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TMI Blog2019 (12) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Rules, 2002 on M/s Cologicx Systems Ltd. 42, Electronics Cooperative Industrial Estate Pune Satara Road Pune 411009 for violation of Rule 5, 6 and 8 of Central Excise Rules, 2002. I demand interest from M/s Cologicx Systems Ltd. 42, Electronics Cooperative Industrial Estate Pune Satara Road Pune 411009 under section 11AB of the Central Excise Act, 1944 from the date of clearance of the said goods till payment of the duty. This order has been passed without prejudice to any other action whicjh may be taken against the noticee under the Central Excise Act, 1944 or the Central Excise Rules, 2002 or any other laws for the time being in force in the Republic of India." 2.0 Appellants are availing of the benefit of exemption Notification No 8/2003-CE dated 01.03.2003 in respect of the goods cleared by them. In respect of the goods cleared under brand name of others they were paying the duty at applicable rate and availed the CENVAT Credit of duty paid on inputs used in manufacture of such goods. Department objected to availing of such simultaneous of benefit under Notification No 8/2003- CE and CENVAT Credit in respect of the goods cleared on payment of duty. Thus a show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the normal rate of duty. Such option shall not be withdrawn during the remaining part of the financial year; (ii) while exercising the option under condition (i), the manufacturer shall inform in writing to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise with a copy to the Superintendent of Central Excise giving the following particulars, namely :- (a) name and address of the manufacturer; (b) location/locations of factory/factories; (c) description of inputs used in manufacture of specified goods; (d) description of specified goods produced; (e) date from which option under this notification has been exercised; (f) aggregate value of clearances of specified goods (excluding the value of clearances referred to in paragraph 3 of this notification) till the date of exercising the option; (iii) the manufacturer shall not avail the credit of duty on inputs under rule 3 or rule 11 of the CENVAT Credit Rules, 2002 (herein after referred to as the said rules), paid on inputs used in the manufacture of the specified goods cleared for home consumption, the aggregate value of first clearances of which, as calculated in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty. 8. Perusal of the above provisions of the notification makes it abundantly clear that in case of specified goods bearing brand name or trade name, whether registered or not, of another person being manufactured by the assessee, the same would not be entitled to claim the benefit under the said notification. Clause 3A(b) specifically excludes such goods even for the purpose of ascertaining the total quantum of production in order to decide the slab of quantity for availing the benefit of exemption under the said notification. This is abundantly clear from Clause 3A(b) of the said notification, which provides that, "for the purpose of determining the first clearance upto an aggregate value not exceeding one hundred lakh rupees made on or after first day of April in any financial year", the clearance bearing the brand name or trade name of another person, which are ineligible for the grant of the said exemption in terms of Clause 4 of the said notification shall not be taken into account. Obviously, therefore, the specified goods bearing brand name or the trade name of another person, manufactured by the assessees and cleared on payment of entire duty would not be entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods v. CCE reported in 1995 (75) E.L.T. 202 (Tribunal). The Notification No. 175/86-C.E., have to be read as a whole and as noted rightly in Kharia Cement Works (supra), sub-clause (i) and (ii) have to be construed harmoniously. The exemption envisaged for the specified goods accrues to them through instrumentality of the manufacturer. The notification clearly demarcated the two categories of manufacturers. A clear cut distinction is explicit between a manufacturer availing Modvat credit under Rule 57A and another not opting for the benefit of the Modvat scheme. As is statutorily provided, input duty relief is given under the scheme to the manufacturers, who opt to operate under the scheme by applying for it in the prescribed manner. Ultimately, the manufacturers have the choice of choosing one of the two concessions i.e. either the Modvat Scheme or Notification No. 175/86- C.E. Further, there is no one-to-one correlation between the inputs and final products under the Modvat Scheme. It would, therefore, not possible to allow the manufacturer to simultaneously avail Modvat for some products and avail full exemption for others under Small Scale Exemption Scheme. It is pertinent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile simultaneously seeking to avail the benefit of Cenvat credit or Modvat credit in relation to such excluded goods provided they are cleared on payment of full duty. The notification being abundantly clear in this regard, in our considered opinion, the Authorities below erred in applying the decision, in Ramesh Food Products to the cases in hand and to deny the benefit of SSI exemption to the goods to which the said exemption notification applies. The impugned orders, therefore, in this regard, cannot be sustained and the demand of duty made while denying the benefit under the said notification cannot be sustained. For the reasons stated above, therefore, the appeals succeed and they are allowed. The impugned orders are, therefore, set aside with consequential relief. 4.4 In case of Synthetic Industries, supra, Ahmedabad bench has held as follows: "4. A short question involved for determination is : whether the appellant are eligible to the benefit of Notification No. 8/2003-C.E., dated 1-3-2003. The Commissioner (Appeals), after examining the provisions of the said notification recorded his observation as follows :- "It is noticed that, for the availment of benefit of No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands overruled." 