TMI Blog2017 (7) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... ods were also treated as removal for export through merchant exporter and the same was held not to be includible in the domestic clearance. With the views taken in the above judgments, the interpretation of the adjudicating authority that in the appellants case the goods were not directly exported from the appellants unit is incorrect and the same cannot be accepted - Appeal allowed - decided in favor of the assessee. - E/2344 & 2369/06 - A/88161-88162/17/EB - Dated:- 28-6-2017 - Shri Ramesh Nair, Member (Judicial) And Shri Raju, Member (Technical) Shri D.H. Nadkarni, Advocate for Appellant Shri V.K. Agarwal, Addl. Commissioner (AR) for Respondent ORDER Per: Ramesh Nair The facts of the case are that the appellants are engaged in the manufacture of Stainless Steel Utensils, Kitchenware and Cutlery Articles falling under Chapter Heading 7323.90 and 8215.00 of Central Excise Tariff Act, 1985. The appellants are availing value based SSI exemption. They are supplying the goods to merchant exporter in addition to the clearances made to their domestic buyers. They have not included the clearance value in respect of supply made to merchant exporter treating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Port of Export or it is first going to the merchant exporter, thereafter dispatch to port of export, does not make any difference as far as the fact that the goods have actually been exported. He further submits that not only the Form 14B/Form H were issued by the merchant exporters but there are other documents such as merchant exporters export invoices, Bill of Lading etc. also prove that the goods supplied by the appellant have been exported through merchant exporter. The only reason for rejecting these documents by the adjudicating authority that the proforma invoice issued by merchant exporter are pre-dated i.e. before the clearance of the goods from the appellants premises. In this regard, he submits that it is general practice that for the purpose of processing the export in the Custom House, the exporter has to submit documents such as proforma invoice, Bill of Lading etc. even before arrival of the goods to the Port. Therefore, merely because the merchant exporters invoice is pre-dated, it cannot be rejected as proof of export. He submits that all other particulars i.e. quantity, specification of the goods were tallied between the export documents and invoices issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice is not related to the proof of export claimed by the appellant. Therefore, on both the counts, the appellant failed to prove export of goods and demand is rightly confirmed by the adjudicating authority. 4. We have carefully considered the submissions made by both sides. We find that the appellant is availing SSI exemption. Accordingly, they are not registered with the Central Excise. The Board vide Circular No.648/39/2002-CX dated 25.7.2002 had prescribed simplified export procedure for small scale manufacturer. The Boards Circular is reproduced below: - I am directed to refer to Part III of Chapter 7 of Central Excise Manual issued in September, 2001 relating to Simplified Export Procedure for exempted units and to say that representations from small scale manufacturers have been received by Board with a request to accept Sales Tax documents as proof of export for the supplies made to other domestic manufacturers who use the said goods in manufacture/packing of goods for export. Further, it has also been requested that the value of such clearances may be excluded from the total value of domestic clearances for the purpose of availing SSI exemption. 2. The mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter exported, the same shall be treated as export and value thereof in not includible in the aggregate value of clearance for the purpose of SSI exemption. Therefore, the interpretation of the adjudicating authority is very narrow and defeats the entire objective of the simplified export procedure prescribed by the Board. It is very obvious that in case of merchant exporter, the manufacturer supplier does not have locus-standi to export the goods directly from his factory. It always happens that first goods purchased by the merchant exporter and thereafter merchant exporters do all the procedures such as preparation and filing of documents for export to the Customs authority. Therefore, the assumption of the adjudicating authority that the goods should have been exported directly from the appellants units is misleading of the clarification given in the Boards Circular. In our considered view, if the supplies made by the appellant get correlated with the details bearing in the Sales Tax Form H and/or Form 14B, the same must be accepted as proof of export and neither any duty can be demanded on such clearances nor the same is includible in the aggregate clearance value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of these documents, I am of the opinion that the assessee is entitled for deduction of the value of hangers cleared to these units from the total value of clearances in terms of Notification No.47/94. 5 . Revenue in their appeal before the Commissioner (Appeals) contended that the appellants had cleared the Plastic Hangers to various units (buyers) who have exported their own goods viz. Garments with hangers. Thus, the assessee had not directly exported the goods viz. Plastic Hangers from their factory as required in the aforesaid Boards circular. 7. On a plain reading of the Boards circular, we find that the dispute relates to acceptance of sales tax documents as proof of export by the exempted SSI units. The Board has clarified that the documents prescribed by the Sales Tax Department viz. H-Form or ST-XXII Form or any other equivalent Sales Tax Form will be accepted as proof of export. In the present case, Revenue has not disputed that the appellant placed sufficient material in the nature of H-Form or ST-XXII Form, Sales Tax Assessment Order as proof of export. There is no dispute that the Hangers were exported with garments by the merchant exporter. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of this Tribunal in the case of Vadapalani Press (supra), wherein para 4.1.2, Chapter 7 of the Central Excise Manual of Supplementary Instructionswas also considered alongwith certain circulars of the CBEC and it was held that the assessee in that case was entitled to reckon clearances of the subject goods (packing materials) to merchant-exporters as clearances for export and hence to exclude the same from computation of aggregate value of clearances of specified goods for home consumption under the relevant SSI exemption notifications. The decision rendered in Vadapalani Presss case was not challenged by the department. On the other hand, it was consistently followed by this Tribunal in similar cases such as Amar Packaging (supra) and Universal Packaging (supra) . Nobody has claimed that any of the decisions was reversed by the competent appellate court. This very Bench followed the ratio of Vadapalani Presss case in Final Order No.A-336-337/2010 dated 9-9-2010 in the case of Universal Packaging (supra) and the said final order also appears to have been accepted by the Revenue. The department has no case that the facts of the present case are materially different from thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -CX dt. 20-5-1996 and No. 648/39/2002-CX. dated 25-7-2002 and para 4.1.2, Chapter 7 of the Central Excise Manual of Supplementary Instructions 2003-04. Para 4.1.2 ibid reads as under :- In the case of export through merchant-exporter the document prescribed by Sales Tax Department will be accepted as the proof of export. Sales made by manufacturer of the goods to the merchant-exporter which ultimately are exported are exempt from Central Sales Tax. The Sales Tax Department issues booklet to the merchant-exporters containing serially numbered H-Forms/ST-XXII form or equivalent Sales Tax form. After the goods have been exported by the merchant-exporters, the latter issues these forms to the manufacturers of the goods. The merchant-exporters in turn have to account all these serially numbered forms to the Sales Tax Department by furnishing a proof that the goods have been exported out. These proofs are in the form of presentation of the Shipping Bill duly completed by the customs, bill of landing, foreign exchange remittance certificates etc. The liability of the manufacturers to the Central Sales Tax gets discharged only when they submit these forms to the Sales Tax Department. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsby the appellants to the said customers was a sale in the course of export of the goods out of India. The above rule contemplated export of the goods by the purchaser. By no stretch of imagination can it be said that the above rule contemplated retention of possession of the goods by the dealer (appellants in the present case) for its direct exportation from their own premises by the buyer (M/s. A.V. Thomas Co. or other similar customer in this ease). If the very physical export of the goods sold by the appellants to their customers is required to be made from the appellants premises, why should the appellants be required to gather proof of export (in the form of Form-H certificate) from their customer We have perused a specimen Form-Hcertificate issued by M/s. A.V. Thomas Co. to the appellants. This document (No. 107 dated 3-1-2005) cerfified as under :- Certified that the goods the Particulars whereof have been specified in items (1) and (2) of the Schedule below supplied in pursuance of my/our Purchase Order No. (ANNEXURE ENCLOSED) Purchased from you as per bill/cash memo/Challan No. (ANNEXURE ENCLOSED) dated (ANNEXURE ENCLOSED) for ₹ 88,64,004.15 have been utiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port procedure for SSI units. Where the export of goods cleared from SSI unit was effected through a merchant-exporter, the certificate in Form-H issued by the latter was accepted as proof of export and it was provided that, in case clearances from SSI unit for home consumption plus clearance for export, where proof of export was not furnished within 6 months, exceeded exemption limit, they should take Central Excise registration and follow the regular A.R. 4/A.R. 5 procedure. Where proof of export was furnished within 6 months, the clearances made for export were not to be added to clearances for home consumption. Circular No.648/39/2002-CX. affirmed the position and further clarified that the above facility was available only in respect of exempted units which undertook exports themselves or through merchant-exporters. Ld. SDR argued that, for the above benefit, the SSI unit must be an exempted unit, i.e. unregistered unit, and the export must be made either directly or through merchant-exporter. Neither of the Notifications speaks of registration of SSI unit. In the SSI scheme, a manufacturing unit is said to be exempted unit for a given financial year if it has enjoyed SSI ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Notification No. 121/94-CE in respect of the goods cleared by them for home consumption. The department alleged that the benefit would not be available to the party inasmuch as they had not followed Chapter X procedure as required under the above notification. Before the Apex Court, the party pleaded substantial compliance. This plea was rejected. In para 34 of the judgment relied on by the Jt. CDR, their Lordships observed to the effect that the object and purpose of the procedure laid down in Chapter X procedure and the Central Excise Rules, 1944 were not to be overlooked. In another part of its order, the Apex Court noted that the case on hand was distinguishable from that of Thermax Pvt. Ltd. v. Collector, 1992 (61) E.L.T. 352 (S.C.). The learned Jt. CDR has today submitted that the Tribunals decision in the case of Vadapalani Press and other similar cases does not reflect the correct law as it was based on the Apex Courts decision in the case of Thermax Pvt. Ltd. (supra) , which has been held to be inapplicable in the case of Hari Chand Shri Gopal. In the case of Hari Chand Shri Gopal , the Apex Court noted the facts of Thermax Pvt. Ltd. and found the same to be di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat could be relaxed by the concerned authority when the other evidence regarding proof of export has been submitted. In view of the foregoing discussion, I set aside the impugned order and allow the appeal with consequential relief to the appellants. 