"Page 1\nJUDGMENT\n1\nREPORTABLE\nIN THE SUPREME COURT OF INDIA\nCIVIL APPELLATE JURISDICTION\nCIVIL APPEAL NO. 2789 OF 2007\nCOMMISSIONER OF CENTRAL EXCISE, \nCHENNAI\n...APPELLANT\nVERSUS\nM/S. NEBULAE HEALTH CARE LTD.\n...RESPONDENTS\nW I T H\nCIVIL APPEAL NO. 1142 OF 2009\nJ U D G M E N T\nA.K. SIKRI, J.\nDelay condoned.\n2)\nThese appeals raise an issue of eligibility of concession/exemption from\nexcise duty that is provided under Notification nos. 8/1999, 8/2000,\n8/2001, 8/2002 and 8/2003 to the Small Scale Industrial Units (for short,\n'SSI Units'). It is not in dispute that the respondents – assessees in these\nappeals fulfill eligibility conditions for availing the benefit of SSI\nexemption under the aforesaid Notifications. However, in addition to\nmanufacturing goods on their own account, they are also doing job work\n\nPage 2\nJUDGMENT\n2\nof manufacturing goods of certain other parties on job work basis. The\ngoods manufactured for third parties bear the brand name of those third\nparties and in respect of such goods manufactured for third parties, the\nassessees paid the normal duty of excise but at the same time availed\nthe benefit of MODVAT/CENVAT credit as well. Thus, to put it succinctly,\nthe real issue is as to whether availing the benefit of MODVAT/CENVAT\ncredit in respect of branded goods of third parties manufactured by the\nassessees on job work basis, disentitles them from availing the benefit of\nthe aforesaid Notifications?\n3)\nThe assessee in Civil Appeal No. 2789 of 2007 is the manufacturer of\nmedicaments which fall under Chapter Heading 30 of the First Schedule\nof the Central Excise Tariff Act, 1985 (hereinafter referred to as the\n“CETA, 1985”). In addition, it is manufacturing medicines under the\nbrand name belonging to third parties, viz., M/s. Roots Pharma House\n(P) Ltd., Chennai, M/s. Satven & Mer, Chennai, M/s. Tickle Pharma,\nChennai, M/s. Shyulu India, Krishnagiri and M/s. ARK Medicare,\nChennai. The goods manufactured by the assessee on its own account\nbear its own brand name and goods manufactured by the third parties\nbear the brand names belonging to those parties. During the period in\nquestion, i.e., 1999 to 2003 – 2004, the assessee had availed the benefit\nof SSI exemption notifications that were in force, i.e., Notification nos.\n8/1999 etc., as mentioned above. Availing the benefit of these\n\nPage 3\nJUDGMENT\n3\nNotifications in respect of goods manufactured by the assessee on its\nown account, i.e., the goods bearing its own brand name, the assessee\nhad cleared the said goods without payment of any excise duty. On the\nother hand, during this very period, in respect of goods bearing the\nbrand name of third parties manufactured by the assessee, it paid excise\nduty thereupon. At the same time, it also availed CENVAT credit in\nrespect of inputs used for the manufacture of these branded goods. It\nresulted in issuance of five show cause notices stating therein that since\nthe assessee had availed CENVAT credit in respect of inputs used for\nthe manufacture of branded goods, it had lost the right to claim the\nbenefit of SSI exemptions under the aforesaid Notifications and, thus,\nhad claimed the exemption from payment of duties improperly. The\ndetails of these show cause notices are as under: \n\nPage 4\nJUDGMENT\n4\nS.No.\nSCN No. & Date\nPeriod\nDuty involved\n1\n1471/30.09.99\n1999-2000\n13,50,000/-\n2\n579/26.04.2001\n2000-2001\n13,50,000/-\n3\n1979/26.12.2001\n2001-2002\n16,00,000/-\n4\n588/08.04.2003\n2002-2003\n15,99,904/-\n5\nV/Ch.30/15/7/04\ndated 16.03.2004\n2003-2004\n15,99,875/-\n \n4)\nThe aforesaid demand was confirmed by the Joint Commissioner vide\nhis Order-in-Original dated January 17, 2005. Penalty under Rule 25 of\nthe Central Excise Rules as well as interest under Section 11AB of the\nCentral Excise Act was also imposed. The appeal of the assessee to the\nCommissioner (A) proved futile as it was dismissed by the\nCommissioner (A) vide orders dated July 19, 2005. However, a partial\nrelief was given by setting aside the penalty. Not satisfied with this\noutcome, the assessee approached the Central Excise and Service Tax\nAppellate Tribunal (hereinafter referred to as “CESTAT”) by way of\nanother statutory appeal in which it has succeeded as the CESTAT,\nChennai Bench, has allowed the appeal of the assessee.\n5)\nThe assessee in Civil Appeal No. 1142 of 2009 is engaged in the\nmanufacture of motor vehicle rubber parts falling under Chapter Heading\n8708.00 of the Act. It filed declaration with effect from May 01, 1995\nclaiming 15% central excise duty on branded goods and full exemption\nfor its own products on the ground that it was eligible for exemption as\n\nPage 5\nJUDGMENT\n5\nper Notification No. 1/9-C.E., dated February 28, 1993, being an SSI\nUnit. The excise duty was paid on branded goods which were\nmanufactured for third parties. However, in respect of inputs used in the\nmanufacture of these goods, the assessee availed MODVAT credit.\nThree show cause notices were issued to the assessee stating that\nsince it had filed MODVAT facility for branded goods under Notification\nNo. 1/93-C.E., the assessee was not entitled to the benefit of exemption\nnotification even in respect of its own products. Order-in-Original dated\nJuly 10, 1998 was passed confirming the demand. In the appeal filed by\nthe assessee to the Commissioner (Appeals), the assessee succeeded\nas the said appeal was allowed by orders dated March 25, 2003 setting\naside the Order-in-Original and holding that the assessee could avail\nboth the facilities, i.e., MODVAT credit of inputs used for manufacturing\nof goods with brand name of others of exemption for own branded\ngoods, simultaneously. This order was challenged by the Department\nbefore the CESTAT. However, vide impugned order dated June 12,\n2008, the Tribunal has dismissed the appeal, thereby maintaining the\norder of the Commissioner (Appeals).\n \nThis is how the Department has filed the two instant appeals challenging\nthe orders of the Tribunal.\n6)\nFrom 1986, the SSI Units have been given the benefit of excise duty by\n\nPage 6\nJUDGMENT\n6\nallowing them to clear the goods either without payment of any excise\nduty or allowing them to clear the goods at concessional duty, depending\nupon the nature of product manufactured by these SSI Units. General\nExemption No. 1 in this behalf was issued vide Notification No.\n175/86-CE dated March 01, 1986 which has been amended from time to\ntime. Vide these amendments, the value of the goods produced to avail\nthe benefits has been increasing. It is not in dispute that the two\nassessees before us qualify the definition of SSI Units. By amendments,\ncertain other eligibility conditions have also been provided from time to\ntime. One such condition/provision with which we are concerned in\nthese appeals pertain to manufacturing of branded goods of third parties.\n7)\nInsofar as Notification No. 1/93-C.E., dated February 28, 1993 is\nconcerned, exemption to first clearances of specified goods upto the\nvalue of 30,00,000/-\n₹\n and concessional duty on subsequent clearances\nin case of manufacturer having clearances not exceeding ₹3,00,00,000/-\nin the preceding financial year was provided. In paragraph 4 of this\nNotification, it was stated that the exemption contained in the said\nNotification would not apply to the specified goods bearing a brand name\nor trade name, whether registered or not, of another person. The said\npara 4 reads as under: \n“4. The exemption contained in this notification shall not\napply to the specified goods, bearing a brand name or\ntrade name (registered or not) of another person:\n\nPage 7\nJUDGMENT\n7\nProvided that nothing contained in this paragraph shall be\napplicable to the specified goods which are component\nparts of any machinery or equipment or appliances and\ncleared from a factory for use a original equipment in the\nmanufacture of the said machinery or equipment or\nappliances, and - \n(i)\nin a case where the clearances of such specified\ngoods are within the first clearances upto an aggregate\nvalue not exceeding rupees thirty lakhs in a financial year,\nthe manufacturer of the specified goods gives a\ndeclaration that the specified goods shall be used as\nmentioned above;\n(ii)\nin any other case, the procedure set out in Chapter\nX of the Said Rules is followed:\nProvided further that nothing contained in this paragraph\nshall be applicable to the specified goods bearing a brand\nname or trade name (registered or not) of the Khadi and\nVillage Industries Commission or of the State Khadi and\nVillage Industries Board, National Small Industries\nCorporation or the State Small Industries Development\nCorporation.\n*\n*\n*\n*\nNotwithstanding the exemption contained in paragraph 1\nof this notification, a manufacturer shall have an option for\nnot availing of the benefit of the exemption contained in\nthe said paragraph and to pay duty of excise at the rate\napplicable to the specified goods but for the exemption\ncontained in the said paragraph 1, subject to the condition\nthat such manufacturer shall pay duty at the rate\napplicable but for the aforesaid exemption on all\nsubsequent clearances of specified goods made after\navailing such option, in a financial year in which such date\nof option falls.”\n8)\nThis Notification contained as many as 11 explanations. For our\npurposes, Explanation Nos. III, IX and X are relevant and, therefore, we\nreproduce here below these explanations as well:\n“Explanation III. - For the purpose of computing the\naggregate value of clearances under paragraph 1,2 and 3,\n\nPage 8\nJUDGMENT\n8\nthe clearances of any specified goods, bearing a brand\nname or trade name (registered or not) of another person,\nwhich are not eligible for grant of exemption in terms of\nprovisions of paragraph 4 of this notification, shall not be\ntaken into account.\nExplanation IX. - “Brand name” or “trade name” shall mean\na brand name or trade name, whether registered or not,\nthat is to say a name or a mark, such as symbol,\nmonogram, label, signature or invented word or writing\nwhich is used in relation to such specified goods for the\npurpose of indicating, or so as to indicate a connection in\nthe course of trade between such specified goods and\nsome person suing such name or mar with or without any\nindication of the identity of that person.\nExplanation X.- For the purpose of this notification, where\nthe specified goods manufactured by a manufacturer, bear\na brand name or trade name (registered or not) of another\nmanufacturer or trader, such specified goods shall not,\nmerely by reason of that fact, be deemed to have been\nmanufactured by such other manufacturer or trader.”\n9)\nThe aforesaid Notification was replaced by Notification No.\n8/1999-Central Excise, dated February 28, 1999 which provided the\nexemption from excise duty or clearance of goods on concessional rate\nof duty as per the table reproduced below:\nS. No.\nValue of clearances\nRate of duty\n(1)\n(2)\n(3)\n1.\nFirst clearances upto an aggregate\nvalue not exceeding fifty lakh rupees\nmade on or after the 1st day of April\nin any financial year\nNil\n2.\nClearances upto an aggregate value\nnot exceeding fifty lakh rupees\nimmediately following the clearances\nspecified against Sl. No. 1 above\nduring the financial year\nFive per cent\nad valorem\n3.