2015 (9) TMI 875 - AT - Central Excise

Denial of SSI Exemption - Exemption not taken for some unit, therefore exemption denied for other units as well - Held that - Demand was confirmed only on the ground that they have been paying duty in two of their units at Jaipur and Vasai and accordingly they cannot avail SSI exemption for their Rohad unit. It appears that the Department proceeded on the basis of the condition that clearance of all the factories of the same manufacturer should be considered for exemption and as such option of duty payment also should be for all factories of the manufacturer. We find that if the SSI exemption is to be denied to the assessee then the combined turnover of all the units of the manufacturer are to be taken and based on the aggregate value of the clearance. The proceedings are not on these lines. In fact for the year 2003-2004, the value of clearance of Jaipur unit is stated to be ₹ 6,82,584/- and for Vasai unit ₹ 20,23,374/- the value of clearance of Rohad unit for the period December 2003 to January 2004 is shown as ₹ 22,16,180/-. We find that if a combined reading of all the conditions of para 2 of the Notification No. 8/2003-CE is to be taken then aggregate value of all excisable goods cleared from one or more factories by the same manufacturer is to be considered. - option of payment of duty is to be exercised for all factories of the same manufacturer. - Decided in favour of assessee.

Summary

Issues:
1. Eligibility for SSI exemption based on multiple factory operations.
2. Interpretation of conditions for availing SSI exemption under Notification No. 8/2003-CE.

Analysis:
1. The case involved a dispute regarding the eligibility of the appellant for SSI exemption due to their operation of multiple units in different locations. The appellant, engaged in manufacturing packaged drinking water and aerated water under their own brand name and Kingfisher, had availed SSI exemption for goods cleared under their own brand but not for units in Vasai and Jaipur. The issue arose when a show cause notice was issued, alleging ineligibility for SSI exemption at their Rohad unit due to non-availment of exemption at other units. The adjudication resulted in a demand confirmation with penalties imposed on company officials. The appellant appealed against this decision, arguing that the conditions of Notification No. 8/2003-CE did not necessitate the combined turnover consideration for exemption eligibility across all units.

2. Upon hearing both sides and examining the appeal records, it was contended by the appellant that the conditions of the notification did not mandate a single option for exemption or duty payment across all units of a manufacturer with multiple factories. The appellant's counsel highlighted that the Jaipur and Vasai units were paying duty and availing Cenvat credit, while the Rohad unit had exercised the option for SSI exemption before the existence of the other units. The Department's stance was based on the premise that all factories of the same manufacturer should be considered for exemption eligibility and duty payment. However, the appellate tribunal found that the denial of SSI exemption to the appellant unit was not supported by the wording of the conditions specified in the notification. The tribunal emphasized that the aggregate value of excisable goods cleared by the same manufacturer from one or more factories should be considered for exemption eligibility, not a combined turnover consideration across all units. Consequently, the tribunal allowed the appeals, providing consequential relief to the appellant if applicable.