The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the value of corrugated boxes cleared to merchant exporters can be includable for computing threshold under SSI exemption notification.
M/s. Universal Packaging, the appellant is a manufacturer of Corrugated Carton Boxes. It had availed SSI exemption available under Notification No. 8/2003 dated 28.02.2003 but was served with periodic show-cause notices with duty demand on the ground that clarificatory Circular No. 468/39/2002CX dated 25.07.2002 issued by the Central Board of Indirect Taxes and Customs (CBIC).
As per the Clarificatory Circular the exempted units who undertake export themselves or through Merchant Exporters directly from the units themselves would get only the benefit of non-inclusion of the value of those manufactured goods (boxes) for computation of the ceiling in the SSI exemption Notification and the same would not be available to the supplies made to any other domestic manufacturer who may export or may not export 100% finished product.
Confirmation of the duty demand including interest and penalties on the Appellant by the Commissioner (Appeals), based on the said clarificatory Circular was challenged by the assessee.
It was viewed that in the case of Vadapalani Press Vs. Commissioner, it was held that corrugated boxes supplied by the said party (SSI unit) were used by their buyer for packing shoes, which were exported. The Tribunal held that such clearances of corrugated boxes by the SSI unit were not to be included in the aggregate value of clearances by the unit to claim the benefit of SSI exemption.
A two-member bench comprising of Mr Sanjiv Srivastava,(Technical) and Dr Suvendu Kumar Pati, (Judicial) held that “inclusion of the value of corrugated boxes supplies to Merchant Exporters to determine tax liability by computing the out-turn to exceed the SSI exemption limit and its confirmation by the Commissioner (Appeals) is not sustainable in both law and facts.”
While allowing the appeal, the CESTAT set aside the order passed by the Commissioner of Central Excise (Appeals), Mumbai Zone.
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