\nAll clearances of the specified goods\nwhich are used as inputs for further\nNil\n\nPage 9\nJUDGMENT\n9\nmanufacture of any specified goods\nwithin the factory of production of the\nspecified goods.\n10)\nIn paragraph 2 of this Notification, certain conditions were stipulated\nsubject to fulfillment of which the benefit of exemption Notification could\nbe made available. Some of the conditions with which we are concerned\nin these appeals are noted below: \n“2. The exemption contained in this notification shall apply\nsubject to the following conditions, namely:-\n(i) a manufacturer who intends to avail the exemption\nunder this notification shall exercise his option in writing for\navailing the exemption under this notification before\neffecting the first clearances under this notification and\nsuch option shall be effective from the date of exercise of\nthe option. Such option shall not be withdrawn during the\nremaining part of the financial year except when an option\nis exercised with respect to Notification No. 9/99-C.E.,\ndated 28th February, 1999.\n(ii)\na manufacturer also has the option not to avail the\nexemption contained in this notification and instead pay\nthe normal rate of duty on the goods cleared by him. Such\noption shall be exercised before effecting his first\nclearances at the normal rate of duty. Such option shall\nnot be withdrawn during the remaining part of the financial\nyear.\n(iii) while exercising the option under condition (i), the\nmanufacturer shall inform in writing to the Assistant\nCommissioner of Central Excise or the Deputy\nCommissioner of Central Excise with a copy to the\nSuperintendent of Central Excise giving the following\nparticulars, namely:-\n(a) name and address of the manufacturer;\n(b) location/locations of factory/factories;\n\nPage 10\nJUDGMENT\n10\n(c) description of inputs used in manufacture of specified\ngoods;\n(d) description of specified goods produced;\n(e) date from which option under this notification has been\nexercised;\n(f) aggregate value of clearances of specified goods\n(excluding the value of clearances referred to in paragraph\n3 of this notification) till the date of exercising the option;\n(iv) the manufacturer shall not avail the credit of duty on\ninputs under rule 3 or rule 11 of the CENVAT Credit Rules,\n2002 (herein after referred to as the said rules), paid on\ninputs used in the manufacture of the specified goods\ncleared for home consumption, the aggregate value of first\nclearances of which, as calculated in the manner specified\nin the said Table does not exceed rupees one hundred\nlakhs;\n(v) the manufacturer also does not utilise the credit of duty\non capital goods under rule 3 or rule 11 of the said rules,\npaid on capital goods, for payment of duty, if any, on the\naforesaid clearances, the aggregate value of first\nclearances of which does not exceed rupees one hundred\nlakhs, as calculated in the manner specified in the said\nTable.\n3. For the purposes of determining the aggregate value of\nclearances for home consumption, the following\nclearances shall not be taken into account, namely:-\n(a) clearances, which are exempt from the whole of the\nexcise duty leviable thereon (other than an exemption\nbased on quantity or value of clearances) under any other\nnotification or on which no excise duty is payable for any\nother reason;\n(b) clearances bearing the brand name or trade name of\nanother person, which are ineligible for the grant of this\nexemption in terms of paragraph 4 below; \n(c)\nclearances of the specified goods which are used\nas inputs for further manufacture of any specified goods\nwithin the factory of production of the specified goods;\n(c) clearance of strips of plastics used within the factory\n\nPage 11\nJUDGMENT\n11\nof production for weaving of fabrics or for manufacture of\nsacks or bags made of polymers or ethylene or propylene.\n4. The exemption contained in this notification shall not\napply to specified goods bearing a brand name or trade\nname, whether registered or not, of another person, except\nin the following cases:-\n(a) where the specified goods, being in the nature of\ncomponents or parts of any machinery or equipment or\nappliances, are cleared for use as original equipment in\nthe manufacture of the said machinery or equipment or\nappliances by following the procedure laid down in\nChapter X of the Central Excise Rules, 1994. Provided\nthat manufacturers, whose aggregate value of clearances\nfor home consumption of such specified goods for use as\noriginal equipment does not exceed rupees fifty lakhs in a\nfinancial year as calculated in the manner specified in the\nsaid Table, may submit a declaration regarding such use\ninstead of following the procedure laid down in Chapter X\nof the said rules;\n(b) \nwhere the specified goods bear a brand name or\ntrade name of-\n(i)\nthe Khadi and Village Industries Commission; or\n(ii)\na State Khadi and Village Industry Board; or\n(iii)\nthe National Small Industries Corporation; or\n(iv)\na State Small Industries Development Corporation;\nor\n(v)\na State Small Industries Corporation.”