5.3 In the case of Merry (supra), this Tribunal has observed as under: - 4. We have considered the submission. We find that though the Commissioner has referred to some discrepancies in the export documents in Para 26 of his order, he has in Para 27 not questioned the export of the goods but has only held that since prescribed procedure was not followed for export, etc goods could not have been cleared without payment of duty. The discrepancies pointed out by him relates to some additional items mentioned in the shipping bill. These were explained by the ld. Advocate for the appellants as additional items procured by the merchant exporter through some other manufacturers and was in addition to the garments received from the appellant. The number of pieces mentioned in the invoices and in the shipping bills tally with each other. We find the other items are additional items which cannot mean that the goods in question w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bills of Lading, Sales Tax forms like FORM-H, FORM-G1 etc. to prove that the cartons cleared by the assessee were actually exported. We find that in a similar factual situation, the Tribunal held in Vadapalani Press case that the sales tax forms evidencing sale of goods in the course of export were to be accepted as proof of export of goods manufactured by SSI unit, as per the Boards circular ibid. Had the learned Commissioner perused the Tribunals judgment for a moment, she would, in all likelihood, have been convinced that the assessees case stood squarely covered by that judgment. 6. Paragraphs 5 and 6 of the judgment in Vadapalani Press case are reproduced below: 5. After giving careful consideration to the submissions, we have found substance in the claim of the appellants that CBEC themselves had accepted Form-H certificates as proof of export vide Circulars No. 212/46/96-CX., dt. 20-5-1996 [reported in 1996 (14) RLT M84] and No. 648/39/2002-CX., dated 25-7-2002 [reported in 2002 (51) RLT M48] and para 4.1.2, Chapter 7 of the Central Excise Manual of Supplementary Instructions 2003-04. Para 4.1.2 ibid reads as under :- In the case of export through me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njointly with the relevant provisions of the Central Sales Tax (Registration and Turnover) Rules, 1957. Rule 10(a) of the CST (R T) Rules, 1957 reads as under : A dealer may, in support of his claim that he is not liable to pay tax under this Act in respect of any sale of goods on the ground that the sale of such goods is a sale in the course of export of these goods out of the Territory of India within the meaning of sub-section (3) of Section 5, furnish to the prescribed authority a certificate in Form Hduly filled, and signed by the Exporter along with the evidence of export of such goods. It is not in dispute that the appellants obtained certificates in Form H from M/s. A.V. Thomas Co. and other similar customers and used the same before the Sales Tax authorities for exemption from payment of sales tax on the cartons sold to such customers. The Revenue has no case that the appellants did not obtain such exemption from payment of sales tax. This would mean that the Revenue has accepted the fact that the sale of 'printed cartons' by the appellants to the said customers was a sale in the course of export of the goods out of India. The above rule contemplate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;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 Tribunals 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. 6. In Circular No. 212/96-CX., dated 20-5-1996, [reported in 1996 (14) RLT M84], the Board simplified the export procedure for SSI units. Where the export o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, the appellants must be held to have established their case for acceptance of Form-H certificates as proof of export in respect of the printed cartons supplied by them to M/s. A.V. Thomas Co. and other similar customers during the period of dispute. It is ordered accordingly. 7. Having found striking parallel between this case and the above case, we follow the ratio of the above decision of this Tribunal and hold that the assessee in the present case has established that the cartons in question were not cleared for home consumption but cleared for export in terms of Rule 19(1) of the Central Excise Rules and, therefore, such clearances are not likely to be reckoned as part of aggregate clearances for home consumption for the purpose of SSI Notification for any of the financial years comprised in the period of dispute. In the result, the assessee will have no liability to pay any amount of duty for any part of the period of dispute and consequently the partner of the firm will not be liable to be penalised. 8. The Commissioners order is set aside and these appeals are allowed. From all the above judgments, it can be observed that not only the goods exported as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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