Benefit of SSI exemption admissible even if brand name used if the factory is situated in a rural area.

PJ/Case Law /2016-17/3315

Case:-COMMR. OF C. EX., CUS. & S.T., BELGAUM VERSUS BTM BEVERAGES PVT. LTD.

Citation:- 2016 (337) E.L.T. 383 (Tri. - Bang.)

Brief Facts:-Being aggrieved with the order passed by Commissioner (Appeals), Revenue has filed the present appeal. We have heard Shri Mohd. Yusuf, DR appearing for the Revenue. Nobody appeared for the respondent.
The dispute in the present appeal relates to applicability of small scale exemption Notification No. 8/2003-C.E., dated 1-3-2003. The appellants were using the brand name of another person and the lower authorities sought to deny the benefit of the notification in question. However during adjudication appellant took a stand that they are not hit by the bar of the notification inasmuch as their unit is located in rural area in the village of Anchatgeri.
However the original adjudicating authority confirmed the demand on the ground that the village Anchatgeri, where the assessee’s factory is situated has been notified by the Government of Karnataka, Housing and Urban Development vide their Notification dated 4-7-1988, for amalgamation of local planning area of cities of Hubli and Dharwad. From the said notification, the original adjudicating authority concluded that the appellant’s factory has now covered by the urban area, thus not entitled to SSI exemption. As such after granting the benefit of limitation, he confirmed the demand along with interest and imposition of penalty. On appeal Commissioner (Appeals) observed as under :
“I find that the Karnataka Government Notification relied on by the original authority does not specifically change the category of Anchatgeri village from a rural to an urban area. This village has merely been included in the amalgamated local planning area for cities of Hubli and Dharwad. I therefore find that the relied on Notification does not change village Anchatgeri from rural area to urban area and is therefore inadequate for denying SSI exemption to the appellant in terms of definition of rural area in the Notification. In fact the clarificatory correspondence referred to by the original authority refers to this village as area reserved for agriculture. I therefore hold that relied upon Notification does not conclusively changes it into urban area. I also place reliance on Hon’ble Tribunal’s decision in the case of Malabar Regional Co-operative Milk Products Union Limited as reported in 2006 (201) E.L.T. 21 (Tri.-Bang.) for coming to this conclusion.

Appellants Contention:-The appellants have produced Tahasildar’s certificate dated 15-4-2005 in support of their claim. Tahasildar is a custodian of land revenue record, and there being no express and clear change of status of Anchatgeri from rural to urban in the above referred Notification, a certificate certifying the rural status of the village should be accepted.”The Revenue in their memo of appeal has referred to the Explanation 5(H) from the Notification No. 8/2003, dated 1-3-2003 which defines “rural area” as the area comprised in a village as defined in the land revenue records, excluding the area under any municipal committee, municipal corporation, town area committee and any area which may be notified as an urban area by the Central Government. Admittedly the village in question has not been notified as an urban area either by the Central Government or a State Government. The Revenue is relying on only upon an amalgamation scheme of local planning area for the city of Hubli and Dharwad where the village in question may be included.

Respondents Contention:- Nobody appeared for the respondent.

Reasoning Of Judgement:-In as much as the said explanation defines “rural area” as a village defined in the land revenue records, for which purpose a certificate stands issued by the Tahsildar of the village, holding the said area to be a rural area and which certificate does not stand challenged by the Revenue, we find no justifiable reasons to ignore the said certificate of the Tahsildar. It may not be out of place to mention here that in terms of the definition as contained in the above referred explanation, the area comprised in a village and as defined in the land revenue records is the rural area. Land revenue records are maintained by the Tahsildar, who is the proper authority to give the certificate. We cannot step into shoes of the local Tahsildar to find out as to whether the certificate given by him is correct or not. Otherwise also the Revenue is not assailing the said certificate as incorrect, we cannot ignore the certificate in question. In Tribunal’s view, the same stands rightly taken into consideration by the Commissioner. No infirmity can be found in the order of the appellate authority.
In view of the above, we reject the appeal filed by the Revenue.

Decision:-Appeal rejected.

Comment:-The substance of the case is that the SSI Exemption is available for goods manufactured in a factory in rural area even if they are made using brand name of others. The assessee was previously denied the benefit on ground that village Anchatgeri was notified for amalgamation of local planning area of cities of Hubli and Dharwad. The Tribunal held that, since the notification of State Government relied by Revenue not specifically declared aforesaid village as urban area and also, the assessee produced a certificate from Tahsildar, certifying said village to be a rural area in terms of Land Revenue records and further the revenue was also unable to assail correctness of said certificate, SSI benefit cannot be denied to the assessee.

Prepared By-Praniti Lalwani

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PJ/Case Law /2016-17/3315

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