2015 (10) TMI 1550 - AT - Central Excise

SSI exemption - manufacture of labels / stickers bearing the band name of the customer - Denial of exemption under Notification No. 8/2003-CE dated 01/03/2003 - Interest u/s 11AB - Held that - Intention of the Government is to grant the benefit of SSI exemption to goods, namely, packing material, containers, metal labels, etc. which may carry a brand name of the customer. The stated policy is clearly not to consider these labels manufactured by one person themselves as having any connection in the course of trade with the goods manufactured by the Customer for whom labels are made. The labels are made for customer who put them on the containers of goods manufactured by them (customers). - Even in the absence of a dictionary meaning we find no reason not to consider a label or sticker especially in view of the fact that the metal labels are also mentioned in Clause 4(e). An interpretation of Clause 4(e) to the effect that stickers would mean only gummed labels is not borne by sound reasoning. We do not appreciate the thin line of distinction being attempted by Revenue to differentiate between the stickers and labels. We do not think it necessary to go into the aspect of the affidavit or the dispute regarding presentation of labels before the adjudicating authority. Accordingly, we hold that the labels manufactured by the appellant are eligible for exemption in terms of Notification No. 08/2003-CE as amended by Notification No. 47/2007. - Decided in favour of assessee.

Summary

Issues involved:
1. Applicability of exemption under Notification No. 8/2003-CE on labels manufactured by the appellant bearing a brand name of their customers.
2. Interpretation of the amendment in Notification No. 8/2003-CE through Notification No. 24/2009-CE(NT) regarding specified goods in the nature of packing materials.
3. Examination of evidence presented by the appellant regarding the nature of the stickers manufactured and supplied.

Detailed analysis:
1. The appeal challenged an Order-in-Original confirming a demand of duty, interest, and penalty by denying exemption under Notification No. 8/2003-CE to labels manufactured by the appellant bearing a brand name of their customers. Initially, the exemption did not apply to goods bearing a brand name of another person. However, an amendment through Notification No. 24/2009-CE(NT) included specified goods like stickers in the exemption, irrespective of the brand name. The appellant contended that their stickers were eligible for exemption under this clause (e) and provided evidence supporting their claim.

2. The appellant referred to a Trade notice and an affidavit confirming the nature of their manufacturing process and the specific type of labels produced. The Revenue argued against considering the evidence presented at this stage, emphasizing that the goods supplied were described as printed labels, not stickers covered under the exemption clause. The dispute centered around the classification of the appellant's product as stickers eligible for exemption.

3. The Tribunal analyzed the intention behind the exemption policy to grant benefits to specified goods like packing materials, containers, and labels bearing a customer's brand name. Referring to a Board Circular, the Tribunal emphasized that the labels were made for customers to use on their goods, not for trade independently. The Tribunal rejected the Revenue's distinction between stickers and labels, holding that the appellant's manufactured labels qualified for exemption under the amended Notification. Consequently, the penalty was deemed unnecessary, and the impugned order was set aside, allowing the appeal.

This detailed analysis highlights the core issues, arguments presented, evidence examined, and the Tribunal's reasoning leading to the decision in favor of the appellant.