2016 (12) TMI 329 - AT - Central Excise

Supreme Court Upholds Small Scale Industry Exemption

M/s Vir Rubber Products Pvt. Ltd. Versus Commissioner of Central Excise, Thane-I

The Supreme Court allowed the Civil Appeal, upholding the appellant's entitlement to the Small Scale Industry (SSI) exemption under Notification No. ... SSI exemption - clubbing of clearances - whether the assessee is required to include the value of goods supplied to O.E. Manufacturer for the purpose aggregate value in a particular financial year or otherwise in order to become eligible for SSI exemption under Notification No. 1/93-CE dated 28.02.1993? - Held that: - reliance placed on the judgement of the case of Vir Rubber Products PO Ltd. Vs. Commissioner of Central Excise, Mumbai-III [2015 (4) TMI 353 - SUPREME COURT], whereby the Hon'ble Supreme Court has held that the appellant is entitled for exemption Notification No. 1/93-CE dated 28.02.1993 as amended by Notification No. 59/94-CE. In view of this judgment, the impugned order is became nonest. Since the matter came to rest on merit itself in view of above Hon’ble Apex Court judgment, we do not incline to go on the issue of re-quantification and limitation raised in the present appeal. We therefore set aside the impugned order and allow the appeal filed by the appellant. Issues:1. Eligibility for SSI exemption under Notification No. 1/93-CE dated 28.02.1993 based on turnover.2. Inclusion of value of goods supplied to O.E. Manufacturer in aggregate value for exemption.3. Appeal against adjudication order denying exemption.4. Tribunal's order remanding the matter for fresh adjudication.5. Civil Appeal filed before the Supreme Court.6. Impugned order passed by adjudicating authority invoking extended period of demand.Analysis:1. The appellant, engaged in manufacturing parts of Motor Vehicles under Chapter 87 & Chapter 40, claimed SSI exemption under Notification No. 1/93-CE based on their turnover. They cleared goods under own brand name 'Vir' while also manufacturing original equipments for Automobiles Manufacturing units. The department disputed the exemption claiming goods bearing markings of O.E. Manufacturer should be included in the aggregate value of Rs. 3 crores, rendering the appellant ineligible for SSI exemption.2. The adjudicating authority confirmed the demand on appellant's own branded goods, denying the exemption. The Tribunal initially held that goods manufactured for O.E. are not branded goods, but remanded the matter for fresh adjudication on various issues including limitation, MODVAT credit, cum duty price, and penalty. The appellant then filed a Civil Appeal before the Supreme Court challenging the Tribunal's order.3. Despite the appellant's absence, the Tribunal considered the issue of limitation raised in the appeal. Upon review, it was found that the Hon'ble Supreme Court had already ruled in a related case that the appellant was entitled to the exemption under Notification No. 1/93-CE. Citing this judgment, the Tribunal set aside the impugned order and allowed the appeal, as the matter was resolved on merit by the Supreme Court decision.4. The Tribunal's decision was pronounced on 05-10-2016, effectively resolving the issue of eligibility for SSI exemption under the specific notification, based on the interpretation provided by the Supreme Court judgment in a related case. The appellant's entitlement to the exemption was upheld, leading to the allowance of the appeal and the setting aside of the previous adjudication order that denied the exemption based on the inclusion of goods supplied to O.E. Manufacturer in the aggregate value calculation.