|
| Packaging material units get relief | | EXIM MATTERS |
| T N C Rajagopalan / New Delhi Sep 22, 2008, 00:35 IST |
|
The finance ministry has amended the exemption no. 8/2003-CE dated 1st March 2003, widely used by small scale industries and sopopularly known as SSI Exemption. The amendment (notification no. 47/2008-C.E. dated 1st September 2008) gives the much needed relief for small manufacturers of packing materials.
Under the SSI Exemption, home clearances of dutiable goods up to Rs 1.50 crore are exempted, subject to fulfillment of certain conditions. One of the conditions is that the goods should not bear the brand name of another person. Certain exceptions to this condition include goods cleared for use as original equipment, goods bearing the trade name of Khadi Village Industries, account books, registers, writing pads etc. The latest amendment now includes in the list of exceptions, goods in the nature of packing materials, namely, printed cartons of paper or paper board, metal containers, HDPE woven sacks, adhesive tapes, stickers, PP caps, crown corks and metal labels. But for the year 2008-09, the exemption will be restricted to Rs 90 lacs.
The question of exemption to such articles has been a subject matter of much controversy, especially where the goods are not sold as such but used by the customer (brand name owner) to pack his goods. The Central Board of Excise and Customs (CBEC) had clarified in case of castings that so long as the branded castings are being supplied to the customer for further manufacture, and are not otherwise “traded”, the benefit of small scale exemption in such cases should not be denied merely on the grounds that goods contain brand name of another unit (Circular no. 71/71/94-CX dated 27.10.1994).
The Tribunal, in the case of Prakash Industries [2000 (119) ELT 30 (T-LB)], had held that the SSI exemption benefit will not be denied on goods affixed with brand name of the customer on the HDPE sacks. However, the Supreme Court over-ruled this larger bench judgment. In the case of Kohinoor Elastics Pvt Ltd , the Tribunal had accepted an argument that elastics manufactured as per specific orders of customers who are manufacturers of undergarments will be eligible for SSI exemption as the ultimate buyer associates brand name with the undergarments and not with the brand name affixed on the elastics. The Supreme Court [2005 (188) ELT 3 9S.C.)] over-ruled this judgment denying the exemption and held that even if a manufacturer only manufactures as per orders of customer and delivers only to that customer, the course of trade for him is such manufacture and sale.
In June this year, CBEC (letter no. 115/01/2008-CX-3 dated 16th June 2008) referred to the Kohinoor Elastic Pvt Ltd judgment and said that existing instructions which are at variance with the Supreme Court decision are being withdrawn, but the action for issuing show cause notices may be taken based on the Supreme Court order immediately, without waiting for withdrawal of circulars. What the latest amendment does is to give the relief that earlier legal provisions and Supreme Court did not.
Now that the finance ministry has accepted the view that SSI exemption should not be denied to manufacturers of packing materials and amended the legal provisions accordingly, it would only be reasonable to expect that no cases are pursued against the small manufacturers who were guided by the CBEC Circular no. 71/71/94-C.X. dated 27th October 2004.
tncr@sify.com
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
