2005 (9) TMI 335 - AT - Central Excise

Summary

Issues: Revenue's appeal against clubbing clearances for exemption under Notification No. 1/93.

In this case, the main issue revolves around the clubbing of clearances for deciding the eligibility of exemption under Notification No. 1/93. The respondents manufactured drugs for themselves and on behalf of another company, Lupin Laboratories, under the SSI exemption. The Revenue contended that the clearances of both firms should be clubbed, exceeding the exemption limit. The Commissioner (Appeals) held that the respondents, acting as independent entities, were entitled to the exemption for their own products made as an SSI unit without clubbing the clearances made on behalf of Lupin. The Tribunal agreed with the Commissioner's findings, stating that since goods for Lupin were cleared under normal duty rates and bore Lupin's brand name, there was no basis to club these clearances with the respondents' for exemption calculation purposes. Therefore, the Revenue's appeal was dismissed.

The Tribunal carefully analyzed the Revenue's argument that both firms' clearances should be clubbed to determine exemption eligibility under Notification No. 1/93. However, the Tribunal agreed with the Commissioner (Appeals) that the respondents, as independent entities, were eligible for the exemption for their own products without including the clearances made on behalf of Lupin Laboratories. The Tribunal emphasized that since the goods manufactured for Lupin were cleared under normal duty rates and bore Lupin's brand name, there was no legal basis to combine these clearances with those of the respondents for the purpose of exemption calculation. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decision.

The key point of contention was whether the clearances of goods manufactured for Lupin Laboratories should be clubbed with the respondents' clearances for determining eligibility for exemption under Notification No. 1/93. The Revenue argued for the clubbing of clearances, contending that the combined value exceeded the exemption limit. However, the Commissioner (Appeals) and subsequently the Tribunal disagreed with this approach. They held that as the goods manufactured for Lupin were cleared under normal duty rates and bore Lupin's brand name, there was no requirement to combine these clearances with those of the respondents. The Tribunal found the Commissioner's decision legally sound and declined to interfere, ultimately dismissing the Revenue's appeal.