SSI Exemption For Cashew Shell Liquid Remains Eligible Despite Notification Amendment: CESTAT Sets Aside ₹3.2 Lakh Duty Demand [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench has ruled that Cashew Shell Liquid (CNSL) continues to be eligible for Small-Scale Industry (SSI) exemption even after the amendment of the notification. Thus set aside an excise duty demand of around ₹3.2 lakh imposed on NS Oil Mills under Section 11AA of the Central Excise Act.

The appellant, M/s NS Oil Mills was engaged in the manufacture of CNSL and had cleared the output without payment of excise duty on the basis of SSI exemption under Notification No. 8/2003-CE from April 2012 to February 2013.

The Department had issued a show cause notice stating that the SSI notification was subsequently amended by Notification No. 8/2006-CE to exclude goods falling under Chapter 13, which included CNSL. Based on this, an excise duty demand of around ₹3.22 lakh along with interest and penalty, was confirmed and sustained in appeal.

The appellant argued that the amendment contained an inadvertent drafting mistake. The Corrigendum of 28.02.2006 made it clear that all articles in Chapters 9 to 20, were meant to remain within the SSI exemption net. As Chapter 13 falls fully within this bracket, CNSL was not supposed to lose exemption.

The assessee cited the established judicial precedents on the principles of statutory interpretation highlighting that government corrigenda are not merely clarificatory documents but an integral part of the notification which is to be given full effect.

The CESTAT agreed with the appellant’s argument that authorities cannot ignore an official corrigendum issued to correct a notification. It was highlighted that the exemption notification was to be read in the light of the corrigendum as it embodies the legislative intent underlying the amendment.

The bench comprising Justice P.Dinesha (Judicial Member) Vasa Seshagiri Rao (Technical Member) held that CNSL continued to fall within the SSI exemption and that the excise duty demand interest and penalty were therefore unsustainable and the appeal was allowed with consequential relief.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates