2002 (12) TMI 296 - AT - Central Excise

Summary

Issues Involved:
Interpretation of Notification No. 75/87-C.E. dated 1-3-1987 regarding Central Excise duty exemption for goods up to Rs. 15 lakhs and subsequent clearances.

Detailed Analysis:

1. Interpretation of Notification No. 75/87-C.E.: The appeal filed by M/s. Freeze Air India raised the issue of whether they were entitled to avail the benefit of Notification No. 75/87-C.E., dated 1-3-1987, which provided exemption from Central Excise duty for goods up to Rs. 15 lakhs. The appellants claimed exemption under this notification but paid duty on the first clearance of Rs. 30 lakhs at 15% rate, even though the first Rs. 15 lakhs were exempt. The Assistant Commissioner confirmed the duty demand, stating that by paying duty on the first slab, the appellants had opted out of the exemption. The Commissioner (Appeals) upheld this decision, leading to the appeal.

2. Arguments by Appellant and Departmental Representative: The appellant's advocate argued that the appellants always intended to avail the benefit of the notification, evidenced by their Classification Declaration. They believed they could pay duty on the first slab as they would cross the Rs. 15 lakhs limit. The departmental representative contended that by paying duty on the first slab at 15%, the appellants opted out of the exemption, making them liable to pay duty at the Tariff rate. The representative highlighted that the appellants had availed Modvat credit from the beginning, indicating their intention not to avail the notification's benefit.

3. Judgment and Analysis: The Tribunal examined both sides' submissions and the provisions of Notification No. 75/87. It noted that the appellants paid 15% duty on clearances up to Rs. 15 lakhs, even though these were exempted. The Tribunal acknowledged that the appellants had claimed the benefit of the notification in their declaration, indicating their intent to avail the exemption. It held that the appellants, due to a bona fide mistake, paid duty on exempted clearances. As per settled law, if a manufacturer is eligible for a notification's benefit, it cannot be denied. Therefore, the Tribunal ruled in favor of the appellants, allowing them to avail the exemption under Notification No. 75/87. The appellants were directed to reverse the Modvat credit availed on goods up to Rs. 15 lakhs. The appeal was disposed of accordingly.

In conclusion, the judgment clarified the correct interpretation of Notification No. 75/87-C.E. and upheld the appellants' right to avail the exemption despite paying duty on the first slab. It emphasized the importance of intent and eligibility in claiming exemptions under Central Excise laws.