2001 (12) TMI 358 - AT - Central Excise

Summary

Issues Involved:
1. Interpretation of Notification No. 16/97-C.E. dated 1-4-97.
2. Eligibility for Small Scale Industries (SSI) exemption.
3. Availing Modvat credit under Rule 57A.
4. Compliance with conditions of the Notification.
5. Denial of benefit of Notification No. 16/97-C.E.

Analysis:

1. The main issue in this appeal was the interpretation of Notification No. 16/97-C.E., dated 1-4-97, specifically regarding whether the benefit of the notification was available to the goods manufactured by the appellant, M/s. Bentex Linger Switch Gear Co.

2. The appellant had been availing Small Scale Industries (SSI) exemption under the said notification but faced challenges when the Commissioner Central Excise, New Delhi held that they were not eligible for the exemption due to their goods bearing the brand name of another person. Consequently, the appellant started paying duty at the tariff rate and availing credit of duty paid on inputs used in their final products.

3. The appellant argued that they were compelled to pay the full rate of duty due to pressure from the Department after the Commissioner's order, which deemed them ineligible for the SSI exemption. They contended that they should not be penalized for violating the conditions of the Notification when they had no choice but to pay the duty at the full rate.

4. On the other hand, the Department contended that the appellant violated the conditions of the Notification by availing Modvat credit before the value of clearances for home consumption exceeded Rs. One crore, as stipulated in the Notification.

5. The Tribunal considered the submissions and found that the appellant had been forced to pay duty at the full rate following the Commissioner's order, rather than voluntarily opting out of the Notification. Since the appellant was compelled to pay duty at the full rate, it was held that they did not contravene the conditions of the Notification. As the demand of duty was based solely on the alleged violation of one condition of the Notification, the Tribunal set aside the order and allowed the appeal.