\n11)\nThis Notification also provided the definition of 'brand name' or 'trade\nname', as under:\n“Explanation. - For the purposes of this notification, -\n(A) “brand name” or “trade name” shall mean a brand\nname or trade name, whether registered or not, that is to\nsay a name or a mark, such as symbol, monogram, label,\nsignature or invented word or writing which is used in\nrelation to such specified goods for the purpose of\n\nPage 12\nJUDGMENT\n12\nindicating, or so as to indicate a connection in the course\nof trade between such specified goods and some person\nusing such name or mark with or without any indication of\nthe identity of that person;\n(B) where the specified goods manufactured by a\nmanufacturer bear a brand name or trade name, whether\nregistered or not, of another manufacturer or trader, such\nspecified goods shall not, merely by reason of that fact, be\ndeemed to have been manufactured by such other\nmanufacturer or trader”\n12)\nIn other Notifications, namely, Notification Nos. 9/1999-C.E.,\n8/2000-C.E., 9/2000-C.E., 8/2001-C.E., 9/2001-C.E., 8/2002-C.E.,\n9/2002-C.E., 8/2003-C.E. and 9/2003-C.E., there is no significant\namendment which has bearing on the present case as the conditions\nwhich are necessary for our purposes remained almost the same.\nHowever, it would still be apt to reproduce paras 2, 3 and 4 of\nNotification No. 8/2003 dated March 01, 2003.\n“2. The exemption contained in this notification shall apply\nsubject to the following conditions, namely:-\n(i) a manufacturer has the option not to avail the\nexemption contained in this notification and instead pay\nthe normal rate of duty on the goods cleared by him. Such\noption shall be exercised before effecting his first\nclearances at the normal rate of duty. Such option shall\nnot be withdrawn during the remaining part of the financial\nyear;\n(ii) while exercising the option under condition (i), the\nmanufacturer shall inform in writing to the Assistant\nCommissioner of Central Excise or the Deputy\nCommissioner of Central Excise with a copy to the\nSuperintendent of Central Excise giving the following\nparticulars, namely:-\n(a) name and address of the manufacturer;\n(b) location/locations of factory/factories;\n(c) description of inputs used in manufacture of specified\n\nPage 13\nJUDGMENT\n13\ngoods;\n(d) description of specified goods produced;\n(e) date from which option under this notification has been\nexercised;\n(f) aggregate value of clearances of specified goods\n(excluding the value of clearances referred to in paragraph\n3 of this notification) till the date of exercising the option;\n(iii) the manufacturer shall not avail the credit of duty on\ninputs under rule 3 or rule 11 of the CENVAT Credit Rules,\n2002 (herein after referred to as the said rules), paid on\ninputs used in the manufacture of the specified goods\ncleared for home consumption, the aggregate value of first\nclearances of which, as calculated in the manner specified\nin the said Table does not exceed rupees one hundred\nlakhs;\n(iv) the manufacturer also does not utilise the credit of\nduty on capital goods under rule 3 or rule 11 of the said\nrules, paid on capital goods, for payment of duty, if any, on\nthe aforesaid clearances, the aggregate value of first\nclearances of which does not exceed rupees one hundred\nlakhs, as calculated in the manner specified in the said\nTable;\n(v) where a manufacturer clears the specified goods from\none or more factories, the exemption in his case shall\napply to the aggregate value of clearances mentioned\nagainst each of the serial numbers in the said Table and\nnot separately for each factory;\n(vi) where the specified goods are cleared by one or more\nmanufacturers from a factory, the exemption shall apply to\nthe aggregate value of clearances mentioned against each\nof the serial numbers in the said Table and not separately\nfor each manufacturer;\n(vii) the aggregate value of clearances of all excisable\ngoods for home consumption by a manufacturer from one\nor more factories, or from a factory by one or more\nmanufacturers, does not exceed rupees three hundred\nlakhs in the preceding financial year.\n3. For the purposes of determining the aggregate value of\nclearances for home consumption, the following\nclearances shall not be taken into account, namely:-\n(a) clearances bearing the brand name or trade name of\n\nPage 14\nJUDGMENT\n14\nanother person, which are ineligible for the grant of this\nexemption in terms of paragraph 4;\n(b) clearances of the specified goods which are used as\ninputs for further manufacture of any specified goods\nwithin the factory of production of the specified goods;\n(c) clearance of strips of plastics used within the factory\nof production for weaving of fabrics or for manufacture of\nsacks or bags made of polymers or ethylene or propylene.\n4. The exemption contained in this notification shall not\napply to specified goods bearing a brand name or trade\nname, whether registered or not, of another person, except\nin the following cases:-\n(a) where the specified goods, being in the nature of\ncomponents or parts of any machinery or equipment or\nappliances, are cleared for use as original equipment in\nthe manufacture of the said machinery or equipment or\nappliances by following the procedure laid down in the\nCentral Excise (Removal of Goods at Concessional Rate\nof Duty of Manufacture or Excisable Goods) Rules, 2001:\nProvided that manufacturers, whose aggregate value of\nclearances of the specified goods for use as original\nequi9pment does not exceed rupees one hundred lakhs in\nthe financial year 2002-2003 as calculated in the manner\nspecified in paragraph 1, may submit a declaration\nregarding such use instead of following the procedure laid\ndown in the said Central Excise (Removal of Goods at\nConcessional Rate of Duty for Manufacture of Excisable\nGoods) Rules, 2001:\n(b) \nwhere the specified goods bear a brand name or\ntrade name of-\n(i)\nthe Khadi and Village Industries Commission; or\n(ii)\na State Khadi and Village Industry Board; or\n(iii)\nthe National Small Industries Corporation; or\n(iv)\na State Small Industries Development Corporation;\nor\n(v)\na State Small Industries Corporation;\n(c)\nwhere the specified goods are manufactured in a\nfactory located in a rural area.”