NEBULAE HEALTH CARE LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) M /s Nebulae Health Care Ltd. Kanchipuram manufactures P or P medicines of CSH 3003.10 and medicines falling under CSH 3003.20. The assessee manufactured and cleared their products during the years 1999 -2000 to 2003 -2004 on their own account and on job work basis for several other parties. The goods manufactured for third parties bore the brand name of such third parties. During the said period, the assessee availed benefit of SSI exemption under the Notifications No. 8/1999, 8/2000, 8/2001, 8/2002 and 8/2003 (Hereafter referred to as "relevant Notifications''.) in respect of the goods manufactured by them on their own account. In respect of the goods bearing brand name of third parties, the assessee availed the benefit of Modvat/Cenvat credit and also paid normal duty of excise. Five show cause notices were issued to the assessee to recover the benefit of SSI Notification availed by the assessee during this period on the ground that the assessee was barred from availing the benefit of SSI notification and Modvat/Cenvat credit simultaneously. The Joint Commissioner demanded an amount of Rs. 74,99,779/ - on adjudication of the five show cause notices issued to them. A penalty of Rs. 10 lakhs was imposed on them under Rule 25 of the Central Excise Rules. Interest under Section 11AB was also demanded. On appeal, against the above order, the Commissioner (Appeals) passed the impugned order upholding the order of the original authority except the penalty, which he vacated. Hence this appeal by the assessee.

(2.) THE lower appellate authority confirmed the demand against the assessee mainly on the ground that the assessee was not eligible for the benefit of SSI exemption owing to the following condition which existed in the Notifications No. 8/1999, 8/2000, 8/2001 8/2002 and 8/2003 which the assessee had violated.

(3.) IN the appeal against the impugned order, the assessee relied on the case law it had cited in its support before the lower appellate authority. The appellants further stated that the facts of the instant case were different from the facts of the case dealt with in Ramesh Food Products case. They submitted that in the said case, the issue was as to whether the two options provided under SSI exemption Notification 175/86 could be simultaneously availed or not. In their case they had not availed the benefit of two options simultaneously. They had availed the benefit of full exemption without Cenvat Credit in respect of their own goods. In respect of goods bearing the brand name of other persons they had not at all availed any concessional rate of duty but paid full duty. The Apex Court had not held that payment of full rate of duty on goods bearing the brand name of other persons and claiming exemption for own goods was not permissible. It was further argued that in all the SSI notifications, while defining the term "aggregate value of clearances" for the purpose of determination of exemption, as well as eligibility limit (i.e. value of clearances during the preceding financial year), the value of clearances of the specified goods, bearing the brand names of other persons had been excluded, for the reason that manufacturers were required to pay full duty on such goods. Therefore, the Notification itself recognized that a manufacturer while availing the benefit of exemption under the said Notification could also manufacture goods bearing the brand name of other persons on which full rate of duty was payable. Moreover, the relevant part of the Notifications (on computation of eligible value of clearances) read as follows: