2017 (4) TMI 1120 - AT - Central Excise

Board Circular on Export Procedures for SSI Units Upheld in Judicial Analysis

Commissioner of Central Excise, Mumbai-V Versus M/s. Edicom Mining Equipment Pvt. Ltd.

The Member (Judicial) analyzed a Board circular on export procedures for SSI units, determining that goods supplied to a merchant exporter under Form H ... SSI exemption - N/N. 8/2003-C.E. dated 01.03.2003 - clearance of goods against form H to the merchant exporter for onwards export - case of the department is that the clearances made under Form H to merchant exporter would not be eligible for deduction from the aggregate value of the exemption under N/N. 8/2003-C.E. dated 01.03.2003 - Held that: - goods were directly supplied by the respondent manufacturer from their factory to the merchant exporter and who in turn exported the goods. Therefore, condition of circular that the export should be through merchant exporter itself stands fulfilled - once the respondents have submitted the Form H against their supply made to merchant exporter his responsibility is over after production of proof of export to the department. Thereafter the clearance against Form H has to be treated as clearance of export and same is not includable in the aggregate value for the purpose of SSI exemption N/N. 8/2003-C.E - appeal dismissed - decided against Revenue. Issues:Interpretation of Board circular on export procedure for SSI units regarding goods supplied to merchant exporter for onward export under Form H.Analysis:The case involved the appellant, engaged in manufacturing pneumatic tools and spares, availing SSI exemption under notification no.8/2003-C.E. for domestic clearances and supplying goods under Form H to a merchant exporter for export. The central excise department contended that such clearances to the merchant exporter should not be deducted from the exemption value, leading to a duty demand. The adjudicating authority upheld the demand citing a Board circular requiring direct exports from the manufacturer's premises. However, the Commissioner (Appeals) allowed the appeal, prompting the revenue's challenge.The revenue, represented by the Asstt. Commissioner, argued that the goods sold to the merchant exporter were not directly exported from the manufacturer's premises, thus not meeting the circular's conditions for export clearance. On the other hand, the respondent's counsel, supported by the Commissioner (Appeals) decision, highlighted that in cases of export through a merchant exporter, direct export from the manufacturer may not be feasible, and the use of Form H as proof of export was justified.The Member (Judicial) analyzed the Board circular dated 25.07.2002, which outlined simplified export procedures for SSI units, accepting sales tax documents like Form H for exports through merchant exporters. The circular clarified that this facility was available for units exporting directly or through merchant exporters. In the present case, the goods were supplied by the manufacturer to the merchant exporter, who exported them, aligning with the circular's intent. The Member emphasized that the manufacturer's responsibility ends upon providing proof of export, and the clearance against Form H should be treated as an export clearance, not included in the aggregate value for SSI exemption.Referring to past judgments like Ramani Plastics Pvt. Ltd. and others, where supplies under Form H to merchant exporters were considered as export clearances, the Member upheld the Commissioner (Appeals) decision, dismissing the revenue's appeal. The judgment highlighted that the revenue's contention of direct exports from the manufacturer's unit was misleading and not in line with the Board's circular. The decision was pronounced on 17/04/2017, affirming the treatment of Form H clearances to merchant exporters as export clearances for SSI exemption purposes.