2023 (5) TMI 428 - AT - Central Excise

Legality of simultaneous availment of SSI exemption benefit under Notification No. 8/2003-CE dated 01.03.2003 and CENVAT Credit - branded goods P P Ayurvedic Medicaments manufactured by the Assessee and cleared by it and goods belonging to other companies processed by it as job worker and cleared under the brand names of those companies - HELD THAT - It is made clear that law is not static and it changes with the changing need of time. The judgment of the Hon'ble Supreme Court, in view of operation of Article 141 of the Constitution of India, is the law of land. In the said COMMISSIONER OF CENTRAL EXCISE, CHENNAI VERSUS M/S. NEBULAE HEALTH CARE LTD. 2015 (11) TMI 95 - SUPREME COURT , while distinguishing other judgments including COMMISSIONER OF C. EX., AHMEDABAD VERSUS RAMESH FOOD PRODUCTS 2004 (11) TMI 103 - SUPREME COURT , it was held that once excise duty is paid by the manufacturer on such branded goods manufactured, the brand name whereof belongs to another person, on job work basis, the SSI Unit would be entitled to Cenvat/Modvat credit on the inputs which were used for manufacture of such goods as on those inputs also excise duty was paid. To put it otherwise, these branded goods manufactured by the SSI Units meant for third parties are regulated by the normal provisions of excise law and will have no bearing or relevance insofar as availing the benefit of those exemption notifications in respect of its own products manufactured by the SSI Units is concerned. The period under dispute in this appeal is before introduction of amended provision in February, 2009 by which Para 2(iii) was added but going by the entire text of the Notification, it can be said that the same is clarificatory in nature, that can be applied from the day of its inception, as has been held by this Tribunal in the case of VAIBHAV ACQUA FRESH LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI-II 2009 (3) TMI 191 - CESTAT, MUMBAI - having regard to the judicial precedent set by the Hon'ble Supreme Court in Nebulae Health Care Ltd. vis-a-vis insertion of proviso into the Notification w.e.f. 11.02.2009 that clarified the notification further, Appellant is entitled to the SSI exemption available under Notification No. 8/2003-CE for clearance of its branded product and also entitled to avail CENVAT Credit on clearance of branded products of others cleared through payment of duty. Appeal allowed.

Summary

Issues:
Legality of simultaneous availment of SSI exemption benefit and CENVAT Credit for branded goods under Notification No. 8/2003-CE.

Detailed Analysis:

Issue 1: Legality of simultaneous availment of SSI exemption benefit and CENVAT Credit
The appeal focused on the legality of simultaneously availing the SSI exemption benefit under Notification No. 8/2003-CE and CENVAT Credit for branded goods manufactured by the Assessee and goods belonging to other companies processed as a job worker. The Appellant faced a show-cause notice for contravening Para-2(iii) of the notification, leading to duty demands, interest, and penalties. The initial adjudication set aside the duty demands, but the Commissioner of Central Excise (Appeals) allowed the duty demands, interest, and penalties. The central issue was whether the Appellant could avail of both benefits simultaneously.

Issue 2: Application of Legal Precedents
During the appeal hearing, the Appellant's Counsel cited the Supreme Court's judgment in Commissioner of Central Excise, Chennai Vs. Nebulae Health Care Ltd., emphasizing the unsustainability of the Commissioner (Appeals) order based on this precedent. The Respondent's Authorised Representative argued in support of the Commissioner (Appeals) order, citing the decision in Commissioner of Central Excise, Ahmedabad Vs. Ramesh Food Products. The Tribunal highlighted the evolving nature of law and emphasized that the Supreme Court's judgments hold significant legal weight.

Issue 3: Interpretation of Notification and Amendments
The Tribunal analyzed the Nebulae Health Care Ltd. judgment, which clarified the provisions of the Notification regarding the exemption and excise duty on branded goods of third parties manufactured by the Appellant. The Tribunal referred to its previous decision in M/s. Cologics Systems Pvt. Ltd. and noted that the Appellant could avail SSI benefit for its own branded products and CENVAT Credit on inputs used for manufacturing branded goods of others. Despite the introduction of an amendment to the Notification post the disputed period, the Tribunal deemed it clarificatory and applicable from its inception, aligning with judicial precedents.

Conclusion:
The Tribunal allowed the appeals, setting aside the Commissioner of Central Excise (Appeals) order, and granting relief to the Appellant based on the legal interpretations of the Notification, relevant judgments, and the evolving nature of law. The decision emphasized the Appellant's entitlement to both SSI exemption benefits and CENVAT Credit for the branded goods in question.