TaxTMI 
TaxTMI 
2020 (11) TMI 432
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....ecoverable from the appellant. The Commissioner has also imposed penalty and interest. 2. The appellant is engaged in the manufacture of PVC bags and other articles of printing like paper inserts, tags, labels, stickers and stiffeners. These articles of printing manufactured by the appellant have been classified under sub-heading 4901.90 of the Tariff Item and are chargeable to NIL rate of duty. However, the PVC bags manufactured by the appellant are classifiable under Tariff Item 3923 29 10 and attract central excise duty. These PVC bags were cleared for home consumption as well as for export. The appellant also supplied these goods to various merchant exporters against Form 'H' and Form 'ST-49' for use in the goods manufactured and exported by such merchant exporters. According to the appellant, the PVC bags are used mainly for packing of home furnishing products, which are ultimately exported. Such supplies made to the merchant exporters against Form 'H' and Form 'ST-49' were not included in the aggregate value of clearances, for availing the benefit of Small Scale Industry, SSI exemption under the Notifications. 3. The Department, however, believed that th....
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....value of clearance for the purpose of claiming SSI exemption under the Notifications; (ii) On a plain reading of the Notification, it is evident that only the clearances for home consumption are to be taken into consideration for determining admissibility of the benefit of exemption under these Notifications. Therefore, clearances for the purpose of export are outside the ambit of these Notifications and, hence, not liable to be included in the aggregate value of clearances; (iii) Clearances made against Forms H/ST-49 are considered as exports under the provisions of Section 5 of the Central Sales Tax Act, 1956, read with rule 12(10)(a) of the Central Sales Tax (R&T) Rules, 1957. Similar provisions exist under section 8 of the Delhi Sales Tax Act, 1975, read with rule 10A of the Rules; (iv) Certificates in Forms H/ST-49 have been accepted as proof of exports by the Board as clarified under Circular dated July 25, 2002; (v) The benefit of the Circular is available even in cases of supplies to merchant exporters where the goods are not directly supplied from the unit. In such cases also, Forms H/ST-49 are considered as sufficient evidence of export....
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.... 10.3 Learned counsel for the party, Shri Shukla's submission that w.e.f. 01/04/2003, the value of exempted goods is includible for the purpose of determining eligibility to SSI exemption after excluding the value of export goods since export clearances are not clearances for home consumption, is acceptable but we have to see whether the so called export clearance have taken place as per the law or not. The Central Board of Excise and Customs has clarified is issue vide Circular No. 648/39/2002-CX dt. 25.07.02 wherein it has been held that "the Central Excise Manual provides that in the case of export by exempted units through merchant exporter, the documents prescribed by Sales Tax Deptt., viz. H-Form or ST-XXII Form or any other equivalent Sales Tax form, will be accepted as proof of export. It is clarified that this facility is available only in respect of the exempted units which undertake exports themselves or through merchant exporters directly from the unit itself. The facility is not available for the supplies made to any other domestic manufacturer who may or may not export its finished products". Clearly in this case the party has not followed the prescribed procedure....
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....able goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers, does not exceed rupees three hundred lakhs in the preceding financial year. 14. It needs to be noted that w.e.f April 1, 2005, the amount of Rs. 3,00,00,000/- mentioned in clause 2 (vii) of the above Notification was substituted for Rs. 4,00,00,000/-. 15. A plain reading of the Notification makes it evident that only the clearances home consumption are to be taken into consideration for determining the admissibility of the benefit of the exemption under the two Notifications dated March 1, 2002 and March, 2003. 16. This is also evident from the Circular dated August 6, 2003 issued by the Central Board of Excise and Customs, New Delhi. The relevant portion of the Circular is reproduced below: "3. Accordingly, it is reiterated that for availing Small Scale Industry Exemption Scheme Exemption under notifications No. 03-Central Excise and No.9/2003-Central Excise, both dated 1.3.2003, for the financial year 2003- 04 the value of clearances for calculating the limit of Rs. 3 crores for the preceding financial year 2002-03 includes the value of e....
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....s to be accepted as proof of export. The relevant portion of the decision is reproduced below: "5. **** SDR has laid emphasis on the same and has argued that a Form-H certificate would not be accepted as proof of export unless the SSI unit did not undertake exports either directly or through merchant-exporter directly from the SSI unit itself. In this case, it was pointed out by SDR, the exports were made by the appellants' buyers from the latter's premises and not from the former's and, therefore, the appellants would not be entitled to employ the Form-H certificates as proof of export of the cartons supplied to their buyers. We are not inclined to accept this contention inasmuch as the Board's clarification as to the manner of exportation has to be understood conjointly with the relevant provisions of the Central Sales Tax (Registration and Turnover) Rules, 1957. Rule 10(a) of the CST (R&T) Rules, 1957 reads as under: "A dealer may, in support of his claim that he is not liable to pay tax under this Act in respect of any sale of goods on the ground that the sale of such goods is a sale in the course of export of these goods out of the Territory o....
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....indicated that the goods covered therein were used by the buyers in the packing of goods exported by them. The details regarding exports which were required to be mentioned in the Schedule to each certificate were furnished in a tabular statement annexed to the document. Such a document was liable to be accepted as proof of export by the appellants' customer, of the cartons supplied by the appellants. It would not cease to be proof of export by mere reason of the fact that the exportation was done by the customer from his own premises and not directly from the appellants' factory. Therefore, we are of the view that the interpretation given by learned SDR to the Board's Circular No. 648/39/2002 would not be consistent with the provisions of law governing issuance of "Form-H" certificate. It is not the case of the Revenue that the cartons supplied by the appellants to A.V. Thomas Co. and other similar customers were not exported. It is, however, pointed out that the cartons were not exported as such, but were only used as packing material for goods exported by the customers. We find that, in the case of M/s. Radhey Paper Udyog (supra), there was an identical factual situa....
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....l Packaging was dismissed and the decision is reported in 2013(292)ELT 191(Bom.). 24. The decision of the Tribunal in Vadapalani Press has been followed in : (i) Jai Jawala Processors (ii) Amar Packaging Industries (iii) Universal Packaging (iv) Viba Fluid Control (v) Hare Krishna Boxes Pvt. Ltd. 25. The Commissioner has also held that the value of traded goods cannot be included in the aggregate value of clearances for the purpose of SSI exemption. According to the appellant, it had also traded some goods which were not manufactured by the appellant and, therefore, this value was liable to be excluded from the aggregate value of clearances for the purpose of claiming SSI benefits. The Commissioner has denied the benefit for the reason that the proper procedure had not been followed. The appellant claims that there has been no violation of the procedure and in any case procedural infraction, if any, cannot be made a ground to deny the substantive benefits of SSI exemption to the appellant if the goods have been exported. 26. This contention of the learned Counsel for the appellant deserves to be accepted in view of the decision ....