2018 (7) TMI 1047 - AT - Central Excise

Tribunal grants appellant relief under Small Scale Exemption, setting aside unjust Central Excise duty demand

The Tribunal allowed the appeal, setting aside the Order-in-Appeal and ruling in favor of the appellant. It held that the appellant was entitled to the ... Small Scale exemption - determination of turnover upto ₹ 4 crores of previous financial year - The appellant has availed the said exemption during the Financial Year 2007-08 whereas Revenue alleged that during Financial Year 2006-07 appellant had exceeded the said limit of aggregate value of clearance for home consumption - N/N. 08/2003-CE dated 01.03.2003 - Held that:- There was no justification in including the value of clearance of ₹ 6,69,600/- during the Financial Year 2006-07 since the same were returned during the month of March, 2007, as provided by provisions under Rule 16 of Central Excise Rules, 2002 - During the Financial Year 2006-07 the value of clearance was less than the threshold value of ₹ 4 crores. Therefore, the appellants were eligible for availment of Small Scale Exemption under N/N. 08/2003-CE dated 01/03/2003 for the Financial Year 2007-08. Demand set aside - appeal allowed - decided in favor of appellant. Issues:1. Interpretation of Small Scale Exemption under Notification No.08/2003-CE2. Computation of value of clearance for home consumption3. Application of Rule 16 of Central Excise Rules, 20024. Justification for Central Excise duty demand and penalty imposition5. Legal validity of Order-in-Appeal No.162-CE/MRT-II/2011Interpretation of Small Scale Exemption under Notification No.08/2003-CE:The appeal involved a dispute concerning the Small Scale Exemption under Notification No.08/2003-CE. The appellant, engaged in the manufacture of Menthol and DMO, had exceeded the aggregate value of clearance for home consumption in a specific financial year. The condition for the exemption was that if the aggregate value of clearance exceeded a certain limit, the exemption would not apply in the subsequent financial year. The appellant claimed to have followed the rules and was eligible for the exemption in the subsequent financial year.Computation of value of clearance for home consumption:The Revenue alleged that the appellant had exceeded the value of clearance for home consumption in the financial year 2006-07. A show cause notice was issued demanding Central Excise duty. The appellant argued that the goods cleared during that year were returned for re-making, and therefore, the value of clearance should not be included in the computation. The Original Authority confirmed the demand and imposed a penalty, leading to the appeal before the Commissioner (Appeals).Application of Rule 16 of Central Excise Rules, 2002:The appellant contended that the goods cleared during the financial year 2006-07 were returned for re-making under Rule 16 of the Central Excise Rules, 2002. Citing a precedent decision, the appellant argued that the value of the first-time clearance should not be counted in such cases. The Tribunal analyzed the situation and found no justification for including the value of clearance in the computation for that financial year.Justification for Central Excise duty demand and penalty imposition:The Revenue supported the impugned Order-in-Appeal, maintaining the demand for Central Excise duty. However, upon considering the arguments and perusing the records, the Tribunal found that the inclusion of the value of clearance for that financial year was unjustified. Relying on the precedent decision, the Tribunal held that the appellant was eligible for the Small Scale Exemption for the subsequent financial year, rendering the demand unsustainable.Legal validity of Order-in-Appeal No.162-CE/MRT-II/2011:The Tribunal set aside the impugned Order-in-Appeal and allowed the appeal filed by the appellant. It was concluded that the appellant was entitled to the Small Scale Exemption under Notification No.08/2003-CE for the subsequent financial year. The decision was based on the interpretation of the rules and the specific circumstances of the case, providing the appellant with consequential relief as per the law.