SSI exemption is allowable on packing material cleared with brand name of the buyer.

PJ/Case Laws/2012-13/1496

Case:- BURPLAST PACKAGING PVT. LTD. Versus COMMR. OF CENTRAL EXCISE, INDORE

Citation:- 2013 (288) E.L.T. 429 (Tri.-Del.)

Brief Facts:-Assessee is engaged in the manufacture of plastic containers, caps, plugs which are subject to excise duty. Appellant is the Director of the above referred appellant-company. The appellant-company during the relevant period cleared the plastic containers, caps, and bottles to M/s. Dabur India Ltd. for manufacture of their final product with their logo "Dabur" embossed on those products. The Department was of the view that since the appellant was clearing those goods with brand name of M/s. Dabur India Ltd. they were not entitled to the benefit of SSI exemption under Notification No. 8/2003- C.E., dated 1-3-2003. On this premise, a show cause notice raising demand was issued to the appellant-company. Show cause notice also proposed to impose penalty on the company as well as its Director. Show cause notice was adjudicated vide order-in-original whereby the Additional Commissioner confirmed the duty demand raised by the show cause notice against the appellant-company along with interest. Equal amount of penalty was imposed on the appellant-company besides penalty was imposed on the appellant (Director). The appellants preferred appeal against the aforesaid order which was dismissed by the Commissioner (Appeals) vide impugned order-in-appeal.

Appellant Contentions:-The Appellant has pleaded that impugned order is not sustainable for the reason that the appellant has been denied SSI exemption ignoring Notification No. 24/2009-CE. (N.T.), dated 21-10-2009 issued under Section 11C of the Central Excise Act, 1944 whereby it was retrospectively clarified that brand name used on packaging material supplied to the person owning the brand name would not be the basis for denial of SSI exemption to the manufacturer of said firm. Thus, it is contended that the appellant have a strong prima facie case for waiver of condition of depositing duty demand and penalty.

Respondent Contentions:-The Respondent on the contrary has argued in support of the impugned order and submitted that the Commissioner (Appeals) has rightly denied the SSI exemption to the appellant as he admittedly was manufacturing and clearing pilfer proof caps and containers bearing logo of M/s. Dabur India Ltd.

Reasoning of Judgment:-We have considered the rival contentions and perused the record. In order to appreciate the contentions of respective parties it would be useful to have a look on the Notification No. 24 /2009-C.E., which reads thus:
Brand name used on packing materials — SSI Exemption not deniable — Exemption w.e.f. 1-10-1987 granted
Whereas the Central Government is satisfied that a practice was generally prevalent regarding levy of duty of excise (including non-levy thereof) under Section 3 of the Central Excise Act, 1944 (1 of 1944) (hereinafter referred to as the said Act), on goods of description given in column (2) of the table below, manufactured by a unit availing benefit of Notification number given in column (4) of the table below, affixing the brand name or trade name of another person who was not eligible for the grant of exemption under the said notification and that such goods were liable to duty of excise which was not being levied under Section 3 of the said Act according to the said practice during the period as specified in column (3) of the said table, namely :-

TABLE

SI. No.	Description	Period	Notification Number
(1)	(2)	(3)	(4)
1.	Packing materials, namely, printed cartons of paper or paperboard, metal containers, high density polyethylene woven sacks, adhesive tapes, stickers, pilfer proof caps, crown corks, metal labels.	1^st October, 1987 to 31^st August, 2008	(i) ................ (ii) ............... (iii) …………… (iv) ………….
2.	……………	1st October, 1987 to 10th February 2009	(i) ................ (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) ................ (xvi)
3.	……………..	1st October, 1987 to 6th July, 2009	(i) ................ (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) ................ (xvi)

Notification No. 47/2008-C.E., dated 1-9-2008 which read thus:
SSI Exemption to packing materials bearing brand name/trade name of another — Amendment to Notification No. 8/2003-C.E.

In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 8/2003-Central Excise, dated the 1st March, 2003 [G.S.R. 138(E), dated the 1st March, 2003], namely: - In the said notification,- in paragraph 4, after clause (d), the following shall be inserted, namely :-

"(e) Where the specified goods are in the nature of packing materials, namely, printed cartons of paper or paperboard, metal containers, HDPE woven sacks, adhesive tapes, stickers, PP caps, crown corks, metal labels."

after paragraph 4A, the following shall be inserted, namely:-

"4B Notwithstanding anything contained in the preceding paragraphs, the exemption in respect of goods specified in clause (e) of paragraph 4, contained in this notification, shall be restricted to rupees ninety lakhs for the remaining part of the financial year 2008-09."
[Notification No. 47/2008-C.E., dated 1-9-2008]

On reading of the above notifications, it prima facie appears that where a manufacturer covered under SSI exemption Notification has been clearing specified goods in the nature of packing material namely printed cartons, metal containers, adhesive, PP caps, crown cork or metal labels bearing brand name of the buyer he would not be denied SSI exemption under Notification No. 8/2003-C.E. In view of the above, prima facie, the denial of SSI exemption to the appellant appears to be unjustified. Thus we are of the view that the appellants have been able to make out a prima facie case for waiver of condition of pre- deposit of duty demand, interest and penalty. Accordingly, the stay applications are allowed and the pre-deposit of duty demand, interest and penalty as a condition of hearing of the appeals is dispensed with.

Decision:-Stay granted.

Comment:-The analogy that is drawn from this case is that benefit of SSI exemption cannot be denied when packing materials are cleared that are bearing the brand name of other person due to specific notification issued in this regard.

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PJ/Case Laws/2012-13/1496

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