2019 (12) TMI 278 - AT - Central Excise

Tribunal Permits SSI Exemption & CENVAT Credit Simultaneous Availment After Resolving Member Disagreement.

Cologix Systems Ltd. Versus Commissioner of Central Excise, Pune-III

The tribunal resolved the issue of simultaneous availment of SSI exemption under Notification No. 8/2003-CE and CENVAT Credit by referring the matter to a ... SSI exemption - use of brand name of others - Department objected to availing of such simultaneous of benefit under Notification No 8/2003- CE and CENVAT Credit in respect of the goods cleared on payment of duty - period September 08 to August 2009 - whether simultaneous availment of CENVAT Credit in respect of the inputs used in manufacture of dutiable final products viz Branded Goods and SSI exemption under notification No 8/2003-CE dated 01.03.2003 as amended is permissible or not? - Difference of opinion - majority order. HELD THAT:- The issue of eligibility of SSI exemption under various notifications issued from time to time in line with Notification No. 8/2003-CE dated 1.3.2003, when the assessee also avails CENVAT Credit on inputs used for the goods manufactured on job-work basis by affixing the brand name of others, has been considered by the Hon’ble Supreme Court in Nebulae Health Care Ltd.’s case [2015 (11) TMI 95 - SUPREME COURT]. Their Lordships analyzing the principles laid down in earlier judgments including that in Ramesh Food Products’ case [2004 (11) TMI 103 - SUPREME COURT] - In the said judgment, the Hon'ble Supreme Court distinguished the ratio laid down in Ramesh Food’s case (supra) and held that an assessee can avail the SSI benefit and also CENVAT credit on inputs used in the manufacture of Branded goods cleared on payment of duty. Besides, Notification No. 8/2003-CE dated 1.3.2003 has been amended w.e.f. 11.2.2009 vide Notification No. 2/2009-CE dated 11.2.2009 incorporating the following proviso to clause (iii) of condition (2) of the said notification. The opinion of learned Member (Judicial) is agreed upon that the appellants are entitled to avail benefit of SSI exemption N/N. 8/2003-CE dated 1.3.2003 even though they have admittedly availed CENVAT Credit on inputs which have been used in the manufacture of branded goods, cleared on payment of duty during the relevant period. Issues Involved:1. Eligibility for simultaneous availment of SSI exemption under Notification No. 8/2003-CE and CENVAT Credit.2. Interpretation of Notification No. 8/2003-CE and its conditions.3. Applicability of precedent decisions and Supreme Court judgments.4. Difference of opinion between judicial and technical members of the tribunal.Issue-wise Detailed Analysis:1. Eligibility for Simultaneous Availment of SSI Exemption and CENVAT Credit:The core issue in this case is whether the appellant can simultaneously avail the benefit of SSI exemption under Notification No. 8/2003-CE for its own manufactured goods while also availing CENVAT Credit for inputs used in the manufacture of branded goods cleared on payment of duty. The appellant argued that such simultaneous availment is permissible based on the precedent set by the tribunal in the case of Cure Quick Remedies P Ltd vs Commissioner of Central Excise, Panchkula. The department, however, contended that such simultaneous availment is not permissible, citing decisions from other tribunal benches and the Supreme Court's ruling in the case of Ramesh Food Products.2. Interpretation of Notification No. 8/2003-CE and Its Conditions:The tribunal examined the conditions stipulated in Notification No. 8/2003-CE, particularly focusing on Para 2, which outlines the conditions for availing the exemption. The notification allows a manufacturer to opt not to avail the exemption and instead pay the normal rate of duty, provided they inform the Assistant Commissioner in writing. It also specifies that the manufacturer shall not avail the credit of duty on inputs used in the manufacture of specified goods cleared for home consumption if the aggregate value of first clearances does not exceed one hundred lakhs. The interpretation of these conditions was crucial in determining whether the appellant's actions were permissible.3. Applicability of Precedent Decisions and Supreme Court Judgments:The tribunal considered various precedent decisions and Supreme Court judgments to resolve the issue. The appellant relied on the tribunal's decision in Cure Quick Remedies P Ltd, which allowed simultaneous availment of SSI exemption and CENVAT Credit. On the other hand, the department cited decisions from the Ahmedabad bench in the case of Synthetic Industries and the Mumbai bench in the case of Warna Packaging Pvt Ltd, which held that such simultaneous availment is not permissible. Additionally, the Supreme Court's decision in Commissioner of Customs (Import), Mumbai Vs. M/s. Dilip Kumar and Company emphasized strict interpretation of exemption notifications, favoring the revenue in case of ambiguity.4. Difference of Opinion Between Judicial and Technical Members:The tribunal members had differing opinions on the issue. The Member (Technical) opined that the appellant was not eligible for the SSI exemption under Notification No. 8/2003-CE since they availed CENVAT Credit on inputs used in the manufacture of branded goods. This view was supported by the Supreme Court's decision in Ramesh Food Products and other tribunal decisions. Conversely, the Member (Judicial) argued that the appellant could avail the SSI exemption for its own goods while availing CENVAT Credit for inputs used in branded goods, as these are two different situations covered under the same notification. This interpretation was supported by the tribunal's decision in Cure Quick Remedies P Ltd and the Supreme Court's decision in Commissioner of Central Excise, Chennai Vs. Nebulae Health Care Ltd.Final Judgment:The matter was referred to a third member due to the difference of opinion between the judicial and technical members. The third member, agreeing with the Member (Judicial), concluded that the appellant was entitled to avail the benefit of SSI exemption under Notification No. 8/2003-CE even though they availed CENVAT Credit on inputs used in the manufacture of branded goods cleared on payment of duty. This conclusion was based on the holistic reading of the notification and the precedent set by the Supreme Court in Nebulae Health Care Ltd's case, which distinguished the earlier judgment in Ramesh Food Products. Consequently, the appeal was allowed, and the impugned order was set aside with consequential relief to the appellant.Final Order:In view of the majority order, the appeal was allowed.