4.6 In light of the said decision of the Apex Court the decision of the Ahmedabad Bench in case of Synthetic Industries, more appropriately and aptly clarifies the position of law. The said decision is also in line with the Apex Court decision in case of Ramesh Food [2004 (174) ELT 0310 (SC)] "10.Notification 175/86 have to be read as a whole and as noted rightly, in Kharia Cement Works case (supra) sub-clauses (i) and (ii) have to be construed harmoniously. Exemption envisaged for the specified goods accrues to them through instrumentality of the manufacturer. The notification clearly demarcated the two categories of manufacturers. A clear cut distinction is explicit between a manufacturer availing Modvat credit under Rule 57A and another not opting for the Modvat Scheme. As is statutorily provided, input duty relief is given under the scheme to the manufacturers who opt to operate under the scheme by applying for it in the prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification. The Para-2 of the notification gives an option to the manufacturer not to avail the said exemption and instead pay the normal rate of duty on the goods cleared by him. Condition contained in Para-2(iii) is that the manufacturer shall not avail the credit of duty on the inputs, in terms of Rule 3 or Rule-11 of the CENVAT Credit Rules, 2002, paid on inputs used in the manufacture of the specified goods cleared for home consumption and in terms of Para 2(iv) the credit of duty paid on the capital goods would also not be available to them. Para-3 of the Notification makes it clear that the clearances bearing the brand name or trade name of another person, which are ineligible for the grant of the exemption in terms of paragraph-4 shall not be taken into account for determining the aggregate value of clearance of home consumption. Further, Para-4 debars the applicability of the Notification if the goods bear the brand name or trade name of another person, except in certain circumstances. I would first like to examine and interpret the said notification without the aid of any precedent decisions, to which reference would be made in succeeding paras. Cumulative reading of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty and clears another part of his own manufactured goods on payment of duty and after availing cenvat credit, such a situation would admittedly amount to simultaneous availment of exemption as well as cenvat credit, which, ofcourse, the notification does not provide. In my views, this is the meaning of the expression 'Simultaneous Availment' used repeatedly in various decisions as also by the Lower Authorities. Where in terms of the same notification a manufacturer is under a legal obligation to clear the branded goods on payment of duty, the benefit of exemption available in terms of the precedent paragraphs of the notification cannot be taken away from the manufacturer. Such an interpretation would lead to making the said notification as infructuous or otiose vis-a-vis the goods manufactured by a manufacturer on its own account. An interpretation which deviates from the legislature intent and leads to absurd results, has to be avoided. 5. Further, the Central Excise Authorities cannot control the business plans of a manufacturer. If in addition to manufacturing his own goods, to which it would be admittedly entitled to exemption up to the first clearances of Rupees one crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal that The notification in question allows availment of SSI exemption and cenvat credit availed for non-branded goods at the same time the notification in question is the same Notification No.8/2003-Central Excise dated 01.03.2003 which is the subject matter of the present appeal. Reference and reliance by the Revenue on the Tribunal decision in the case of M/s Synthetic Industries V/s Commissioner of Central Excise & Service Tax, Rajkot reported at 2016 (344) E.L.T. 1044 (Tri.-Ahmd.) is not applicable to the facts of the present case. On going through the impugned order, which in any case is an ex-partee order, I find that the appellant in that case was manufacturing PD Pumps. The appellant cleared the PD pumps for July, 2006 to October, 2006 by availing the benefit of the notification in question. However, for the further period 01.08.2006 to 09.08.2006 they availed cenvat credit in respect of the same PD pumps and paid duty on their final product. As such the Tribunal held that availment of exemption in respect of the same very goods during a part of financial year, in respect of a part clearance and then switching to payment of duty after availment of credit, is not permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lip Kumar and Company & Ors. is not in respect of the disputed issue in question. The Hon'ble Five Member Constitutional Bench of Supreme Court have laid down the law that exemption notification should be interpreted strictly and in case of the ambiguity in exemption Notification, it has to be interpreted in favour of the Revenue. 9. As already observed, in my views there is no ambiguity in the notification and even the strict interpretation of the Notification No.08/2003- Central Excise dated 01.03.2003 leads us to the conclusion that the same covers two different situations, one in respect of own manufactured goods by SSI manufacture and the other in respect of branded goods by the same SSI manufacture. 10. In view of the forgoing, I am of the opinion that the impugned order is required to be set aside and appeal is to be allowed with consequential relief to the appellant. I order accordingly. (Archana Wadhwa) Member (Judicial) Difference of Opinion 11. Whether the appeal has to be rejected as held by Learned Member (Technical) or the same has to be allowed as held by Learned Member (Judicial). (Pronounced in Court on 18.12.2018) (Sanjiv Srivastava) Member (Techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs of the learned Member (Judicial). In support, he referred the judgment of the Hon'ble Supreme Court in the case of Ramesh Food Products (supra) and this Tribunal's judgment in the case of Synthetic Industries Vs. Commissioner of Central Excise & Service Tax, Rajkot - 2016 (344) ELT 1044 (Tri-Ahmd) and Warna Packaging Pvt. Ltd. Vs. Commissioner of Central Excise, Pune-II - 2017 (347) ELT 638 (Tri-Mum). 5. Learned Advocate Shri Manoj Deshpande for the appellants, on the other hand, has submitted that the Hon'ble Supreme Court recently in the case of Commissioner of Central Excise, Chennai Vs. Nebulae Health Care Ltd. - 2015 (325) ELT 431 (SC) distinguishing the earlier judgment in Ramesh Food Product's case held that an assessee can avail SSI exemption and also CENVAT Credit on inputs used in the manufacture of goods on jobwork basis bearing brand name of others side by side. Also, he has referred to the judgment of this Tribunal in the case of Commissioner of Central Excise, Kanpur Vs. U.P. Engineering Corporation - 2010 (261) ELT 888 (Tri- Del). 6. I have carefully considered the submissions and perused the orders passed by learned Member (Judicial) and also learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood, it becomes apparent that so far as manufacture of branded goods of third party on job work basis by the SSI Unit is concerned, they are to be dealt with differently in the sense that they do not come within the ambit of exemption on which normally excise duty, as per the provisions of the Act, is payable. As a sequitur, it also follows 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. 7. In the aforesaid judgment, the Hon'ble Supreme Court distinguished the ratio laid down in Ramesh Food's case (supra) and held that an assessee can avail the SSI benefit and also CENVAT credit on inputs us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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