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2012 (6) TMI 459 - AT - Central ExciseSSI Exemption - Deemed export - Value of clearance - Whether the value of deemed exports has to be included in the calculation of aggregate value of clearances for the benefit of exemption in terms of SSI Notification No.1/93 Held that - Value of Deemed Exports is to be included in the calculation of aggregate value of clearances for extending the benefit of exemption in terms of Notification No.1/93-CE In favor of Revenue. Whether Deemed Exports can be equated with clearances for home-consumption or the same have to be treated as exports - Deemed Exports cannot be equated as exports for each and every purpose and, therefore, the benefits available for deemed exports shall be only those specifically provided under the EXIM Policy - In favor of Revenue.
Issues Involved:
1. Whether the value of "deemed exports" should be included in the calculation of aggregate value of clearances for the benefit of exemption under SSI Notification No. 1/93-CE. Detailed Analysis: Issue 1: Inclusion of "Deemed Exports" in Aggregate Value of Clearances Background and Facts: - The respondents, a small-scale industry (SSI) unit, availed of the concession under Notification No. 1/93-CE. - They declared a turnover of Rs. 2.73 crores for the financial year 1994-95, excluding Rs. 32,83,894/- as the value of "deemed exports." - The department contended that the value of "deemed exports" should be included in the aggregate value of clearances, which would then exceed the Rs. 3 crore limit, making the respondents ineligible for the exemption in the subsequent financial year. Tribunal's Decision in Oxide (India) Pvt. Ltd.: - The Tribunal previously held that "deemed exports" do not need to be included in the aggregate value of clearances for the purposes of Notification No. 1/93-CE. - "Deemed exports" are defined in the EXIM Policy as transactions where goods do not leave the country, and payment is received in India. - The Tribunal concluded that since "deemed exports" are not clearances for home consumption and are not specifically included in the Notification, their value should not be added to the aggregate clearances. Majority Opinion: - The majority decision, including the third member, held that "deemed exports" should be included in the aggregate value of clearances. - The Central Excise Law does not recognize the concept of "deemed exports" under the SSI exemption notification. - The Hon'ble Madras High Court in BAPL Industries Ltd. vs. Union of India clarified that "deemed exports" are distinct from actual exports. - The Central Excise Law categorizes clearances as either for home consumption or export outside India. Since "deemed exports" do not leave the country, they fall under home consumption. - The respondents had the option to clear goods under another exemption (Notification No. 499/94-CE) without payment of duty but did not follow the required procedure, resulting in the duty-paid clearances being considered for home consumption. Legal Reasoning: - The term "deemed exports" is defined in the EXIM Policy but not in the Central Excise Law. - The Notification No. 1/93-CE specifically includes exports to Nepal and Bhutan but does not mention "deemed exports," implying their exclusion was not intended. - The Tribunal's decision in Oxide (India) Pvt. Ltd. was not considered good law as it equated "deemed exports" with actual exports, contrary to the Hon'ble Madras High Court's decision. - The third member emphasized that following the Chapter X procedure was mandatory to avail of certain exemptions, and non-compliance meant the clearances were for home consumption. Conclusion: - The majority held that the value of "deemed exports" must be included in the calculation of aggregate clearances for the purpose of Notification No. 1/93-CE. - Consequently, the respondents exceeded the Rs. 3 crore limit for the financial year 1994-95, making them ineligible for the SSI exemption in 1995-96. - The appeal of the Revenue was allowed, and the order of the Commissioner (Appeals) was set aside. Final Order: - The value of "deemed exports" is to be included in the aggregate value of clearances for the benefit of exemption under SSI Notification No. 1/93-CE. - The appeal of the Revenue was allowed.
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