\n\nPage 15\nJUDGMENT\n15\n13)\nHaving taken note of the relevant provisions of the aforesaid exemption\nNotifications and without commenting upon the same at this juncture, we\nwould like to discuss few judgments of this Court which have considered\nand interpreted these Notifications in the context of the issue that arises\nfor determination in these appeals. In Commissioner of Central\nExcise, Ahmedabad v. Ramesh Food Products1, the assessee therein\nwas engaged in the manufacture of biscuits under the brand name\n'Ramesh' on his own account. It was also manufacturing, on job work\nbasis, biscuits under the brand name of 'Cadbury' on behalf of M/s.\nHindustan Coco Products, Bombay. It availed MODVAT benefit on the\ninputs used for manufacture of Cadbury branded biscuits. The\nDepartment issued the show cause notice taking the position that as the\nassessee had availed MODVAT benefit it had no right to avail the benefit\nof Notification No. 175/86 in respect of its own goods bearing 'Ramesh'\nbrand either. Though, the Assistant Collector dropped the demand\nholding that assessee could avail both the benefits, the Collector\n(Appeals) took a contrary view holding that it was not permissible for the\nassessee to simultaneously opt for goods of one heading and MODVAT\nfacility in respect of another heading. Assessee's appeal before the\nCEGAT was decided in favour of the assessee, which decision of\nCEGAT was upset by this Court in the judgment. This Court noted that\n1\n2004 (174) E.L.T. 310 (S.C.)\n\nPage 16\nJUDGMENT\n16\nthe CEGAT had relied upon another judgment of Tribunal in Faridabad\nTools Pvt. Ltd. v. Collector of Central Excise2 which was specifically\noverruled by a larger Bench of CEGAT in Kamani Food v. Collector of\nCentral Excise3 \n14)\nAfter extensively quoting from the discussion of the Tribunal in Kamani\nFood case (supra), this Court observed as follows:\n“10. Notification 175/86 have to be read as a whole and as\nnoted rightly, in Kharia Cement Works case (supra)\nSub-clauses (i) and (ii) have to be construed harmoniously.\nExemption envisaged for the specified goods accrues to\nthem through instrumentality of the manufacturer. The\nnotification clearly demarcated the two categories of\nmanufacturers. A clear cut distinction is explicit between a\nmanufacturer availing Modvat credit under Rule 57A and\nanother not opting for the Modvat Scheme. As is statutorily\nprovided, input duty relief is given under the scheme to the\nmanufacturers who opt to operate under the scheme by\napplying for it in the prescribed manner. Ultimately the\nmanufacturers have the choice of choosing one of the two\nconcessions, i.e. either The Modvat Scheme or Notification\n175/86. Further, there is no one to one correlation between\nthe inputs and final products under Modvat Scheme. It\nwould therefore not possible to allow the manufacturer to\nsimultaneously avail Modvat for some products and avail\nfull exemption for others under small-scale exemption\nscheme.”\n15)\nSome of the salient features of the decision of this Court in Ramesh\nFood Products which need to be emphasised are the following:\n(a) The decision of the Tribunal in that case was of the year 1998 and it had\nrelied upon its earlier judgment in Faridabad Tools case, which was\n2\n1993 (63) E.L.T. 759\n3\n1995 (75) E.L.T. 202\n\nPage 17\nJUDGMENT\n17\ndecided in the year 1993, without realising that the said judgment had\nbeen overruled by a larger Bench of the Tribunal in Kamani Foods\ncase, decided in the year 1995.\n(b) In view of the above, this Court was influenced by the fact that smaller\nBench of the Tribunal, while giving the decision which was impugned\nbefore it, was bound to follow the judgment of the larger Bench as per\nthe demands of judicial propriety.\n(c) In Kamani Foods case, the larger Bench of the Tribunal had noted its\nearlier Special Bench ruling in the case of Kharia Cement Works v.\nCollector of Central Excise4 wherein it was held that Notification No.\n175 of 1986 had to be read as a whole and sub-clauses (i) and (ii) had to\nbe construed harmoniously. The case was, thus, confined to interplay\nbetween sub-clauses (i) and (ii) of clause (a) of para 1 of the Notification,\nwhich reads as under:\n“In exercise of the powers conferred by sub-rule (1) of\nRule 8 of the Central Excise Rules, 1944, in supersession\nof the notification of the Government of India in the\nMinistry of Finance (Department of Revenue) No.\n85/85-Central Excises, dated the 17th March, 1985, the\nCentral Government hereby exempts the excisable goods\nof the description specified in the Annexure below and\nfalling under the Schedule to the Central Excise Tariff Act,\n1985 (5 of 1986), (hereinafter referred to as the “specified\ngoods”), and cleared for home consumption on or after the\n1st day of April in any financial year, by a manufacturer\nfrom one or more factories, - \n(a) in the case of the first clearances of the specified\n4\n1989 (42) ELT 696 (Tribunal)\n\nPage 18\nJUDGMENT\n18\ngoods upto an aggregate value not exceeding rupees thirty\nlakhs, - \n(i) in a case where a manufacturer avails of the credit\nof the duty paid on inputs used in the manufacture of\nthe specified goods cleared for home consumption\nunder Rule 57A of the said Rules, from so much of\nthe duty of excise leviable thereon which is specified\nin the said Schedule [read with any relevant\nnotification issued under sub-rule (1) of Rule 8 of the\nsaid Rules or sub-section (1) of section 5A of the\nCentral Excises and Salt Act, 1944 (1 of 1944) and in\nforce for the time being] as is equivalent to an amount\ncalculated at the rate of 10% ad valorem :\n(ii) in any other case from the whole of the duty of\nexcise leviable thereon :\nProvided that the aggregate value of clearances\nof the specified goods under sub-clause (ii) of this\nclause in respect of any one chapter of the said\nSchedule, shall not exceed rupees twenty lakhs;\nxx\nxx\nxx”\n(d)\nInterpreting the aforesaid two sub-clauses harmoniously, this Court,\nwhile giving its imprimatur to Kamani Foods case, held that if the\nMODVAT credit under Rule 57A is availed by the assessee, it would not\nbe entitled to exemption from excise duty under the said Notification.