2015 (11) TMI 95 - SC - Central Excise

Supreme Court affirms Tribunal decisions on exemption availed by assessees under relevant Notifications.

Commissioner of Central Excise, Chennai Versus M/s. Nebulae Health Care Ltd.

Commissioner of Central Excise, Chennai Versus M/s. Nebulae Health Care Ltd. - 2015 (325) E.L.T. 431 (SC) Issues Involved:1. Eligibility of concession/exemption from excise duty under specific Notifications for Small Scale Industrial Units (SSI Units).2. Impact of availing MODVAT/CENVAT credit on the eligibility for SSI exemption.3. Interpretation of various Notifications and their conditions regarding branded goods manufactured for third parties.Detailed Analysis:1. Eligibility of Concession/Exemption from Excise Duty:The appeals revolved around the eligibility of SSI Units for concessions or exemptions from excise duty under Notification Nos. 8/1999, 8/2000, 8/2001, 8/2002, and 8/2003. The respondents, who were assessees, fulfilled the eligibility conditions for SSI exemption under these Notifications. However, they also manufactured goods on a job work basis for third parties, bearing the brand names of those third parties. For such branded goods, the assessees paid the normal excise duty and availed MODVAT/CENVAT credit. The core issue was whether availing MODVAT/CENVAT credit for branded goods disentitled them from SSI exemption.2. Impact of Availing MODVAT/CENVAT Credit:The assessees availed SSI exemption for goods manufactured under their own brand names and paid excise duty for goods manufactured for third parties, availing MODVAT/CENVAT credit for the latter. The Department issued show cause notices arguing that availing CENVAT credit for inputs used in manufacturing branded goods for third parties disqualified the assessees from SSI exemptions. The Joint Commissioner confirmed this demand, and penalties and interest were imposed. However, the Central Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeals of the assessees, leading to the Department's appeals to the Supreme Court.3. Interpretation of Notifications:The Court examined the relevant provisions of the Notifications and previous judgments, particularly focusing on the interplay between sub-clauses and the overall scheme of the Notifications. The Notifications provided that clearances bearing the brand name or trade name of third parties were not to be included in the aggregate value of clearances for home consumption. Such branded goods were not eligible for SSI exemption, and excise duty was payable on them. The Notifications also allowed MODVAT/CENVAT credit for inputs used in manufacturing these branded goods.The Court noted that the judgment in *Commissioner of Central Excise, Ahmedabad v. Ramesh Food Products* was primarily influenced by the fact that the Tribunal had relied on an overruled decision. The Court distinguished the present case by emphasizing that the assessees did not claim CENVAT credit for their own branded goods but only for goods manufactured for third parties. The Notifications' scheme allowed for such differentiation, and the assessees' actions were in compliance with the provisions.Conclusion:The Supreme Court upheld the Tribunal's decisions, confirming that the assessees correctly availed the exemption under the relevant Notifications. The Court dismissed the Department's appeals, clarifying that the Notifications allowed for the simultaneous availing of SSI exemption for own branded goods and MODVAT/CENVAT credit for branded goods manufactured for third parties. The judgment reaffirmed that each Notification must be construed strictly on its own terms, and the assessees' interpretation was consistent with the Notifications' provisions.