2016 (6) TMI 16 - HC - Central Excise

Court affirms SSI exemption for own brand while claiming Cenvat Credit, citing precedent.

The court upheld the Tribunal's interpretation of Notification No. 8/2003-CE, allowing the respondent to claim SSI exemption for their own branded goods ... Entitlement to claim full SSI exemption in terms of Notification No. 8/2003-CE dated 1.3.2003 - goods manufactured under his own brand name even though Cenvat Credit was availed by it in respect of the duty paid on the inputs utilized in the manufacture of those goods which bear brand name of another person and are cleared on full payment of duty - Held that:- In the present scheme manufacturer has been given clear option to opt both of the two benefits i.e. (a) to avail the full SSI exemption without Cenvat Credit and (b) payment of duty on Goods manufacturing under the brand name of others with availing cenvat credit. The issue in the present appeals is governed by the ratio of the Supreme Court in Commissioner of C. Ex., Chennai v. Nebulae Health Care Ltd. [2015 (11) TMI 95 - SUPREME COURT] and the judgment in Commissioner of Central Excise, Ahmedabad v. Ramesh Food Products [2004 (11) TMI 103 - SUPREME COURT OF INDIA] had been rightly distinguished by the Tribunal on the same lines as has been noticed by the Apex Court in the aforesaid pronouncement. Accordingly, there is no error in the approach of the Tribunal which may warrant interference by this Court. - Decided against the revenue Issues Involved:1. Interpretation of Notification No. 8/2003-CE dated 01.03.2003.2. Entitlement to Cenvat Credit while availing SSI exemption.3. Distinction between own branded goods and goods bearing another's brand name.4. Applicability of the Supreme Court's judgment in Commissioner of Central Excise, Ahmedabad vs. M/s Ramesh Food Products.Issue-wise Detailed Analysis:1. Interpretation of Notification No. 8/2003-CE dated 01.03.2003:The court examined whether the respondent could claim full exemption under Notification No. 8/2003-CE for goods manufactured under its own brand while availing Cenvat Credit for inputs used in manufacturing goods bearing another's brand name. The notification's relevant clauses were scrutinized, specifically Clause 3(a), Clause 4, and Clause 1 of the Table. Clause 3(a) excludes clearances bearing another's brand from the aggregate value for home consumption. Clause 4 denies exemption to goods bearing another's brand name. Clause 1 sets a nil duty rate for the first clearances up to Rs. 100 lakhs.2. Entitlement to Cenvat Credit while availing SSI exemption:The Tribunal found that goods manufactured under another's brand name and cleared on full duty payment do not preclude the manufacturer from availing SSI exemption for their own branded goods. The court upheld this interpretation, noting that the notification does not restrict manufacturers from claiming both benefits simultaneously for different categories of goods.3. Distinction between own branded goods and goods bearing another's brand name:The Tribunal and the court emphasized that the notification allows manufacturers to avail SSI exemption for their own branded goods while using Cenvat Credit for inputs used in manufacturing goods bearing another's brand, provided full duty is paid on the latter. This distinction was critical in adjudicating the respondent's entitlement to exemptions and credits.4. Applicability of the Supreme Court's judgment in Commissioner of Central Excise, Ahmedabad vs. M/s Ramesh Food Products:The Tribunal distinguished the present case from the Ramesh Food Products case, where the Supreme Court ruled against simultaneous benefits under a different notification. The court supported the Tribunal, noting that the Nebulae Health Care Ltd. case provided a more relevant precedent. The Supreme Court in Nebulae Health Care Ltd. clarified that branded goods manufactured for third parties do not affect the SSI exemption for the manufacturer's own goods, allowing Cenvat Credit for inputs used in third-party branded goods.Conclusion:The court concluded that the Tribunal correctly interpreted Notification No. 8/2003-CE, allowing the respondent to claim SSI exemption for their own branded goods while availing Cenvat Credit for inputs used in goods bearing another's brand name. The judgment in Ramesh Food Products was rightly distinguished, and the approach was consistent with the Supreme Court's ruling in Nebulae Health Care Ltd. Consequently, the appeals were dismissed, and the questions of law were answered in favor of the assessee.