2017 (3) TMI 370 - AT - Central Excise

Tribunal Upholds Decision for Respondent in Tax Exemption Case

CCE & ST, Ludhiana Versus M/s Ocean Metals (P) Ltd. Gaushala Road, Jaitu, Punjab

The Tribunal upheld the Commissioner's decision in the case, ruling in favor of the respondent. It was determined that the respondent did not need to ... SSI exemption - valuation - sale of branded goods to related person - Held that: - It is admitted that the respondent is not clearing 100% goods to the related person. In that circumstances, the Rule 9 read with Rules 8 are not applicable. The Respondent cleared goods to various customers and they have cleared the goods to SEPL and affix their brand name on the pipes. The respondent did not include to claim SSI exemption the pipes cleared to SEPL - Held that: - the clause 4 of SSI Exemption notification is not applicable to the goods cleared by the respondent as branded goods - Therefore, the value of such clearances goods cannot be added to arrive on the aggregate value clearance during the respectively period. Appeal dismissed - decided against Revenue. Issues:- Whether the respondent wrongly availed the benefit of certain notifications by not including the value of clearance of goods declared as branded goods cleared to related personsRs.- Whether the valuation of goods cleared to related persons should be done as per specific valuation rulesRs.- Whether the respondent was required to include the clearance made to a related person while claiming a specific exemptionRs.- Whether the circular regarding branded goods applies to the case at handRs.- Whether the exemption notification applies to goods bearing a brand name of another personRs.Analysis:1. The case involved an appeal by the Revenue against an order where the Commissioner set aside proceedings against the respondent for alleged wrongful availment of benefits under specific notifications due to not including the value of clearance of branded goods to related persons. The respondent was engaged in manufacturing non-alloy steel pipes and tubes and was accused of not following valuation rules and eligibility criteria for SSI exemption under relevant notifications.2. The Revenue argued that the respondent should have included the value of branded goods in their total clearance value to determine eligibility for exemptions. They also contended that most clearances were made to related persons, necessitating valuation as per specific rules. The Revenue challenged the Commissioner's decision to drop proceedings against the respondent.3. The Tribunal noted that the respondent did not clear 100% of goods to related persons, making the specific valuation rules inapplicable. The Commissioner's decision was supported by the finding that the valuation rules were not applicable to the case, leading to the dropping of proceedings on the issue of undervaluation.4. The Revenue further claimed that the respondent should have included clearances made to a related person while claiming a specific exemption. However, the Tribunal found that the circular cited by the Revenue did not apply to the case, as it pertained to goods not sold in the market as branded goods.5. Lastly, the Tribunal examined whether the exemption notification applied to goods bearing a brand name of another person. Referring to a Supreme Court decision, the Tribunal upheld that the exemption is lost if goods bear a brand name of another, emphasizing strict compliance with notification terms. Consequently, the Tribunal dismissed the Revenue's appeal, finding no infirmity in the Commissioner's decision.In conclusion, the Tribunal upheld the Commissioner's decision, emphasizing the inapplicability of specific valuation rules and the strict compliance required for claiming exemptions under relevant notifications.