2019 (5) TMI 449 - AT - Central Excise

Tribunal grants relief to appellant by excluding clearances to sister concern from exemption limit calculation

The Tribunal set aside the Order-in-Appeal confirming duty demand against the appellant for exceeding the SSI exemption limit under Notification No. ... SSI Exemption - N/N. 08/2003 CE dt.1.3.2003 - clearance made by the appellant’s DTA unit to their 100% EOU and inclusion of such amount in SSI limit - HELD THAT:- The show-cause notice proposed to add the value of clearance made by the appellant’s DTA unit to their 100% EOU, solely on the ground that the goods were cleared without proper documents, invoices but under delivery challans. There is no dispute of the fact that the intermediate goods viz. casing is which were duly received in their 100% EOU. As per clause (3A) of the Notification no. 08/2003CE dt. 1.3.2003 as amended, in determining the aggregate value of clearances of all excisable goods for home consumption, the value of clearances of goods to 100% EOU cannot be taken into consideration. In the present case, there is no dispute of the fact that the appellant had cleared the intermediate product, namely “casing”, to their sister concern an 100% EOU against delivery challans-cum-invoices, which are duly recorded in the Books of Accounts of both the Units. Also, it is not in dispute that the said casings were used in the manufacture of final products by their 100% EOU, and the finished goods were ultimately exported by the said 100% EOU, and the said facts had not been challenged. Therefore, adding the value of clearance made to 100% EOU in computing the aggregate value of clearances for home consumption of the DTA Unit is contrary to the position of law and accordingly unsustainable. Appeal allowed - decided in favor of appellant. Issues:- Appeal against Order-in-Appeal No. YDB/202/M-II/2011 dated 08.03.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai-II.- Whether the appellant exceeded the SSI exemption limit under Notification No. 8/2003-CE.- Proper documentation and invoices for clearances made by the appellant's DTA unit to their 100% EOU.- Interpretation of clause (3A) of Notification No. 08/2003CE regarding clearances to 100% EOU.Analysis:1. The appeal was filed against an order confirming a demand for duty short paid by the appellant, a manufacturer of excisable goods availing SSI exemption. The dispute arose from clearances of intermediate products to their 100% EOU sister concern. The appellant argued that proper records were maintained, and the goods were used in the manufacture of final products for export.2. The appellant contended that the clearances were made against transfer challans cum invoices to the 100% EOU, as reflected in their Books of Account. They emphasized that the goods were utilized in the EOU's manufacturing process for exported goods. The appellant's compliance with maintaining records was questioned due to alleged discrepancies in documentation.3. The Revenue argued that strict construction of exemption notifications was necessary, citing Supreme Court decisions. The Tribunal analyzed whether the appellant exceeded the SSI exemption limit for the relevant financial years and scrutinized the documentation issue regarding clearances to the 100% EOU.4. The Tribunal noted that the value of clearances to the 100% EOU should not be considered in computing the aggregate value for SSI exemption as per clause (3A) of Notification No. 08/2003CE. It was established that the goods were duly recorded and used in the EOU's manufacturing process for export, rendering the demand unsustainable.5. Considering the facts and legal position, the Tribunal set aside the impugned order, allowing the appeal with consequential relief. The decision was based on the proper interpretation of the law and the factual circumstances of the case, including the utilization of goods in the EOU's export-oriented manufacturing process.