2006 (2) TMI 409 - AT - Central Excise

Appellants' Manufacturing Activities Qualify for Duty Exemption

The Tribunal upheld the appellants' claim for the benefit of Notifications No. 83/94 and 84/94 CE, determining that their manufacturing activities on job ... SSI Exemption - Goods manufactured through loan licensee and job worker Issues:Appeal regarding manufacturing of medicines on job work basis, benefit of Notifications No. 83/94 and 84/94 CE, denial of benefit due to lack of factory setup, clubbing of clearances for duty liability determination, denial of SSI benefit to loan licensee, labelling and packing processes carried out by job workers, eligibility for job work notification, inclusion of job work in assessable value, requirement of Central Excise registration for loan licensee.Issue 1: Manufacturing on Job Work Basis and Benefit of Notifications:The appellants manufactured medicines on job work basis for M/s. DUMED Labs under Loan Licensee. They claimed the benefit of Notifications No. 83/94 and 84/94 CE, which exempted goods manufactured on job work basis from duty. The dispute arose as the appellants had not obtained a license or declared the activity to the Department. The appellants argued that their activities fell under Chapter Note V of Chapter Heading 30, constituting manufacture. The Tribunal agreed, stating that labelling and re-labelling activities qualified as manufacturing. Since the clearances were within the exemption limit, the benefit of the notifications could not be denied based on the lack of a factory setup or non-declaration.Issue 2: Clubbing of Clearances and Duty Liability:The Commissioner had clubbed clearances of goods manufactured by the appellants and the loan licensee to determine duty liability under the SSI Notification. The appellants contended that they had cleared goods under their brand name, following the value limits specified in other notifications. The Tribunal noted that the appellants' activities were within the exemption limits, and the Department did not claim that the clearances exceeded the prescribed value. The clubbing of clearances and denial of SSI benefit were found unjustified, leading to the appeal being allowed.Issue 3: Eligibility for Job Work Notification and Central Excise Registration:The Revenue challenged the grant of benefit under the Notifications, arguing that the job work activities did not meet the requirements. The Tribunal disagreed, emphasizing that the processes like labelling and packing were carried out by the job workers, satisfying the job work criteria. It was established that the goods were manufactured at the premises of the job workers, justifying the eligibility for the job work notification. Additionally, it was clarified that the loan licensee did not need Central Excise registration as their clearances fell within the exemption limit, ultimately dismissing the Revenue's appeal.In conclusion, the Tribunal upheld the appellants' claim for the benefit of Notifications No. 83/94 and 84/94 CE, emphasizing that their activities constituted manufacturing under the relevant provisions. The decision highlighted the importance of adherence to exemption limits and the criteria for job work eligibility, ultimately setting aside the Commissioner's findings and dismissing the Revenue's appeal.