93-C.E. regarding value of clearances and applicability of the ceiling limit.

In this case, the Appellate Tribunal CESTAT, CHENNAI, comprising Ms. Jyoti Balasundaram, Vice-President, and Dr. Chittaranjan Satapathy, Member (T), considered the appeal where the appellants, who purchased a factory from another entity, contested the department's decision to aggregate the value of clearances of the previous owner with their own for the purpose of determining the applicability of the Small Scale Industries (SSI) exemption under Notification No. 1/93-C.E. The department sought to club the clearances, which the appellants objected to, claiming they were separate manufacturers with clearances well within the ceiling limit. The adjudicating authority confirmed the demand and imposed a penalty, which was reduced by the Commissioner (Appeals) in the subsequent appeal.

Upon analysis, the Tribunal referred to para-2 of Notification No. 1/93, which specifies conditions for the exemption and states that the exemption shall not apply if the aggregate value of clearances from a factory by one or more manufacturers had exceeded Rs. 200 lakhs in the preceding financial year. The Tribunal noted that the clearances from the factory, including those made by the previous owner, exceeded the ceiling limit. As the factory remained the same, the Tribunal concluded that the appellants were covered by the clause of the notification, upholding the impugned order. Consequently, the appeal was dismissed, and the cross-objection was disposed of accordingly. The decision reaffirmed the legal position that the value of clearances from a factory, regardless of ownership changes, must be considered cumulatively for the purpose of determining eligibility for the SSI exemption under the relevant notification.