2021 (8) TMI 1146 - AT - Central Excise

Valuation - SSI Exemption - inclusion of value of goods destroyed in flood in the aggregate value of clearance or not - HELD THAT - N/N. 08/2003 in para 2(vii) and para 3 clearly indicate that aggregate value of clearance for home consumption by a manufacturer is to be taken into account and admittedly para 3 has categorised 3 exclusions wherein damage by fire is not found mention. However, going by the strict literal interpretation of para 3 and 2(vii), it is crystal clear that only clearances for home consumption is to be taken into account and goods destroyed by fire were not clear for home consumption on any point of time but was directed by the insurance company to be destroyed as were unfit for consumption as revealed from the insurance settlement letter at page 30 of the appeal memo. The value of such damaged goods, which were never cleared for home consumption, cannot be added to the total turnover - appeal allowed.

Summary

Issues:
Whether the value of goods destroyed in flood is to be added in the aggregate value of clearance by the unit availing SSI exemption.

Detailed Analysis:
The case involved a manufacturer who suffered loss and damage of finished/semi-finished goods in a flood. The department sought to add the value of the destroyed goods to the turnover, potentially impacting the SSI exemption availed by the manufacturer. The duty demand with interest was confirmed by the adjudicating authority and upheld by the Commissioner of Central Excise (Appeals).

During the appeal, the respondent-department argued for strict interpretation of the exemption notification, citing precedents and legal principles. However, the Tribunal analyzed Notification No. 08/2003, specifically para 2(vii) and para 3, which mention the "aggregate value of clearance" for home consumption. The Tribunal noted that the notification did not mention damage by fire as an exclusion. Despite this, the Tribunal emphasized that goods destroyed by fire were never cleared for home consumption but were deemed unfit for consumption by the insurance company. The Tribunal concluded that such damaged goods, not cleared for home consumption, should not be added to the total turnover.

In the final order, the Tribunal allowed the appeal and set aside the order passed by the Commissioner of Central Excise (Appeals), thereby ruling in favor of the appellant. The decision was based on the interpretation of the exemption notification and the specific circumstances of the goods destroyed in the flood.

This judgment highlights the importance of interpreting exemption notifications strictly and considering the specific facts of each case when determining the value of goods for exemption purposes. The Tribunal's decision focused on the distinction between goods cleared for home consumption and those destroyed due to uncontrollable circumstances, ultimately providing relief to the appellant in this case.