\nSignificantly, these two sub-clauses deal with the goods manufactured\nby the assessee with its own brand and do not deal with the situation\nwhere, in addition, the assessee/manufacturer also manufactures the\ngoods of third parties on job work basis. It goes without saying, and\ndoes not need much elaboration, that in respect of its own goods\nmanufactured by the SSI Unit, it can either claim exemption from the\n\nPage 19\nJUDGMENT\n19\nexcise duty or CENVAT credit, and not both. That is the clear message\nof sub-clauses (i) and (ii) of clause (a) of para 1 of the Notification.\n(e)\nDistinction between the goods cleared for home consumption and\nthose manufactured on job work basis for third parties and the fact that\nCENVAT credit was availed of only in respect of goods manufactured for\nthird parties and not with respect to home brand was not brought to the\nnotice of the Court. Other provisions of the notifications which have\nbearing on this issue were also not brought to the notice of the Court. In\nfact, as noted above, the Court was primarily influenced by the fact that\nTribunal had relied upon its earlier decision in Faridabad Tools case\nwithout realising that same had already been overruled by a larger\nBench of the Tribunal in Kamani Foods case. It would be pertinent to\npoint out that the appeal was decided ex parte, i.e., in the absence of\nassessee who chose not to appear. As would be noted hereafter on this\nissue, it is the other clauses of the Notifications which provide a correct\nanswer.\n \n16)\nThe question posed in these appeals, however, is different where the\nassessees have not claimed any CENVAT/MODVAT credit in respect of\ninputs used in the manufacture of their own products. This CENVAT\ncredit is availed by them in respect of goods manufactured for third\nparties on job work basis for which the assessees had admittedly paid\nthe excise duty. In such circumstances, whether such an assessee\n\nPage 20\nJUDGMENT\n20\nloses the benefit of exemption notification even in respect of goods for\nhome consumption? Answer to this question is not available in\nsub-clauses (i) and (ii) of clause (a) of para 1. For this, other paragraphs\nof the Notifications in question have to be looked into. We have already\nextracted those relevant paragraphs from these Notifications. We\nreproduce, in the form of a comparative chart, extract of those\nparagraphs:\nNotification No. 175/86\nNotification No. 8/99-CE and\n9/99-CE\nProviso to Para 3\n \n“Provided that for the purpose of\ncomputing the aggregate value of\nclearances under this paragraph, the\nclearances of any excisable goods\nwhere a manufacturer affixes the\nspecified goods with a brand name\nor trade name (registered or not) of\nanother person who is not eligible for\nthe grant of exemption under this\nnotification, shall not be taken into\naccount;”\nPara 3\nFor the purposes of determining the\naggregate value of clearances for\nhome consumption, the following\nclearances shall not be taken into\naccount, namely:\n(a) clearances, which are exempt\nfrom the whole of the excise duty\nleviable thereon (other than an\nexemption based on quantity or value\nof clearances) under any other\nnotification or on which no excise\nduty is payable for any other reason;\n(b) clearances being the brand name\nor trade name of another person,\nwhich are ineligible for the grant of\nthis exemption in terms of paragraph\n4 below;\n(c) clearances of the specified goods\nwhich are used as inputs for further\nmanufacture of any specified goods\nwithin the factory of production of the\nspecified goods; \n(d) clearances of strips of plastics\nused within the factory of production\nfor weaving of fabrics or for\nmanufacture of sacks or bags made\n\nPage 21\nJUDGMENT\n21\nof polymers of ethylene or propylene.\nPara 7\nThe exemption contained in this\nnotification shall not apply to the\nspecified\n \ngoods\n \nwhere\n \na\nmanufacturer affixes the specified\ngoods with a brand name or trade\nname (registered or not) of another\nperson who is not eligible for the\ngrant of exemption under this\nnotification.\nProvided that nothing containing in\nthis notification shall be applicable to\nthe specified goods which are\ncomponent parts of any machinery or\nequipment or appliances and cleared\nfrom a factory for use as original\nequipment in the manufacture of the\nsaid machinery or equipment or\nappliances and the procedure set out\nin Chapter X of the said rules is\nfollowed...\nProvided further that nothing\ncontained in this paragraph shall be\napplicable to the specified goods\nwhere a manufacturer affixes the\nspecified goods with a brand name\nor trade name (registered or not) of\nthe Khadi and Village Industries\nCommission, the State Khadi and\nVillage Industries Board, the National\nSmall Industries Corporation or the\nState Small Industries Development\nCorporation.