2002 (5) TMI 298 - Commission - Central Excise

Summary

Issues Involved:
1. Scope of notifications granting exemption to SSI units based on value of clearances.
2. Permissibility of availing the said exemptions after reversing the Modvat credit of AED.
3. Legality of computing duty on the basis of Notification 38/97, which was not opted for by the applicant.
4. Eligibility of the applicant to deduction of duty demanded from their sale price of the impugned goods, in terms of Sec. 4(4)(d)(ii) of the Central Excise Act, 1944.

Detailed Analysis:

1. Scope of Notifications Granting Exemption to SSI Units Based on Value of Clearances:
The main applicant, M/s. Sri Gajanand Coaters Pvt. Limited, contended that they were entitled to SSI exemption benefits in regard to AED during the material period. They argued that when exemption is provided under specific notifications, it should include both basic and additional duty of excise. Reliance was placed on the Supreme Court's decision in M/s. Ujagar Prints v. UOI to support this contention. However, the Bench observed that the SSI exemption notifications did not expressly refer to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Thus, the exemption granted under these notifications could not be construed to exempt AED.

2. Permissibility of Availing the Said Exemptions After Reversing the Modvat Credit of AED:
The applicant sought permission to reverse Modvat credit to be eligible for SSI exemption benefits. They relied on the Supreme Court's decision in Chandrapur Magnate Wires (P) Limited v. CCE, Nagpur. The Bench found that the SSI exemptions and availment of Modvat credit of duty under Rule 57A or Q were mutually exclusive. Since the SSI notifications covered only BED and not AED, the Bench held that availment of Modvat credit of AED for discharge of AED due on the final product would not affect the availment of SSI notifications in respect of BED.

3. Legality of Computing Duty on the Basis of Notification 38/97:
The applicant contested the Revenue's quantification of duty liability in terms of Notification 38/97, arguing that they had opted for Notification 16/97. The Bench observed that Notification 16/97 applied only to BED and that availment of Modvat credit of AED would not disentitle the benefits of the said exemption to BED. Therefore, the applicant would continue to be eligible for the benefit of Notification 16/97 till it was rescinded or modified.

4. Eligibility of the Applicant to Deduction of Duty Demanded from Their Sale Price of the Impugned Goods:
The applicant sought to deem their sale price as cum-duty price, eligible for abatement under Sec. 4(4)(d)(ii) even for clandestinely removed goods. They relied on the Supreme Court's decision in CCE, Delhi v. Maruti Udyog Ltd. The Bench noted that for the years 95-96 and 96-97, the sales bills/invoices of the main applicant formed the basis for quantifying the value of clandestine clearances, and thus, it was mandatory to hold the "invoice price" as cum duty value. However, for the years 97-98 and 98-99, the value was adopted from the statutorily accounted clearances, and the Bench did not find it possible to consider the value of clearances themselves as cum duty price for these years.

Conclusion:
The Bench concluded that the applicant was not entitled to assessment under SSI notifications regarding their AED liability, which had to be discharged at applicable rates without reference to SSI notifications. However, the applicant was entitled to the benefit of the relevant SSI notifications regarding BED. The duty payable was determined as Rs. 14,13,921/-. The main applicant and co-applicants were granted immunity from penalty, fine, and interest under the Central Excise Act, 1944, and the Central Excise Rules, and from prosecution under the Central Excise Act, 1944. The settlement would be void if obtained by fraud or misrepresentation of facts.