2023 (6) TMI 950 - AT - Central Excise

SSI Exemption - appellant had crossed the exemption limit of Rs.1 Crore during 2006-07 to 2007-08 or not - failure to consider the export clearances made by the appellant through the merchant exporter - Board Circular No.648/39/2002 dated 25.07.2002. HELD THAT - The Tribunal in the case of VADAPALANI PRESS VERSUS COMMISSIONER OF C. EX., CHENNAI 2007 (3) TMI 151 - CESTAT, CHENNAI had occasion to consider a similar issue. The above Board s circular was also referred by the Tribunal. It was held that when Form-H has been produced to establish that the goods have been exported the value of such clearances would not be included in the aggregate value so as to deny the SSI exemption. The Hon ble Gujarat High Court in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS AMAR PACKAGING INDUSTRIES 2012 (8) TMI 1068 - GUJARAT HIGH COURT has held that the Tribunal has not committed any error in allowing the appeal of the assessee. It is rightly held that requirements of the circular were substantively complied with. The demand cannot sustain. The impugned order is set aside - Appeal allowed.

Summary

Issues Involved:
1. Whether the appellant crossed the exemption limit of Rs.1 crore during 2006-07 and 2007-08.
2. Whether export clearances made through merchant exporters should be included in the aggregate value of clearances for determining the SSI exemption.

Summary:

Issue 1: Exceeding the Exemption Limit
The appellant, engaged in the manufacture of Magnesium Sulphate, was alleged to have crossed the exemption limit of Rs.1 crore during 2006-07 and 2007-08 as per Notification No.8/2003-CE dated 01.03.2003. The department issued a show cause notice on 14.09.2011, demanding duty along with interest and imposing penalties. The original authority confirmed the duty liability with interest and imposed a penalty, which was upheld by the Commissioner (Appeals). The appellant contended that they did not cross the threshold limit during the disputed period, arguing that the department failed to consider export clearances made through merchant exporters.

Issue 2: Inclusion of Export Clearances in Aggregate Value
The appellant argued that the value of export clearances made through merchant exporters against Form-H should not be included in the aggregate value of clearances for determining the SSI exemption. The appellant referred to Circular No.648/30/2002 dated 25.07.2002, which clarifies that exports made through merchant exporters against Form-H should be considered for SSI exemption. The Tribunal in Vadapalani Press Vs CCE Chennai and Ramani Plastics Pvt. Ltd. Vs CCE Chennai supported this view, stating that when Form-H is produced to establish that the goods have been exported, the value of such clearances should not be included in the aggregate value.

Tribunal's Findings:
The Tribunal referred to the Board's Circular No.648/39/2002 and previous decisions in similar cases, concluding that the value of export clearances made through merchant exporters should not be included in the aggregate value for SSI exemption. The Tribunal found that the appellant had substantially complied with the requirements of the circular by providing Form-H and other relevant documents as proof of export. Therefore, the demand could not be sustained, and the impugned order was set aside.

Conclusion:
The appeal was allowed with consequential relief, if any, as the Tribunal found that the appellant was entitled to SSI exemption by excluding the value of export clearances made through merchant exporters from the aggregate value of clearances.