\nPara 4\nThe exemption contained in this\nnotification shall not apply to the\nspecified goods bearing a brand\nname or trade name, whether\nregistered or not, of another person,\nexcept in the following cases:-\n(a) where such specified goods,\nbeing in the nature of components or\nparts of any machinery or equipment\nor appliances, are cleared for use as\noriginal\n \nequipment\n \nin\n \nthe\nmanufacture of the said machinery or\nequipment or appliances by following\nthe procedure laid down in Chapter X\nof the Central Excise Rules, 1944.\nProvided that manufacturers, whose\naggregate value of clearances for\nhome consumption of such specified\ngoods for use as original equipment\ndoes not exceed rupees fifty lakhs in\na financial year as calculated in the\nmanner specified in the said Table,\nmay submit a declaration regarding\nsuch use instead of following the\nprocedure laid down in Chapter X of\nthe said rules;\n(b) where the specified goods bear a\nbrand name or trade name of - \n(i) the Khadi and Village Industries\nCommission; or\n(ii) a State Khadi and Village\nIndustry Board; or\n(iii) the National Small Industries\nCorporation; or\n(iv) \n a State Small Industries\nDevelopment Corporation; or\n(v) \n a State Small Industries\nCorporation.\nExplanation IV\nFor the purposes of this notification,\nwhere\n \nthe\n \nspecified\n \ngoods\nExplanation B to para 5\nFor the purposes of this notification,\nwhere\n \nthe\n \nspecified\n \ngoods\n\nPage 22\nJUDGMENT\n22\nmanufactured by a manufacturer, are\naffixed with a brand name or trade\nname (registered or not) of another\nmanufacturer or trader, such\nspecified goods shall not, merely by\nreason of that fact, be deemed to\nhave been manufactured by such\nother manufacturer or trader.\nmanufactured by a manufacturer\nbear a brand name or trade name,\nwhether registered or not, of another\nmanufacturer or trader, such\nspecified goods shall not, merely by\nreason of that fact, be deemed to\nhave been manufactured by such\nother manufacturer or trader.\n17)\nA holistic reading of the Notification, in the light of the other paragraphs,\nbrings into focus the overall scheme. It, inter alia, provides that the\nclearances bearing the brand name or trade name of third parties which\nare ineligible for grant of this exemption, for the purposes of determining\naggregate value of clearances for home consumption, are not to be\nincluded. These Notifications also make it clear that the exemption\ncontained therein is not to apply to the specified goods bearing a brand\nname or trade name, whether registered or not, of any person, except\nunder certain circumstances specifically stipulated therein. The\nNotifications also clarify that for the purpose of these Notifications, where\nthe goods manufactured by a manufacturer bear brand name or trade\nname (whether registered or not) of any manufacturer of trade, they shall\nnot be deemed to have been manufactured by such other manufacturer\nor trade. Reading of the aforesaid provisions in the Notifications\nunambiguously points out that for the purposes of availing the benefit of\nNotification by an SSI Unit, the clearances for home consumption only\nare to be taken into consideration, except in those cases where it is\nclearly provided otherwise. For this purpose, clearances bearing the\n\nPage 23\nJUDGMENT\n23\nbrand name or trade name of third parties are concerned, they are kept\noutside the scheme inasmuch as: (a) they are not to be included for the\npurposes of determining the aggregate value of the clearances for home\nconsumption; and (b) such products bearing brand names or trade\nnames of third parties, even if manufactured by the SSI Unit, are not\neligible for any exemption and excise duty thereupon has to be paid.\nOnce we understand the scheme of the Notifications in the aforesaid\nperspective, which according to us is the only manner in which it has to\nbe understood, it becomes apparent that so far as manufacture of\nbranded goods of third party on job work basis by the SSI Unit is\nconcerned, they are to be dealt with differently in the sense that they do\nnot come within the ambit of exemption on which normally excise duty,\nas per the provisions of the Act, is payable. As a sequitur, it also follows\nthat once excise duty is paid by the manufacturer on such branded\ngoods manufactured, the brand name whereof belongs to another\nperson, on job work basis, the SSI Unit would be entitled to\nCENVAT/MODVAT credit on the inputs which were used for manufacture\nof such goods as on those inputs also excise duty was paid. To put it\notherwise, these branded goods manufactured by the SSI Units meant\nfor third parties are regulated by the normal provisions of excise law and\nwill have no bearing or relevance insofar as availing the benefit of those\nexemption notifications in respect of its own products manufactured by\n\nPage 24\nJUDGMENT\n24\nthe SSI Units is concerned.\n18)\nWe, thus, find that the Tribunal in the impugned decisions in both these\nappeals has decided the issue correctly. Admittedly, in respect of home\nproduction, the assessee had not availed the benefit of two options\nsimultaneously as no CENVAT credit is claimed in respect of those\ngoods. While doing so, the Tribunal has taken note of the judgment of\nthis Court in Ramesh Food Products case and rightly analysed the\nsame. We reproduce following discussion in the impugned judgment\ndated 22.08.2006 of the Tribunal (which is the subject matter of Civil\nAppeal No. 2789 of 2007):\n“7. The provisions in the relevant Notifications to compute\naggregate value of clearances mandate that the\nclearances of goods bearing brand name or trade name of\nanother persons which are ineligible for the grant of\nexemption shall not be taken into account in determining\nthe aggregate value of clearances. Therefore, value of\nclearances of goods bearing brand name of third parties\nwithout availing the benefit of Notification No. 8/2003 is not\nreckoned for computing clearance value of rupees one\nhundred lakhs in any year for exemption benefit. From\nthese clauses contained in the relevant Notifications, it is\nclear that goods bearing brand name of third parties were\nnot eligible for exemption contained in Notification No.