2017 (11) TMI 277 - AT - Central Excise

SSI exemption - use of Brand name - apart from clearance of goods which are sold to the domestic buyers the appellants have also sold the goods to the merchant exporter under the brand name of merchant exporter - case of the department is that the goods bearing the brand name of buyer is not eligible for SSI exemption - Board Circular No. 648/39/2002-CX dated 25.7.2002 - Held that - merely because the goods first cleared to merchant exporter and then the same goods is exported simplified procedure prescribed by the board cannot be denied to the appellant - The Tribunal in various decisions has consistently taken a stand that if the supply to the merchant exporter is against Form14B/Form-H the same will be treated as export clearance - Therefore in the present case the goods admitted supplied against Form 14-B which should be treated as export and the same should not be included in the aggregate clearance value of Rs. 100 lakhs provided under N/N. 8/2001-CE & 8/2002-CE. However the adjudicating authority as well as the first appellate authority have not verified the factual aspect and they have rejected the claim of the appellant s goods sold to the merchant exporter is export clearance only on the basis that goods were not exported directly from the appellant s factory - matter needs to be remanded to adjudicating authority only for the purpose of verification that all the clearances of branded goods to the merchant exporter are covered by the Form 14B - appeal allowed by way of remand.

Summary

Issues:
Interpretation of SSI exemption for goods sold to merchant exporter under a brand name.

Analysis:
The case involved the appellants engaged in manufacturing industrial valves availing SSI exemption under Notification No.8/2001-CE and 8/2002-CE. The dispute arose as the department contended that goods sold to a merchant exporter under the brand name of the exporter were not eligible for SSI exemption due to not being directly exported from the appellant's factory. The appellants argued that goods were physically exported by the merchant exporter, supported by Form 14B, and should not be included in the exemption value. The appellant cited precedents like Universal Packaging and others to support their claim.

The Revenue maintained that goods bearing another person's brand name were not eligible for SSI exemption, referencing judgments like Koroes India Ltd. and Venkateswara Electronics. The Tribunal examined the submissions and records, noting that the goods were sold to the merchant exporter who physically exported them, supported by relevant shipping bills and Form 14B. The Tribunal highlighted Circular No.648/39/2002-CX, which allowed Sales Tax documents as proof of export for small scale manufacturers exempted from Central Excise registration.

The Tribunal emphasized that the simplified export procedure was designed to accommodate SSI manufacturers exempt from Central Excise registration, allowing Sales Tax forms like Form-H or Form-14B as proof of export. The Tribunal rejected the lower authorities' narrow interpretation, emphasizing that goods sold to a merchant exporter and exported should be considered as exports, as per the Circular's intent. The Tribunal referred to the case of Bhalaria Metal Craft Pvt. Ltd. to support its interpretation and concluded that the matter required verification by the adjudicating authority to ensure all clearances to the merchant exporter were covered by Form 14B for exclusion from the aggregate clearance value under the SSI exemption.

In the final decision, the Tribunal set aside the impugned order and remanded the case to the adjudicating authority for a fresh denovo adjudication order based on the observations made, emphasizing the need for verification of all clearances against Form 14B for proper exclusion from the exemption value.

This detailed analysis highlights the interpretation of SSI exemption provisions for goods sold to a merchant exporter under a brand name, emphasizing the importance of proper documentation and adherence to prescribed procedures for claiming exemptions under relevant notifications.