SSI exemption valuation excludes captive blister packs and game boxes used to pack toys and games.

Blister packs and game boxes specially manufactured and captively consumed in the same factory for packing toys and games were held not to form part of the aggregate value of first clearances for Small Scale Industries exemption under Notification No. 8/2001-C.E. The Tribunal noted that no MODVAT credit had been taken on inputs, so the amendment relating to Notification No. 67/95-C.E. did not support the Revenue. Applying Chapter Note 3 to Chapter 95, it treated the packing materials as goods within the same tariff framework as the toys and games, and followed the cited SSI exemption principle to exclude their value from the clearance computation.

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Issues: Whether the value of blister packs and game boxes, manufactured and captively consumed within the same factory for packing toys and games, was required to be included in the aggregate value of first clearances for availing Small Scale Industries exemption under Notification No. 8/2001-C.E. for the relevant period.

Analysis: The respondent manufactured toys and games, with the packing materials also being specially designed and manufactured in the same factory. The Tribunal held that the respondent had not availed MODVAT credit on inputs, so the amendment relied upon in relation to Notification No. 67/95-C.E. did not assist the Revenue. It further relied on Chapter Note 3 to Chapter 95 of the Central Excise Tariff Act, 1985, under which parts and accessories suitable for use solely or principally with articles of Chapter 95 are classified with those articles. On that basis, the blister packs and game boxes were treated as goods falling within the same tariff framework as the toys and games and, following the principle applied in the cited precedents on SSI exemption, their value could not be added to the aggregate value of clearances of the final products.

Conclusion: The value of the blister packs and game boxes was not includible in the aggregate value of first clearances under Notification No. 8/2001-C.E., and the demand of duty had no basis.

Final Conclusion: The Revenue's appeal failed and the order dropping the duty demand and penalty was sustained.

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