SSI exemption and scope of reference: job work manufacturing and an unraised brand-name objection could not sustain denial.

Notification No. 175/86 was held not to deny SSI exemption merely because medicines were manufactured on behalf of loan licensees who themselves did not hold SSI certificates; the job worker remained the manufacturer for excise purposes, so the absence of SSI status with the loan licensees did not by itself defeat exemption. The Collector also could not sustain denial on the basis of brand-name use, because that objection was not raised in the reference under Section 35E(4) and was outside the scope before him. The impugned order was set aside and the appeal succeeded.

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Issues: (i) whether medicines manufactured on behalf of loan licensees who did not hold SSI certificates were denied exemption under Notification No. 175/86; (ii) whether the Collector could sustain denial of the benefit on the ground that the goods bore the brand name of the loan licensees when that ground was not raised in the reference under Section 35E(4) of the Central Excise Act, 1944.

Issue (i): Whether medicines manufactured on behalf of loan licensees who did not hold SSI certificates were denied exemption under Notification No. 175/86.

Analysis: The notification was read as not making the benefit dependent on the industrial or corporate status of the principal for whom the goods were manufactured. The job worker continued to be treated as the manufacturer for excise purposes even when production was undertaken on behalf of another person, and the absence of an SSI certificate with the loan licensees did not by itself take the clearances out of the exemption.

Conclusion: The denial of exemption on the sole ground that the loan licensees were not SSI certificate holders was unsustainable and was against the assessee.

Issue (ii): Whether the Collector could sustain denial of the benefit on the ground that the goods bore the brand name of the loan licensees when that ground was not raised in the reference under Section 35E(4) of the Central Excise Act, 1944.

Analysis: The brand-name objection was not part of the application referred to the Collector. The Collector, therefore, went beyond the scope of the reference. Even assuming the brand-name reasoning to be otherwise correct, it could not support the impugned order when the point itself had not been raised before him.

Conclusion: The brand-name ground could not sustain the order and was against the Revenue.

Final Conclusion: The impugned order was set aside and the appeal succeeded in full.

Ratio Decidendi: An exemption notification cannot be denied merely because goods are manufactured on behalf of a person lacking SSI status where the job worker remains the manufacturer, and an authority cannot uphold an adverse order on a ground that lies outside the scope of the reference before it.

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