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2009 (240) E.L.T. 314 (Tri. - Mumbai)

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI [COURT NO. II] S/Shri P.G. Chacko, Member (J) and K.K. Agarwal, Member (T)

STANLEK ENGINEERING P. LTD. COMMISSIONER OF C. EX., MUMBAI-II

Final Order No. A/866/2008-WZB/C-II/EB, dated 19-11-2008 in Appeal No. E/1518/2001 SSI Exemption and Cenvat/Modvat - Simultaneous availment - Availment of exemption in respect of goods covered by SSI Notification No. 8/98-C.E. and availment of Modvat benefit in respect of goods lying outside the purview of exemption Notification - Goods cleared under third partys brand name to be considered as out of purview of Notification No. 8/98-C.E. - Goods which were cleared on payment of full duty by availing input duty credit were not to be taken into account for computing the aggregate value of clearances for purposes of Notification ibid - Benefit of exemption under the Notification ibid admissible to goods cleared without brand name or under own brand name as aggregate value of such clearances was within the limit and Modvat credit was not availed of duty paid on inputs used in manufacture of such goods. [paras 5, 6] Versus

Appeal allowed
CASES CITED
Commissioner v. Ramesh Food Products 2004 (174) E.L.T. 310 (S.C.) Distinguished [Paras 1, 4, 5] Commissioner v. Solik Foods 2001 (127) E.L.T. 159 (Tribunal) Relied on.............. [Paras 1, 3] Nebulae Health Care Ltd. v. Commissioner 2007 (209) E.L.T. 125 (Tribunal) Relied on [Paras 1, 4] Stanlek Engineering Pvt. Ltd. v. Commissioner Order No. C-1/827-28/2002-WZB, dated 11-3-2002 Relied on [Paras 1, 3]

REPRESENTED BY : Ms. Aparna, Advocate, for the Appellant. Shri H.B. Negi, SDR, for the Respondent.

[Order per : P.G. Chacko, Member (J)]. - In this appeal, the assessee is aggrieved by the demand of differential duty of Rs. 31,348.30 for the period from January to March 1999, which is consequential to denial of the benefit of SSI exemption under Notification No. 8/98-C.E. coupled with direction to pay duty at concessional rate in terms of Notification No. 9/98-C.E. in respect of specified goods manufactured and cleared by them during the said period either without brand name or under their own brand name. There is also a penalty on the assessee. After examining the records, we find that the case is arising pursuant to a remand order of the Honble High Court vide Stanlek Engg. Pvt. Ltd. v. CCE Mumbai-III, 2008 (229) E.L.T. 61 (Bom.) wherein our earlier final order was set aside and it was directed that the appeal be taken up for de novo consideration. Before the Honble High Court, the party raised the grievance that two judgments of the Tribunal cited before this bench in the earlier round was not considered. There Lordships directed that the said judgments of the Tribunal also be considered. Though the High Courts judgment does not contain mention of the said judgments of the Tribunal, it appears from the records that the following judgments of the Tribunal were cited before this bench in the earlier round : 1. CCE v. Solik Foods, 2001 (127) E.L.T. 159 (T) 2. Stanlek Engineering P. Ltd. v. CCE - Order no. C-I/827-28/02-WZB dated 11-302. Today it is submitted by the ld. Counsel for the appellants that the Tribunals decision in

