The Central Excise department's criteria to calculate the exemption limit of Rs 1 crore for SSI units based on the value of clearances on the Maximum Retail Price (MRP) after abatement has been challenged in the High Court of Punjab & Haryana by the Karnal Pharmaceutical Manufacturers Association (KPMA).
The move of the association followed a recent explanation given by the joint commissioner, office of the Commissioner of Central Excise, Panchkula on an enquiry from the association whether value based Central Excise exemption of Rs 1 crore to SSI is calculated on invoice value or on MRP less 40 percent abatement. The official clarified that the exemption limit of Rs. One crore would be based on the value of clearances on the MRP after availing abatement of 40% and not on the invoice value, as practiced earlier.
"As per para 5 c (1) of the notification no. 8/2003 CE dated 1/03/03 as amended, 'Value' means, in respect of specified goods which have been notified under Section 4A of the Central Excise Act, 1944, the value as determined in accordance with the provisions of that section. As per Section 4A, regarding valuation of excisable goods with reference to retail sales price provides that the value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the official gazette. Now wide notification No.2/2005 CE (NT) dated 7/1/2005 as amended, the Government has specified medicaments under sub-section 2 of section 4A of the CE Act and allowed abatement of 40% on retail sale price of the product," the official informed the association.
Sources informed that the petitioner challenged the decision citing the decision has caused exhaustion of limit very early for the member manufacturers and has created an unviable business environment.
Sources said the court, which took up the case for hearing last week, has remarked that the case would be decided ex-party next time, unless the concerned Government officials submit their views in the court. The outgoing Chief Justice C K Jain, now elevated to the Supreme Court, observed that the respondents failed to appear for hearing when the case was taken up for hearings earlier, since the court accepted the petition two months ago.