2018 (10) TMI 158 - AT - Central Excise

Tribunal rules in favor of manufacturer in exemption denial case.

Kajal Print & Pack (Pvt) Ltd Sunil P Rui Versus Commissioner of Central Excise Mumbai – V

The Tribunal ruled in favor of the appellant, a manufacturer of printed stationary items, regarding the denial of exemption under notification 8/2003-CE ... SSI Exemption - manufacturers of packaging with designs with brand name - appellant was denied eligibility to exemption on the ground that ‘catch cover’ manufactured by them was not specifically enumerated in the incorporated provision - benefit of N/N. 47/2008-CE dated 1st September 2008 - Held that:- It would appear from the amendment to the notification, and the subsequent exemption under section 11C of Central Excise Act, 1944, that legislative approval for exclusion from exemption did not intend to cover ‘packaging’ manufacturers in the small scale sector who, by the very nature of their activity, were, undoubtedly, an ancillary but, undoubtedly, in the small-scale sector. The exclusion from exemption is applicable to goods which bear a brand name and the exclusion from coverage under these exclusion is limited to certain categories. There is no definition of ‘printed cartons of paper or paperboard’ either in the notification or elsewhere. Accordingly, this description should conform to such as is commonly understood, and intended, in the industry - there is no reason to distinguish ‘printed cartons of paper or paperboard’ from ‘catch cover’ and to deny eligibility to exemption. Appeal allowed - decided in favor of appellant. Issues:- Denial of exemption under notification 8/2003-CE to manufacturers of packaging material with designs for non-entitled entities.- Interpretation of notification 47/2008-CE regarding exemption for small-scale industries manufacturing packing material.- Eligibility of 'catch cover' as a packing material for exemption.- Comparison of 'catch cover' with 'printed cartons of paper or paperboard' for exemption eligibility.Analysis:The judgment addresses the denial of exemption under notification 8/2003-CE to manufacturers of packaging material with designs for non-entitled entities. The appellant, a manufacturer of printed stationary items, claimed exemption under this notification but faced denial due to the incorporation of designs for non-entitled entities on the packaging material. The controversy over the withholding of exemption benefits for such manufacturers led to the denial of exemption, despite the appellant's compliance with registration and duty payment since October 2004.Regarding the interpretation of notification 47/2008-CE, the exemption for small-scale industries manufacturing packing material was discussed. The amendment to the notification included clause (e) in paragraph 4, allowing exemption for small-scale industries manufacturing packing material bearing marks of non-entitled entities. However, the appellant was denied exemption eligibility for 'catch cover' manufacturing, as it was not specifically mentioned in the provision.The eligibility of 'catch cover' as a packing material for exemption was a crucial issue in the judgment. The appellant argued that 'catch cover' should be considered a packing material similar to cartons and, therefore, eligible for the exemption. The Tribunal analyzed the legislative intent behind the exemption and the subsequent exclusion from exemption under section 11C of the Central Excise Act, 1944. It was noted that the exclusion from exemption applied to goods bearing a brand name, and the exclusion was limited to certain categories. The Tribunal concluded that 'catch cover' is a packaging material and should not be distinguished from 'printed cartons of paper or paperboard' for exemption eligibility.In comparing 'catch cover' with 'printed cartons of paper or paperboard' for exemption eligibility, the Tribunal emphasized the lack of a specific definition for 'printed cartons of paper or paperboard' in the notification or elsewhere. The description of these items should align with industry standards and common understanding. As 'catch cover' falls within the scope of packaging materials, the Tribunal found no reason to deny exemption eligibility based on this distinction. Consequently, the impugned orders were set aside, and the appeals were allowed.