Tribunal rules in favor of appellant on SSI exemption eligibility under Notification No. 8/2003-CE. Pre-deposit waived.

The Tribunal found that the appellant had a strong prima facie case regarding eligibility for SSI exemption under Notification No. 8/2003-CE and the clubbing of clearances from different manufacturers. The requirement of pre-deposit under Section 35F was waived, but the appellant was directed to deposit Rs. 6,00,000 within 4 weeks to safeguard the revenue's interest.

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Issues Involved:
1. Eligibility for SSI exemption under Notification No. 8/2003-CE.
2. Clubbing of clearances from different manufacturers for determining SSI exemption eligibility.
3. Prima facie case for waiver of pre-deposit under Section 35F of the Central Excise Act, 1944.

Detailed Analysis:

1. Eligibility for SSI exemption under Notification No. 8/2003-CE:
The appellant is engaged in the manufacture of Ophthalmic and liquid orals (medicaments) and avails SSI exemption under Notification No. 8/2003-CE. The jurisdictional central excise officers found discrepancies between the clearances declared in the ER-I Returns and the balance sheets for the years 2007-2008 and 2008-2009. The department opined that the aggregate clearances for home consumption during 2007-2008 exceeded Rs. 4 Crores, making the appellant ineligible for SSI exemption for the year 2008-2009. A show cause notice was issued for the demand of differential duty amounting to Rs. 18,54,000/- along with interest and penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944. The original adjudicating authority confirmed the duty demand and imposed a penalty, which was later partially upheld by the Commissioner (Appeals) with a reduced duty demand of Rs. 12,36,000/-.

2. Clubbing of clearances from different manufacturers for determining SSI exemption eligibility:
The appellant argued that they have only one manufacturing unit at Allahabad and also get goods manufactured through other manufacturers under loan licence and job work agreements. The goods manufactured by other units were cleared on payment of duty and sold from the appellant's depot. The appellant contended that the value of clearances of goods manufactured under loan licence or job work agreements should not be clubbed with the clearances of their own goods for SSI exemption purposes. The Commissioner (Appeals) relied on para 4.2 of Chapter 2 of the CBEC Excise Manual of supplementary instructions for clubbing the clearances. However, the appellant argued that the clubbing done by the department is contrary to the provisions of the SSI exemption notification, which only requires clubbing of clearances from one or more factories of the same manufacturer or from a factory by one or more manufacturers.

3. Prima facie case for waiver of pre-deposit under Section 35F of the Central Excise Act, 1944:
The appellant pleaded for a waiver of the pre-deposit requirement, arguing that the difference between the balance sheet figures and the ER-I return figures was due to the inclusion of goods manufactured on job work or loan licence basis. The department opposed the stay application, citing a judgment of the Hon'ble Allahabad High Court in the appellant's own case. The Member (Technical) concluded that the appellant had a strong prima facie case, as the interpretation of para 4.2, Chapter 2 of the supplementary instructions adopted by the department was contrary to the provisions of the SSI exemption notification. The requirement of pre-deposit of duty demand, interest, and penalty was waived, and recovery was stayed till the disposal of the appeal. However, the Member (Judicial) directed the appellant to deposit Rs. 6,00,000/- within 4 weeks. The third Member agreed with the direction for pre-deposit, and the appellant was directed to comply.

Conclusion:
The judgment involved a detailed examination of the appellant's eligibility for SSI exemption, the clubbing of clearances from different manufacturers, and the requirement of pre-deposit under Section 35F. The Tribunal found that the appellant had a strong prima facie case and waived the requirement of pre-deposit, but ultimately directed a deposit of Rs. 6,00,000/- to safeguard the revenue's interest.

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