2014 (8) TMI 967 - AT - Central Excise

Government Cooperative Society qualifies for SSI exemption under notification criteria

COMMR. OF CE., JAIPUR-I Versus SAHAKARI KITNASHAK DAWAI FACTORY

The Tribunal upheld the respondent's eligibility for SSI exemption under notification No. 9/2003-C.E., ruling that the clearances of the respondent's unit ... SSI Exemption - Clubbing of clearances - Held that:- Respondent unit and SPAF, Jaipur are owned by RAJFED. - The monitoring of the performance of the RAJFED as well as the respondent unit is also looked after by a sub-committee constituted by the State Government headed by the Chief Secretary to the Government of Rajasthan and the Management Staff has also been appointed by the sub-committee. Therefore, the respondent unit is a company owned and controlled by the Government of Rajasthan. In terms of para 5(E) of the Notification No. 9/2003-C.E., “where the specified goods are manufactured in a factory belonging to or maintained by the Central Government or by a State Government, or by a State Industries Corporation, or by a State Small Industries Corporation or by the Khadi and Village Industries Commission, then the value of the excisable goods cleared from such factory alone shall be taken into account. - Since the respondent unit, is a unit owned and by the controlled Government of Rajasthan, and this fact is not disputed in the grounds of appeal. In our view, all the clearances of the respondent’s unit cannot be clubbed for the purpose of SSI exemption with the clearances of SPAF, Jaipur. Therefore, is no infirmity in the impugned order. - Decided against Revenue. Issues:1. Eligibility for SSI exemption under notification No. 9/2003-C.E.2. Clubbing of clearances for determining eligibility.3. Interpretation of para 5(E) of Notification No. 9/2003-C.E.4. Ownership and control of the respondent unit by the State Government of Rajasthan.Analysis:1. The respondent's eligibility for SSI exemption under notification No. 9/2003-C.E. was challenged by the department due to the ownership structure of the respondent's unit, which is owned by a Cooperative Society, RAJFED, owned by Cooperative Societies and the Rajasthan State Government. The department argued that the clearances of the respondent's unit should be clubbed with another unit owned by RAJFED, leading to a denial of the SSI exemption.2. The Commissioner (Appeals) set aside the Joint Commissioner's order, allowing the appeal based on the ownership and control structure of the respondent unit. The Commissioner relied on the certificate of the Registrar of Cooperative Societies, Rajasthan, certifying RAJFED as an agency of the State Government. The Commissioner also referred to a previous decision of the Hon'ble Rajasthan High Court to support the respondent's status as an agency of the State Government, thereby concluding that the respondent's unit should not have its clearances clubbed with another unit for the purpose of SSI exemption.3. The main contention revolved around the interpretation of para 5(E) of Notification No. 9/2003-C.E., which provides that the value of excisable goods cleared from a factory belonging to or maintained by the Central or State Government alone shall be taken into account for SSI exemption. The Tribunal found that since the respondent's unit is owned and controlled by the Government of Rajasthan, as established by the ownership structure and monitoring mechanisms, the clearances of the respondent's unit should not be clubbed with another unit for determining SSI exemption eligibility.4. The Tribunal emphasized that the respondent unit being owned and controlled by the Government of Rajasthan, as evidenced by the share capital structure and oversight by a sub-committee constituted by the State Government, qualifies it for the benefits under para 5(E) of the notification. Therefore, the Tribunal dismissed the appeal, upholding the decision that all clearances of the respondent's unit cannot be clubbed with another unit for the purpose of SSI exemption.