Case Law Details
Universal Packaging Vs Commissioner of Central Excise (CESTAT Mumbai)
The legality of availing Small Scale Industries (SSI) exemption without including the value of supplies to Merchant Exporters has been challenged in four appeals. The appellant, a manufacturer of Corrugated Carton Boxes, had availed the SSI exemption under Notification No. 8/2003. However, periodic show-cause notices were served, demanding duty based on a clarificatory circular that excluded the benefit of non-inclusion of value for supplies made to domestic manufacturers who may or may not export finished products. The Commissioner (Appeals) confirmed the duty demand and penalties, but the CESTAT ruled in favor of the appellant, stating that the inclusion of such values for determining tax liability exceeded the SSI exemption limit and was not sustainable in law or fact. CESTAT referred previous judgments in support of this ruling.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Legality of availment of SSI exemption under Notification No. 08/2003-CE(NT) dated 28.02.2003 without including value of supplies to Merchant Exporters that resulted in confirming duty demand through three Orders-in-Original for the period from 2006 onwards vide Order-in-Original No. 132-134/13-15/V/2008/JC/KNP dated 30.06.2008 along with confirmation of penalties on the Appellant company as well as on its Managing Partner, that got confirmed vide Order-in-Appeal No. 53-54/MV/2004 is assailed in these four appeals.
2. Bereft of unnecessary detail, it is to be noted here that Appellant is a manufacturer of Corrugated Carton Boxes. It had availed SSI exemption available under Notification No. 8/2003 dated 28.02.2003 but was served with periodic show-cause notices dated 12.09.2006, 12.03.2007 and 11.09.2007 respectively with duty demand on the ground that clarificatory Circular No. 648/39/2002-CX dated 25.07.2002 issued by the Central Excise and Customs Board has clearly indicated that exempted units who undertake export themselves or through Merchant Exporters directly from the units itself would get only the benefit of non-inclusion of the value of those manufacture goods (boxes) for the purpose of computation of the ceiling in the SSI exemption Notification and the same would not be available to the supplies made to any other domestic manufacturer who may export or may not export 100% finished product. Confirmation of the duty demand including interest and penalties on the Appellant by the Commissioner (Appeals), on the basis of the said clarificatory Circular, has brought the dispute to the present forum.
3. We have heard submissions from both the sides and perused the case record as well as relied upon case laws. Learned Counsel for the Appellant Mr. Shailesh P. Sheth submitted that the issue is no longer res integra in view of the findings of the Principal Bench of this Tribunal at New Delhi in the case of Decorpac Vs. Commissioner of Central Excise, New Delhi reported in 2021 (376) ELT 759 (Tri.-Del.) and as the facts and circumstances in both the cases are identical, the appeals of the Appellant may be decided on the basis of the said judgment. Learned Authorised Representative, on the other hand in producing the copy of the clarificatory Circular, argued that the clarificatory Circular is followed by the Commissioner in its true letter and spirit and the findings would require no interference by this Tribunal.
4. We have carefully gone through the decided case law of Decorpac cited above. As could be observed there is reiteration of the finding of this Tribunal made on this issue in the case of Vadapalani Press Vs. Commissioner reported in 2007 (217) ELT 248 (Tribunal) case, the relevant portion of which, befitting to the issue in hand, is reproduced below:-
“… Therefore, we are of the view that the interpretation given by Learned SDR to the Board’s Circular No. 648/39/2002 would not be consistent with the provisions of law governing issuance of “Form-H” certificate. It is not the case of the Revenue that the cartons supplied by the appellants to A.V. Thomas Co. and other similar customers were not exported. It is, however, pointed out that the cartons were not exported as such, but were only used as packing material for goods exported by the customers. We find that, in the case of M/s. Radhey Paper Udyog (supra), there was an identical factual situation. In that case, corrugated boxes supplied by the said party (SSI unit) were used by their buyer for packing shoes, which were exported. The Tribunal held that such clearances of corrugated boxes by the SSI unit were not to be included in the aggregate value of clearances by the unit for the purpose of claiming the benefit of SSI exemption. The Revenue has no case that the Tribunal’s decision in Radhey Paper Udyog dated 27-1-2005 was not accepted. Earlier decision to the same effect of the Learned Single Member in the case of International Corrugators (supra) was also, apparently, accepted by the Revenue.”
(emphasis supplied)
It is also noticed that Hon’ble High Court of Bombay, in the decision reported in 2013 (292) ELT 191 (Bom.), had dismissed the Revenue’s appeal that was filed against decision of this Tribunal given in Universal Packaging Vs. Commissioner judgement reported in 2011 (264) ELT 147 (Tribunal) that was being passed basing on the ratio of Vadapalani Press cited supra. Further, decision of Vadapalani Press has been consistently followed thereafter in several decisions of this Tribunal including the case of Jai Jawala Processors Vs. Commissioner [2018 (360) ELT 94 (Tribunal)], Commissioner Vs. Amar Packaging Industries [2016 (344) ELT 187 (Guj)], Viba Fluid Control Vs. Commissioner [2018 (364) ELT 230 (Tribunal)] and Hare Krishna Boxes Pvt. Ltd. Vs. Commissioner [2011 (267) ELT 525 (Tribunal)]. We are, therefore, of the considered view that inclusion of such value of corrugated boxes supplies to Merchant Exporters to determine tax liability by computing the out-turn so as to exceed the SSI exemption limit and its confirmation by the Commissioner (Appeals) is not sustainable in both law and facts. Accordingly, no penalty is imposable also on the Appellant Company or its Managing Partner. Therefore, in order to maintain consistency of the order passed by this Tribunal and in carrying forward the judicial precedent set by it, the following order is passed.
THE ORDER
8. These four appeals are allowed and the order passed by the Commissioner of Central Excise (Appeals), Mumbai Zone-I vide Order-in-Appeal No. BR/53-54/MV/2012 dated 28.08.2012 is hereby set aside with consequential relief, if any, to the Appellant.
(Operative portion of the order pronounced in open court)
