Case Law Details
Cenvat credit : Manufacturers are not debarred from availing benefit under Notification No. 8/2003-CE dated 1-3-2003 in relation to goods other than goods which are excluded from benefit of said notification while simultaneously seeking to avail benefit of Cenvat credit or Modvat credit in relation to such excluded goods provided they are cleared on payment of full duty
The specified goods manufactured in the brand name of the assessee himself are not excluded from availing the benefit of exemption under the Notification No. 8/2003-CE Dated 1-3-2003 even though the assessee seeks to avail the Cenvat credit facility in respect of the duty paid on the inputs utilised in the manufacture of the branded specified goods on which the full duty is paid while clearing the same.
CASE LAWS DETAILS
DECIDED BY: CESTAT, PRINCIPAL BENCH, NEW DELHI, IN THE CASE OF: Cure Quick Remedies Pvt. Ltd. Vs. CCE, APPEAL NO: EXCISE APPEAL NO. E/895 of 2008, DECIDED ON APRIL 28, 2010
FACTS
All these appeals arise from the orders passed by the lower authorities whereby, while denying the benefit of SSI exemption Notification No.8/2003-CE dated 1.3.2003 on the ground mat the assessees are not entitled for simultaneous benefit of SSI exemption notification and Cenvat credit facility, has confirmed the demand to the extent of the goods cleared while seeking the benefit of SSI exemption. The authorities below have also claimed interest on such amount and has also levied penalty in case of the matters covered by the Appeals Nos.E/895,897 and 981 of 2008.3
In all these appeals, the challenge to the impugned order is on the ground that the branded specified goods stand excluded from entitlement of benefit under SSI exemption notification and they are cleared on payment of duty and that, therefore, they cannot be denied the Cenvat credit facility and for availing such facility in relation to the specified goods for which the benefit is assured under the SSI exemption notification cannot be denied.
HELD
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 3 A (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 3 A (b) of the said notification, which provides that, “for the purpose of determining the first clearance up to 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 claim the benefit under the said notification. The specified goods manufactured in the brand name of the assessee himself are not excluded from availing the benefit of exemption under the said Notification No. 8/2003 –CE Dated 1-3-2003 even though the assessee seeks to avail the Cenvat credit facility in respect of the duty paid on the inputs utilised in the manufacture of the branded specified goods on which the full duty is paid while clearing the same.
Rather plain reading of Clause 3, 3 A and 4 of the said notification would disclose that the manufacturers are not debarred from availing benefit under said Notification No. 8/2003-CE dated 1-3-2003 in relation to goods other than goods which are excluded from benefit of the said notification while simultaneously seeking to avail 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 A 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.
Relevant Extracts
3. All these appeals arise from the orders passed by the lower authorities whereby, while denying the benefit of SSI exemption Notification No.8/2003-CE dated 1.3.2003 on the ground mat the assessees are not entitled for simultaneous benefit of SSI exemption notification and Cenvat credit facility, has confirmed the demand to the extent of the goods cleared while seeking the benefit of SSI exemption. The authorities below have also claimed interest on such amount and has also levied penalty in case of the matters covered by the Appeals Nos.E/895,897 and 981 of 2008.3
4. In all these appeals, the challenge to the impugned order is on the ground that the branded specified goods stand excluded from entitlement of benefit under SSI exemption notification and they are cleared on payment of duty and that, therefore, they cannot be denied the Cenvat credit facility and for availing such facility in relation to the specified goods for which the benefit is assured under the SSI exemption notification cannot be denied. In that regard, it is the contention on behalf of the appellants that the decision of the Apex Court in Commissioner of Central Excise, Ahmedabad Vs. Ramesh Food Products reported in 2004 (174) ELT 310 (SC), which has been heavily relied upon by the authorities below to deny the benefit of the said notification, is clearly distinguishable being in relation to totally different facts and on a totally different issue.