\n8/2003. Identical provision existed in Notifn No. 9/2003\nwhere the option of availment of Modvat benefit and\npayment of a concessional rate of duty was prescribed.\nGoods bearing brand name of third parties are therefore\nexcluded from the exemption in Notification No. 9/2003 as\nwell. The assessee has not availed the benefit contained\nin either of the Notifications 8/99 and 9/99, 8/2000 and\n9/2000 etc. in respect of goods bearing brand name of\nthird parties.\n8. We find that the impugned order also seeks support of\nthe ratio of Ramesh Food Products case decided by the\n\nPage 25\nJUDGMENT\n25\nHon'ble Supreme Court. In that case, the Honourable\nSupreme Court considered the options available to the SSI\nunits clearing specified goods and decided that both the\noptions provided substantive concessions viz; modvat and\nexemption under Notfn. 175/86 to the manufacturer and\nthe manufacturer had to decide on one option. Once an\noption was made, there was no liberty to the assessee to\navail benefits of both the options simultaneously.\nTherefore an SSI unit availing full exemption as per the\nNotfn. No. 175/86 in respect of certain specified goods\ncould not also avail the modvat benefit in respect of certain\nother specified goods.\n8.1 Notfn No. 175/86 dated 01.03.1986 extended\nconcessional rate of duty on first clearances of specified\ngoods of value of rupees seven and half lakhs while\navailing modvat credit on inputs or full exemptions benefit\nfor such goods without the benefit of modvat credit. The\nNotfn also provided lesser benefit for further clearances in\nexcess of the above aggregate value under both the\noptions for higher slabs/aggregate value of clearances. In\ncomputing the aggregate value of clearances for the\npurposes of exemption under both the options, the\nnotification did not require that the goods bearing brand\nname of third parties should be excluded. The following\nexplanations, inter-alia, governed computation of the\nabove aggregate value for the Notfn.\nExplanation IV – For the purposes of this notification,\nwhere the specified goods manufactured by a\nmanufacturer, are affixed with a brand name or trade name\n(registered or not) of another manufacturer or traders,\nsuch specified goods shall not, merely by reason of that\nfact, be deemed to have been manufactured by such other\nmanufacturer or trader.\n8.2 The above condition though present in the\nNotifications that replaced the scheme of duty benefit for\nSSI units contained in Notfn. 175/86, value of such goods\nare specifically excluded from the computation of\naggregate value in these Notfns. Clearances of goods\nbearing brand name of third parties is thus not governed\nby the Notfns issued for the benefit of SSI units.\nxx\nxx\nxx\n9.1 All the twin Notifications contain the following identical\nconditions excluding the goods bearing brand name of\n\nPage 26\nJUDGMENT\n26\nthird parties from the purview of both the Notifications:\n“3. For the purpose of determining the aggregate\nvalue of clearances for home consumptions, the\nfollowing clearances shall not be taken into account,\nnamely:\n(a)\nxx\nxx\nxx\n(b) clearances bearing the brand name or trade\nname of another person, which are ineligible for the\ngrant of this exemption in terms of paragraph 4 below.\n4. The exemption contained in the Notification shall\nnot apply to the specified goods bearing a brand\nname or trade name, whether registered or not, of\nanother person, except in the following cases....”\nThe exclusions mentioned are components manufactured\nfor OE manufacturers, goods manufactured in rural area,\ngoods bearing brand names of KVIC etc. The conditions\ncontained in para 2(iii) of the relevant Notifications seminal\nto the dispute was not present in the Notification No.\n175/86. The relevant notifications are different from\nNotification No. 175/86 in view of the other new conditions\nsince added.\n10. Therefore, the ratio laid down by the Apex Court\ninterpreting Notification No. 175/86 in Ramesh Food\nProducts cannot apply in reading the scope of pairs of\nNotifications issued in various years after its (Notification\nNo. 175/86) rescission for the benefit of SSI Units. It is\nwell settled that each Notification has to be construed\nstrictly on its own terms. The issue involved in the subject\ncase is interpretation of the scope of relevant Notfns\nextending exemption without the benefit of modvat credit.\nIn the view we have taken of the relevant Notifications, the\nassessee had correctly availed the exemption under the\nrelevant Notfns. and the impugned order is passed on\nincorrect reasoning. We therefore set aside the impugned\norder and allow the appeal.”\n19)\nWe, accordingly, uphold the view of the Tribunal in both the decisions,\nresult whereof is to dismiss these appeals. Ordered accordingly. There\n\nPage 27\nJUDGMENT\n27\nshall, however, be no order as to costs.\n.............................................J.\n(A.K. SIKRI)\n.............................................J.\n(ROHINTON FALI NARIMAN)\nNEW DELHI;\nOCTOBER 27, 2015.\n"