2002 (9) TMI 734 - AT - Central Excise

Issues:

1. Interpretation of deemed credit benefit under Ministry's Order No. TS/36/94-TRU.
2. Entitlement to deemed credit after crossing the exemption limit of Rs. 75,000 under Notification No. 1/93-C.E.
3. Applicability of deemed credit order to manufacturers availing exemption under Notification No. 1/93-C.E. even after crossing the exemption limit.
4. Legal validity of extending deemed credit benefit to units paying duty at the normal rate after crossing the exemption limit.

Issue 1: Interpretation of Deemed Credit Benefit under Ministry's Order No. TS/36/94-TRU

The case involved a reference application by the Revenue to determine the correctness of extending the deemed credit benefit under Ministry's Order No. TS/36/94-TRU to a unit availing exemption under Notification No. 1/93-C.E. The Revenue argued that once a manufacturer crosses the exemption limit provided under Notification No. 1/93, they are no longer entitled to the deemed credit benefit. The Tribunal dismissed the Revenue's appeal, relying on a previous decision. The deemed credit order allowed re-rollers availing the exemption to be deemed to have paid duty on certain materials without the need for documentation.

Issue 2: Entitlement to Deemed Credit after Crossing Exemption Limit

The respondents, engaged in manufacturing steel products, were availing benefits under Notification No. 1/93-C.E. and deemed credit under Ministry's Order No. TS/36/94-TRU. Despite crossing the exemption limit of Rs. 75,000 under Notification No. 1/93, they continued to claim the deemed credit benefit. The adjudicating authority initially disallowed the benefit after the exemption limit was crossed, but the Commissioner (Appeals) allowed the appeal. The Tribunal upheld the decision, emphasizing that the deemed credit was available to re-rollers even after crossing the exemption limit.

Issue 3: Applicability of Deemed Credit Order to Manufacturers Crossing Exemption Limit

The contention of the Revenue was that manufacturers no longer working under Notification No. 1/93 after crossing the exemption limit should not be entitled to the deemed credit benefit. The Tribunal's decision, based on the interpretation of the deemed credit order and the exemption notification, favored the respondents. The order specified conditions under which re-rollers availing the exemption could benefit from deemed credit without the need for duty payment documentation.

Issue 4: Legal Validity of Extending Deemed Credit Benefit to Units Paying Duty at Normal Rate

The core question requiring reference to the High Court was whether the deemed credit benefit should be extended to units availing exemption under Notification No. 1/93-C.E. even after crossing the exemption limit and starting to pay duty at the normal rate. The Revenue argued that once the exemption limit was exceeded, the manufacturer was no longer covered by the notification and, therefore, not entitled to the deemed credit. The Tribunal's decision, based on precedent and the specific provisions of the deemed credit order, upheld the respondents' entitlement to the benefit even after surpassing the exemption limit.

This detailed analysis of the judgment provides insights into the interpretation of the deemed credit benefit, entitlement after crossing the exemption limit, applicability to manufacturers, and the legal validity of extending the benefit to units paying duty at the normal rate.

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