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2016 (6) TMI 16 - PUNJAB AND HARYANA HIGH COURT

2016 (6) TMI 16 - PUNJAB AND HARYANA HIGH COURT - TMI - Entitlement to claim full SSI exemption in terms of Notification No. 8/2003-CE dated 1.3.2003 - goods manufactured under his own brand name even though Cenvat Credit was availed by it in respect of the duty paid on the inputs utilized in the manufacture of those goods which bear brand name of another person and are cleared on full payment of duty - Held that:- In the present scheme manufacturer has been given clear option to opt both of the .....

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A] had been rightly distinguished by the Tribunal on the same lines as has been noticed by the Apex Court in the aforesaid pronouncement. Accordingly, there is no error in the approach of the Tribunal which may warrant interference by this Court. - Decided against the revenue - CEA No. 2 of 2011 (O&M) - Dated:- 4-5-2016 - MR. AJAY KUMAR MITTAL AND MR. SHEKHER DHAWAN, JJ. For The Appellant : Mr. Kamal Sehgal, Advocate For The Respondent : Mr. Vikrant Kackria, Advocate AJAY KUMAR MITTAL, J. 1. Thi .....

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as the Tribunal ). The appeal was admitted for consideration of substantial questions of law as proposed in para 4 of the appeal which are as under:- i) Whether Tribunal has erred in law by not appreciating the language of the relevant subpara (iii) of para 2 of Notification No. 8/2003- C.E., dated 01.03.2003, which debars the manufacturer from taking credit of duty paid on inputs, if manufacturer opts for availing of the benefit under Notification No. 8/2003-C.E., dated 01.03.2003? ii) Whether .....

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/Modvat credit qua other branded goods manufactured and cleared by them on payment of duty. A show cause notice dated 11.1.2007 (Annexure A-1) was issued to the assesseerespondent after denial of SSI exemption by raising demand of duty along with interest and penalty. The adjudicating authority vide order dated 29.6.2007 (Annexure A-2) confirmed the demand of duty amounting to ₹ 15,73,174/- under Section 11A of the Act along with interest. Feeling aggrieved, the assessee filed an appeal be .....

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ndent assailed the order, Annexure A-3, in appeal before the Tribunal. The Tribunal vide order dated 28.4.2010 (Annexure A-4) allowed the appeal and set aside the order, Annexure A-3. Hence, the present appeals. 4. We have heard learned counsel for the parties. 5. The issue that arises for consideration of this Court in these appeals is whether the respondent was entitled to claim full exemption in terms of Notification No. 8/2003-CE dated 1.3.2003 in respect of the goods manufactured by the ass .....

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djudication of the dispute between the parties. The said Clauses read thus:- 3. For the purposes of determining the aggregate value of clearances for home consumption, the following clearances shall not be taken into account, namely- (a) clearances bearing the brand name or trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 4. XX XX XX 4. The exemption contained in this notification shall not apply to specified goods bearing a brand name or t .....

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ces 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. Further, the relevant portion of Clause 4 of the aforesaid notification stipulates 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. It has been noted in clause 1 of the Table con .....

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notification, it was held that the specified goods bearing brand name or the trade name of another person, manufactured by the assessee and cleared on payment of entire duty would not be entitled to claim the benefit under the said notification. Simultaneously the specified goods manufactured in the brand name of the assessee were not excluded from availing the benefit of exemption under the said notification even though in case of the former goods, the assessee seeks to avail the Cenvat credit .....

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assessee by recording the underquoted findings which read thus:- ....Taking into consideration the facts of the matter in Ramesh Food Products case and bearing in mind, the pre-condition for availing the benefit of the notification No. 175/86-CE dated 01.03.86, it is abundantly clear that the manufacturer thereunder was given clear option to choose between the two benefits, one under the notification and another under the Modvat Scheme and not to avail both the benefits simultaneously. That is .....

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relation to such excluded goods provided they are cleared on payment of full duty. The notification being 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 .....

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s Court which have considered and interpreted these Notifications in the context of the issue that arises for determination in these appeals. In Commissioner of Central Excise, Ahmedabad v. Ramesh Food Products - 2004 (174) ELT 310 (S.C.), the assessee therein was engaged in the manufacture of biscuits under the brand name 'Ramesh' on his own account. It was also manufacturing, on job work basis, biscuits under the brand name of 'Cadbury' on behalf of M/s. Hindustan Coco Products .....

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that it was not permissible for the assessee to simultaneously opt for goods of one heading and MODVAT facility in respect of another heading. Assessee's appeal before the CEGAT was decided in favour of the assessee, which decision of CEGAT was upset by this Court in the judgment. This Court noted that the CEGAT had relied upon another judgment of Tribunal in Faridabad Tools Pvt. Ltd. v. Collector of Central Excise - 1993 (63) E.L.T. 759 which was specifically overruled by a larger Bench of .....

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e it clear that the exemption contained therein is not to apply to the specified goods bearing a brand name or trade name, whether registered or not, of any person, except under certain circumstances specifically stipulated therein. The Notifications also clarify that for the purpose of these Notifications, where the goods manufactured by a manufacturer bear brand name or trade name (whether registered or not) of any manufacturer of trade, they shall not be deemed to have been manufactured by su .....

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cluded for the purposes of determining the aggregate value of the clearances for home consumption; and (b) such products bearing brand names or trade names of third parties, even if manufactured by the SSI Unit, are not eligible for any exemption and excise duty thereupon has to be paid. Once we understand the scheme of the Notifications in the aforesaid perspective, which according to us is the only manner in which it has to be understood, it becomes apparent that so far as manufacture of brand .....

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inputs which were used for manufacture of such goods as on those inputs also excise duty was paid. To put it otherwise, these branded goods manufactured by the SSI Units meant for third parties are regulated by the normal provisions of excise law and will have no bearing or relevance insofar as availing the benefit of those exemption notifications in respect of its own products manufactured by the SSI Units is concerned. 11. In all fairness to learned counsel for the appellant, it would be imper .....

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ribunal in that case was of the year 1998 and it had relied upon its earlier judgment in Faridabad Tools case, which was decided in the year 1993, without realising that the said judgment had been overruled by a larger Bench of the Tribunal in Kamani Foods case, decided in the year 1995. (b) In view of the above, this Court was influenced by the fact that smaller Bench of the Tribunal, while giving the decision which was impugned before it, was bound to follow the judgment of the larger Bench as .....

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ion which reads as under:- In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 85/85- Central Excises, dated the 17th March, 1985, the Central Government hereby exempts the excisable goods of the description specified in the Annexure below and falling under the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), (hereinafter r .....

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h of the duty of excise leviable thereon which is specified in the said Schedule [read with any relevant notification issued under sub-rule (1) of Rule 8 of the said Rules or sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944) and in force for the time being] as is equivalent to an amount calculated at the rate of 10% ad valorem: (ii) in any other case from the whole of the duty of excise leviable thereon : Provided that the aggregate value of clearances of the sp .....

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by the assessee with its own brand and do not deal with the situation where, in addition, the assessee/manufacturer also manufactures the goods of third parties on job work basis. It goes without saying, and does not need much elaboration, that in respect of its own goods manufactured by the SSI Unit, it can either claim exemption from the excise duty or CENVAT credit, and not both. That is the clear message of sub-clauses (i) and (ii) of clause (a) of para 1 of the Notification. (e) Distinctio .....

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