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Nebulae Health Care Ltd. v. CCE, Chennai, 2007 (209) E.L.T. 125 (Tri.-Chennai) also supports their case. Ld. SDR relies on the Apex Courts judgment in CCE v. Ramesh Food Products, 2004 (174) E.L.T. 310 (S.C.). In her rejoinder, the ld. Counsel submits that the case of Ramesh Food Products is factually distinguishable as found by the Tribunal in Nebulae Healthcare case. 2. The appellants were engaged in the manufacture of excisable goods specified for SSI benefit. Those goods which were cleared under their own brand name and those cleared without any brand name were so cleared without payment of duty under the aforesaid Notification No. 8/98-C.E., while those goods which were cleared under the brand name of another person were so cleared on payment of duty by availing Modvat credit on inputs. After verification of records and connected enquiries, the department also found that the assessee had not included the value of the goods cleared (under anothers brand name) on payment of duty, in the aggregate value of clearances for the purpose of determining the SSI exemption eligibility. The department look the view that the value of such clearance (under anothers brand name) should have been taken into account in determining the aggregate value of clearances for the purposes of Notification 8/98-C.E. They also considered the case as one of simultaneous availment of SSI exemption and Modvat credit and, on this basis, the benefit of Notification 8/98-C.E. was proposed to be denied to the assessee. Accordingly, a show-cause notice was issued to the assessee, demanding duty in terms of Notification No. 9/98-C.E. and proposing penalty. These proposals are contested. In adjudication of the dispute, the original authority held against the asscssee and confirmed the demand of duty. It also imposed a penalty on the assessee. In appeal, the appellate authority sustained the decision of the lower authority, but with a reduction of the quantum of penalty. The present appeal is directed against the appellate Commissioners order. 3. In terms of the Honble High Courts remand order, we ought to consider two decisions of this Tribunal. In the case of Solik Foods (supra), the question arose as to whether, in respect of specified goods covered by para 4 of Notification 1/93-C.E., the SSI unit was required to exercise option. The assessee in that case had also cleared some finished goods on payment of duty by availing Modvat credit on inputs as these finished goods were affixed with anothers brand name. Para (4) of the Notification barred SSI units from availing exemption in respect of such branded goods. The question arose whether the assessee was required to elect to avail exemption in respect of their unbranded goods and not to avail it in respect of the branded goods. It was held that any option to be exercised would only be for the goods covered by Notification 1/93. The goods cleared under anothers brand name were held to be not covered by the Notification. The second judgment relied on by ld. Counsel is one passed by this bench in a case of the appellants vide order C-I/827-28/02 WZB dated 11-3-02. The facts of that case are no different from those obtaining in the instant case. The issue which arose in that case was whether the assessee could simultaneously avail of SSI exemption in respect of their own goods and avail of the benefit of Modvat credit while paying duty on goods manufactured on job work basis. On this issue, the Tribunal held in favour of the assessee. 4. The reliance placed by counsel on Nebulae Healthcare (supra) is also seen to be apposite inasmuch as, in that case, the question whether the Apex Courts decision in Ramesh Food Products (supra) could be applied was also examined. On the question whether clearances of branded goods were to be taken into account for determining the aggregate value of clearances for purposes of Notifications 8/2003 etc., it was held as under :
The provisions in the relevant notifications to compute aggregate value of clearance mandate that the clearances of goods bearing brand name or trade name of another person which are ineligible for the grant of exemption shall not be taken into account in determining the aggregate value of clearances. Therefore, value of clearances of goods bearing brand name of third parties without availing the benefit of Notification No. 8/2003 is not reckoned for computing clearance value of Rs. One hundred lakhs in any year for exemption benefit. From these clauses contained in the relevant notifications, it is clear that goods bearing brand name of third parties were not eligible for exemption contained in Notification No. 8/2003. Identical provision existed in Notification No. 9/2003 where the option of availment of modvat benefit and payment of a concessional rate of duty was prescribed. Goods bearing brand name of third parties are therefore excluded from the exemption in Notification No. 9/2003 as well. The assessee has not availed the benefit contained in either of the notifications 9/99 (sic) [8/99] and 9/99, 8/2000 and 9/2000 etc.

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in respect of goods bearing brand name of third parties.

All the SSI notifications considered by the bench in Nebulae Healthcare case contained a provision pari materia with para 3(b) of Notification No. 8/98. This provision was to the effect that, for the purpose of determining the aggregate value of clearances for home consumption, the clearances under the brand name or trade name of another person ineligible for SSI benefit should not be taken into account. The ld. Counsel has referred to this provision and has submitted that this provision virtually recognised the assessees claim that they were entitled to the benefit of exemption in respect of their unbranded and own-branded goods while paying duty on goods affixed with third partys brand name. We have found substance in this argument of the assessee, which is squarely supported by case law cited by counsel. 5. The case law relied on by the appellants counsel supports their claim that (a) the goods cleared under third partys brand name were to be considered as out of the purview of Notification No. 8/98-C.E. (b) these goods which were cleared on payment of full duty by availing input duty credit were not to be taken into account for computing the aggregate value of clearances for purposes of the Notification and (c) the benefit of exemption under the Notification was admissible to the goods cleared without brand name or under own brand name as the aggregate value of such clearances was within limit and Modvat credit was not availed of the duty paid on the inputs used in the manufacture of such goods. The appellants case is not one of simultaneous availment of exemption and Modvat credit. It is rather a case of availment of exemption in respect of goods covered by SSI Notification 8/98-C.E. and availment of Modvat benefit in respect of goods lying outside the purview of the Exemption Notification. Such was not the issue considered in Ramesh Food Products case (supra). 6. In the result, the demand of duty and penalty on the appellant are set aside and this appeal is allowed. (Dictated in Court)
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