5. Ld. Advocate for the appellants while drawing our attention to the Notification No.8/2003-CE dated 1.3.2003, as amended, and as was in force during the relevant time, submitted that Clause 3 A (b) read with Clause 4 thereof and Clause 1 in the Table to the said Notification makes it abundantly clear that the goods manufactured bearing brand name or trade name of another person are not eligible for the exemption under the said notification and, therefore, Condition No.2 (iii) of the said notification based on which the benefit is sought to be denied to the specified goods other than the branded goods is not at all attracted. He has further submitted that it has been consistently held by the Tribunal in various matters including in the matters of CCE Vs. Spring Klein Aqua Pvt. Ltd. reported in 2008 (84) RLT 470 (CESTAT-Kolkata), Mepro Pharmaceuticals P. Ltd. Vs. CCE, Rajkot reported in 2009 (91) RLT 557 (CESTAT-Ahmd.), CCE, Coimbatore Vs. CRI Pumps (?) Ltd. reported in 2009 (91) RLT 929 (CESTAT-Chennai), Stanlek Engg. Pvt Ltd. CCE, Mumbai-II reported in 2009 (90) RLT 607 ( CESTAT-Mumbai) and Nebulae Health Care Ltd. Vs. CC, Chennai reported in 2007 (78) RLT 74 (CESTAT-Chennai) that full exemption in terms of such notification is available in respect of the goods manufactured by an assessee under his own brand name even though cenvat credit is availed in respect of the duty paid on the inputs utilised in the manufacture of those goods which bear brand name of another person and are cleared on foil payment of duty. Drawing our attention to the decision in Ramesh Foods Products’s case, it was submitted that the same was in relation to the exemption Notification no.l75/86-CE dated 1.3.86, which was in a totally different set of facts and on totally different grounds as well as different conditionsattached to it. Being so, according to the Id. Advocate, the decision of the Apex Court in Ramesh Food Products can be of no help to decide the matters in hand. He has further submitted that the decisions in the matters of Kharia Cement Works Vs. CCE reported in 1989 (42) ELT 696 (Tribunal) as well as Saurashtra Exports Vs. CCE, Rajkot reported in 2007 (215) ELT 448 (Tribunal-Ahmd.) and Basant Industries Vs. CCE, Kanpur reported in 2007 (210) ELT 257 (Tribunal-Delhi) are not at all attracted in the matter.
6. Ld. DR, on the other hand, submitted that the Notification No.8/2003-CE dated 1.3.2003 and Condition No.2 (iii) clearly provides that the manufacturer shall not avail credit of duty on inputs under Rule 3 or Rule 11 of the Cenvat Credit Rules, 2002 paid on the inputs used in the manufacture of the specified goods cleared for home consumption, the aggregate value of first clearance of which, as calculated in the manner specified in the Table incorporated in the said notification, does not exceed one hundred lakh rupees, which clearly discloses that the manufacturer would not be entitled to avail credit of duty paid on inputs in the. manufacture of such specified goods and, therefore, it is obvious that the manufacturer seeking to avail such Cenvat credit facility would not be entitled for the exemption benefit under the said notification. Drawing our attention to Clause 3 of the Notification No.l75/86-CE dated 1.3.86, he submitted that the similar provision is found incorporated in the form of proviso to the said Clause 3 of the said notification and the decision of the Apex Court in Ramesh Food Products is essentially in relation to the said proviso and, therefore, the appellants cannot be heard to contend that the ruling of the Apex Court in Ramesh Food Products would not apply to the cases in hand. He further submitted that the very essence of the Notification No.8/2003-CE dated 1.3.2003 is to give option to the manufacturer to choose between the benefits, which are available one under the SSI exemption notification and another under Cenvat Credit Rules and not to grant benefits under both the provisions of law. Considering the same, according to the Id. DR, there is no case made out for interference in the impugned orders.
7. In all these matters, the period involved is from October, 2005 to September, 2006. During the relevant period, the Notification No.8/2003-CE dated 1.3.2003, as amended, which was in force, and the same clearly provided under Clause 3 A (b) that for the purposes of determining the aggregate value of the clearances of all excisable goods for home consumption, the clearances bearing the brand name or the trade name of another person, which are ineligible for the grant of exemption under the said notification in terms of Clause 4 thereof shall not be taken into account. The relevant portion of the Clause 4 of the Notification provides that the exemption contained in the notification would not apply to the specified goods bearing the brand name or trade name whether registered or not of another person. Clause 1 of the Table to the said notification, which deals with the subject of value of the clearances provided that, “first clearance up to an aggregate value not exceeding one hundred lakh rupees made on or after the first day of April in any financial year”, shall be liable for nil rate of duty.
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 3 A (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 3 A (b) of the said notification, which provides that, “for the purpose of determining the first clearance up to 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 claim the benefit under the said notification. The specified goods manufactured in the brand name of the assessee himself are not excluded from availing the benefit of exemption under the said Notification No. 8/2003 –CE Dated 1-3-2003 even though the assessee seeks to avail the Cenvat credit facility in respect of the duty paid on the inputs utilized in the manufacture of the branded specified goods on which the full duty is paid while clearing the same.
This is a long pending issue made at rest. The Excise Department should formulate crystal clear policy on SSI without which all sorts of litigations will arise and this case is clear example.