Notification No.8/2003-Central Excise provides full exemption from Central Excise duty to goods manufactured by small-scale units i.e. units whose aggregate value of clearances did not exceed Rs.4 crore in the preceding financial year. The exemption is available for clearances up to Rs.1.5 crore in a financial year subject if the prescribed conditions are fulfilled.
One of the conditions of this notification is that goods bearing the brand name or trade name of another person are not eligible for exemption barring a few exceptions such as goods cleared as 'original equipment', goods bearing the brand name or trade name of KVIC, or if such goods are manufactured in a factory which is located in a rural area. Disputes have arisen in the past about the applicability of this condition to goods that bear the brand name of another person but which are sold under that brand name by the buyer of the goods and not by the SSI unit affixing the brand name. Examples of such goods are elastic tapes used in the manufacture of undergarments, castings, packing materials such as printed cartons of paper, HDPE bags, Polypropylene caps, metal containers etc. On the basis of circulars/ clarifications issued by the Government, from time to time, the brand name restriction was not being applied to such goods and the benefit of the exemption was being extended on the ground that there is no nexus between the person manufacturing the goods and the brand name. In a recent Supreme Court decision, however, it has been held that the wording of the notification does not allow the benefit of the exemption in this situation as the notification does not envisage a nexus between the manufacturer and the brand.
In the wake of several representations from the trade and industry, notification no. 47/2008-Central Excise was issued, here today to amend the SSI exemption. It provides that the benefit of the exemption shall be available to goods bearing the brand name or trade name of another person if they are in the nature of packing materials, namely, printed cartons of paper or paper board, metal containers, HDPE woven sacks, adhesive tapes, stickers, PP caps, crown corks and metal labels. The amendment comes into effect on the 1st of September, 2008 and shall be available for a turnover of these goods not exceeding Rs. 90 lakh in the remaining part of this financial year.
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