1995 (4) TMI 143 - AT - Central Excise

Summary

Issues:
1. Eligibility for Small Scale exemption based on SSI certificate issued prior to lease agreement.
2. Validity of SSI certificate for clearance by lessee firm after unit is leased.
3. Interpretation of endorsement on SSI certificate in case of unit being leased.
4. Continuation of small scale exemption when unit is leased to another person.

Analysis:

1. The appeal concerns the eligibility of a unit for Small Scale exemption based on an SSI certificate issued before a lease agreement. The lower authority held that goods manufactured in the unit taken on lease were not eligible for the exemption due to the change in constitution post-lease. The original authority supported this decision by noting the absence of a valid SSI certificate for the lessee firm, rendering the clearance ineligible for the benefit.

2. The appellate authority, however, disagreed with the lower authority's interpretation. They emphasized that the absence of a fresh SSI certificate for the lessee firm did not automatically disqualify the clearance for the exemption. The appellate authority highlighted that the lessee firm was not required to obtain a new SSI certificate as they were not engaged in manufacturing but in storing non-duty goods, thus maintaining the eligibility for the exemption.

3. The Respondent cited a Tribunal judgment where it was established that even with a change in factory ownership, small scale exemption could still apply. The key issue was whether a unit holding an SSI certificate, upon being leased to another party, could retain the benefit of Modvat Credit based on the original certificate. The Tribunal emphasized the importance of the endorsement on the SSI certificate, indicating that the issuing authority should clarify if the certificate remains valid post-lease for availing the small scale exemption.

4. Following previous decisions, the Tribunal set aside the lower authority's order and directed a clarification from the State authorities regarding the status of the SSI certificate when a unit is leased to another party. The appeal was allowed for reconsideration based on the need for clarity on the validity of the SSI certificate in the context of leasing arrangements, ensuring a thorough examination of the issue before a final decision is made.