Whether Value of trading activity and work done on job work basis is includible in SSI exemption limit?

PJ/Case Law /2016-17/3393

Case:- BHAVI PLAST PVT. LTD. Versus COMMISSIONER OF C. EX., THANE-I

Citation:-2016 (342) E.L.T. 268 (Tri. - Mumbai)

Brief facts: -This appeal is directed against Order-in-Appeal No. BR/26/TH-I/2005, dated 17-3-2005.

Appellant’s contention:- None appeared on behalf of the appellant. Since the appeal is of 2005, they take up the appeal for disposal in the absence of any representation.

Respondent’s contention:- Shri H.M. Dixit, AC (AR), appeared for the Respondent.
He submits that the issue is demand of differential duty for the period 13-11-1990 to 31-3-1991 on the ground that the appellant had exceeded the small scale industries exemption limit by suppressing the value of the clearances affected which were beyond the threshold limit of ` 30 lakhs.

Reasoning of judgment:-On perusal of the documents and the grounds in appeal, they find that the appellant is contesting the differential duty demand on the ground that the said duty liability has been wrongly worked out by including cost of various elements of which are value of traded goods, trading activity is not excisable, job work done at site of the customers, which does not amount to manufacture in the hands of the appellant and inclusion of transport charges in the value of clearance in order to inflate the aggregate value and denying them the benefit; it is also the case of the appellant that the revenue authorities have included the value of the clearances in relation to the goods manufactured by them under Chapter 39 for which they were eligible for benefit of Notification No. 53/88-C.E.
They find that as regards the inclusion of the value of the clearances of excisable goods falling under Chapter 39 the lower authorities are in error inasmuch as the appellant had claimed the benefit of Notification No. 53/88-C.E. which exempts the goods so manufactured if the conditions are fulfilled. The only condition that needs to be fulfilled is that the final products are manufactured out of raw materials falling under Chapters 3901 to 3915. The appellant had claimed that they are manufacturing FRP, PVC and PP lining tank which are manufactured out of raw material like polypropylene or fibre reinforced polypropylene which fail under 3901 to 3915. Both the lower authorities have not considered these submissions.
In their view, it is a common knowledge that FRP, PVC and PP line tanks are made out of raw material which fail under Chapter 39, i.e., commonly known as plastic. In view of this, they hold that the value of the finished goods manufactured under Chapter 39 needs to be excluded from the aggregate value of clearances of any year.
As regards the total clearances value, they do find some merits in the submission made on the grounds of appeal by the appellant, as the value seems to include the trading activity also and the work done on job work basis. Revenue has included the value of the job work basis on the tanks constructed/fabricated holding it as manufacture. It is on record that the appellant had been given a job work of construction/fabrication of tank at the site for which the material was also supplied by the concerned assessee. In their view, revenue authorities have misdirected themselves in including such value in job work in the clearance value of the appellant.
In view of the foregoing, in the facts and circumstances of this case, they hold that the impugned order is unsustainable and liable to be set aside and they do so.
The impugned order is set aside and the appeal is allowed.

Decision:-Appeal allowed

Comment:-The analogy of the case is that FRP, PVC and PP line tanks are made out of raw material which fall under Chapter 39, i.e., commonly known as plastic. The value of the finished goods manufactured under Chapter 39 needs to be excluded from the aggregate value of clearances of any year. Value of traded goods, trading activity is not excisable, job work done at site of the customers, which does not amount to manufacture so does not includible in value of clearance for SSI exemption limit.
Prepared by:- Monika Tak

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PJ/Case Law /2016-17/3393

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