2001 (11) TMI 341 - AT - Central Excise

Summary

Issues Involved:
Whether a manufacturer can avail of SSI exemption under Notification No. 8/99-C.E. for specified goods and discharge duty liability at the normal tariff rate by utilizing Modvat Credit for other goods manufactured.

Analysis:
The appeal by M/s. Kinjal Electricals Pvt. Ltd. raised the issue of whether they could avail of SSI exemption under Notification No. 8/99-C.E. for certain goods and pay duty at the normal tariff rate while using Modvat Credit for other manufactured goods. The Appellants opted for SSI exemption for some goods and paid duty for others, leading to a demand for excise duty by the Deputy Commissioner. The Commissioner (Appeals) rejected their appeal, stating that both Notification Nos. 8/99 and 9/99 did not allow selective availing of exemptions for specified goods. The Appellants argued that a previous Tribunal decision supported their position, allowing simultaneous benefit from SSI exemption and Modvat credit on different goods. The Appellants contended that the Notification did not require uniform spread of benefits across all goods and that they should be granted the benefit of Notification No. 9/99-C.E. if not under No. 8/99.

The Appellants' Consultant argued that the Notification did not mandate uniform benefit spread and that the Revenue misinterpreted the Notification by insisting on uniform application. The Consultant also cited a Tribunal decision and Supreme Court confirmation supporting simultaneous benefit from SSI exemption and Modvat credit on different goods. On the other hand, the Revenue argued that the Notification clearly required manufacturers to choose either exemption or payment of duty before the first clearances, without the option to selectively apply it to different products. The Revenue contended that the benefit of Notification No. 9/99-C.E. could not be extended due to non-compliance.

The Tribunal analyzed Notification No. 8/99-C.E., which mandated manufacturers to exercise the exemption option before the first clearances without specifying selective application to certain goods. The Tribunal agreed with the Revenue that the Notification did not allow selective availing of exemptions for specific goods. However, the Tribunal found merit in the alternative argument that the Appellants should benefit from Notification No. 9/99-C.E. since they were denied the exemption under No. 8/99. Consequently, the matter was remanded for the Adjudicating Authority to recompute the duty liability, and the appeal was disposed of accordingly.