Branded labels - SSI exemption – Metal Labels Vs Paper Labels.
DDT received this mail from a netizen –
The Central Government has issued a notification 47/2008-CE, dated 01.09.2008 inserting the following clause 4(e) and paragraph 4B in notification 8/2003-CE which is as under
“4. The exemption contained in this notification shall not apply to specified goods bearing a brand name or trade name, whether registered or not, of another person, except in the following cases : -
(e) Where the specified goods are 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, metal labels.
4B. Notwithstanding anything contained in the preceding paragraphs, the exemption in respect of goods specified in clause (e) of paragraph 4, contained in this notification, shall be restricted to rupees ninety lakhs for the remaining part of the financial year 2008-09.”
There are assessees manufacturing ‘paper labels' carrying a brand name and these paper labels are tagged on to ready made garments such as shirts, trousers, pants etc. In our excise formations, it is contended that such ‘ branded paper labels ' are NOT entitled to the benefit flowing out of this amending notification 47/2008-CE as they are not specifically mentioned in clause (e) [above] inasmuch as only ‘metal labels' are referred to. It is also being contended that the usage of the term ‘namely' indicates the exclusive nature of the ‘specified goods' entitled to the benefit of SSI exemption.
When metal labels are entitled for exemption, why not paper labels?
The Supreme Court in the case of Suksha International & Nutan Gems [] has held that interpretation which would unduly restrict the scope of the beneficial provision and take away with one hand what is given with the other is to be avoided. So also, in the case of Shriram Vinyl & Chemical Industries, [], it was held that interpretation of an exemption notification must be rational and it must not result in denial of benefit thereof.
It is also held by the Apex Court in the case of Mahindra Engg . & Chemical Products Ltd. [] that the use of expressions “namely”, “that is to say”, followed by description of goods is usually exhaustive unless there are strong indications to the contrary.
Secondly, how can the term ‘namely' be construed as exclusive in nature when the fact remains that the clause (e) begins with the words ‘Where the specified goods are in the nature of packing materials…”. The fact of the matter is that the word ‘namely' extrapolates the word ‘packing materials'. So, if the Central government has failed to make a mention of the word ‘paper labels' in explicit terms in the exclusion clause (e), that cannot be a ground to deny the SSI exemption in respect of ‘branded paper labels'.
Will the Board clarify or leave the matter to the consultants and courts?