2012 (12) TMI 921 - AT - Central Excise

Manufacturing Units Combined for SSI Exemption

The Tribunal held that the chemical division of a main manufacturer was not eligible for Small Scale Industry (SSI) exemption on excisable goods as it ... SSI exemption - Limit to SSI Exemption - Revenue contends that respondent are not a separate manufacturer inasmuch as they are a division of the main manufacturer M/s. Premium Suitings (P) Ltd., UPSIDC Industrial Area, Jainpur, Kanpur and as such the aggregate value of the clearances of all excisable goods for home consumption from one or more factories of the respondent during the previous financial year were in excess of the threshold limit - Held that:- The benefit of SSI exemption is available to a manufacturer manufacturing the specified goods only if the clearances of all excisable goods manufactured by that manufacturer in one or more factories and cleared for home consumption during the previous financial year is within the specified threshold limit, which during the period of dispute was Rs. 3,00,00,000/- (Rupees Three crores). In this case, it is undisputed that the respondent i.e. chemical division of M/s. Premium Suitings (P) Ltd. is part and parcel of the main manufacturer engaged in manufacture of textiles and, therefore, the respondent unit i.e. chemical division of M/s. Premium Suitings (P) Ltd. cannot be looked at in isolation for the purpose of determining its eligibility for SSI exemption and for this purpose, the clearances for home consumption of all excisable goods of the respondent unit have to be clubbed with the clearances of excisable goods manufactured by other factories of the respondent-company during the previous financial year and on that basis, the respondent would not be eligible for SSI exemption. We, therefore, hold that the impugned order extending the benefit of SSI exemption to the respondent unit is contrary to the provisions of law and is not sustainable - Decided in favour of Revenue. Issues:1. Eligibility for SSI exemption based on manufacturing units being considered separate entities.2. Interpretation of the provisions of law regarding SSI exemption eligibility.3. Clubbing of clearances for home consumption of excisable goods from multiple factories for determining SSI exemption eligibility.Analysis:The case involved a dispute over the eligibility of a respondent, a chemical division of a main manufacturer, for Small Scale Industry (SSI) exemption on excisable goods manufactured. The Revenue contended that the respondent was not an independent manufacturer but a division of the main manufacturer, making them ineligible for SSI exemption. The Assistant Commissioner upheld this view, leading to a demand for short-paid duty and penalties. However, the Commissioner (Appeals) overturned this decision, stating that the chemical division was independent and eligible for SSI exemption. The Revenue appealed this decision.During the proceedings, the Revenue argued that the chemical division should not be treated as a separate manufacturer but as part of the main manufacturer engaged in textile manufacturing. They emphasized that the clearances of all excisable goods from all factories should be considered for SSI exemption eligibility. They also challenged the applicability of a previous court judgment cited by the Commissioner (Appeals).On the other hand, the respondent clarified that while having a separate Central Excise registration, they shared common PAN and Sales Tax registrations with the main manufacturer for Income-tax and sales tax purposes. After considering both sides' submissions and reviewing the records, the Tribunal concluded that the chemical division could not be viewed independently for SSI exemption eligibility. The clearances for home consumption of all excisable goods from all factories of the respondent had to be combined, making them ineligible for SSI exemption. Consequently, the Tribunal set aside the Commissioner (Appeals) order, reinstated the original Adjudicating Authority's decision, and allowed the Revenue's appeal.In essence, the judgment focused on the interpretation of the law regarding SSI exemption eligibility concerning the treatment of manufacturing units as separate entities and the clubbing of clearances from multiple factories for determining eligibility. The Tribunal's decision clarified that in this case, the chemical division could not be considered independently for SSI exemption, leading to the reversal of the Commissioner (Appeals) decision.