2018 (4) TMI 815 - AT - Central Excise

SSI Exemption - determination of turnover to ascertain the base exemption level - denial of SSI exemption on the ground that their turnover was exceeding exemption limit for excisable goods - Held that - the provisions of para 2(vii) read with para 3(A)(b) of N/N. 8/2003 is clear that clearance bearing brand name of another person are not to be included with the turn - over of the appellant - The Hon ble Supreme Court in the case of Nebulae Health Care Ltd. 2015 (11) TMI 95 - SUPREME COURT observed that the branded goods manufactured by SSI unit meant for third party are reckoned by normal provision of law and will have no bearing or relevance in the appellant s availing the benefit of this exemption notification in respect of its own products manufactured by the SSI unit concerned. The inclusion of said turn-over of branded goods in turn-over of appellant for SSI limit is not legally sustained - appeal allowed - decided in favor of appellant.

Summary

Issues:
Eligibility for small scale exemption under notification No. 8/2003 - CE dated 1.3.2003 based on turnover calculation.

Analysis:
The dispute in this case revolves around the appellant's eligibility for the small scale exemption under a specific notification. The appellant, previously engaged in manufacturing Aluminum ingots using a branded name belonging to another entity, was discharging excise duty as branded goods are not eligible for the small scale exemption. After selling the unit and moving to a new premise to manufacture refractory and fire bricks, the appellant claimed the small scale exemption. However, the Revenue denied the exemption, arguing that the appellant's turnover exceeded the exemption limit due to including alloy steel ingots manufactured and cleared earlier by the appellant in another unit. The lower authorities upheld this decision, resulting in the confirmation of differential Central Excise duty and penalties.

The appellant's counsel argued that the turnover calculation should exclude the value of steel alloy ingots that had already incurred Central Excise duty and were outside the scope of the small scale exemption. Reference was made to specific provisions of the notification and a Supreme Court decision to support this argument. On the other hand, the Revenue contended that the turnover for exemption eligibility should encompass all clearances exempted from duty payment in the past year.

Upon reviewing the case, the Tribunal focused on the key issue of turnover to determine the appellant's base exemption level. It was noted that the appellant had previously manufactured and cleared branded alloy steel products from their earlier unit, resulting in a turnover of around ?10.94 crores during a specific financial year. However, the Tribunal emphasized that the notification clearly stated that clearances bearing another person's brand name should not be included in the appellant's turnover for the small scale exemption. Citing a Supreme Court decision, it was established that branded goods manufactured by an SSI unit for a third party should not impact the SSI unit's eligibility for exemption concerning its own products. Consequently, the Tribunal concluded that the inclusion of turnover from branded goods was not legally justified, setting aside the impugned order and allowing the appeal.