2003 (2) TMI 362 - AT - Central Excise

Summary

Issues Involved:
- Whether the benefit of exemption under Notification No. 49/94-CE (N.T.) is available to the goods manufactured and removed by the Respondents.

Detailed Analysis:

1. Issue of Exemption Benefit:
The appeal filed by the Revenue questions the availability of exemption under Notification No. 49/94-CE (N.T.) to the goods manufactured and removed by the Respondents, M/s. Parasrampuria Synthetics Ltd. The Respondents, manufacturers of polyethylene Terephthalate, availed Modvat Credit of the duty paid on inputs under Rule 57A of the Central Excise Rules, 1944. The dispute arose when a show cause notice was issued to recover wrongly taken Modvat Credit and impose penalties for clearing their final product at a nil rate of duty against C.T.-2 Certificates issued under the said notification.

2. Arguments by the Revenue:
The Revenue argued that the Modvat Credit should not have been allowed as the final products were cleared without payment of duty, making Rule 57-C applicable. They contended that the products were not cleared to units specified under Rule 57-C, thus making the Modvat Credit inadmissible.

3. Counterarguments by the Respondents:
The Respondents, represented by Shri K.K. Anand, argued that Rule 57-C was not applicable as the final goods were not exempted from duty or chargeable at a nil rate. They relied on the fact that the goods were cleared under Notification No. 49/94-CE (N.T.), issued under Rule 13 of the Central Excise Rules, not under Section 5A of the Central Excise Act. Precedents were cited to support this argument.

4. Judgment and Analysis:
The Tribunal analyzed Rule 57-C, which prohibits credit on inputs used in products exempt from duty or chargeable at nil rates. It was noted that the final goods were cleared under Notification No. 49/94, allowing removal without duty payment for supply to manufacturers. The Tribunal agreed with the Respondents, concluding that the goods were not exempt from duty or chargeable at nil rates. Precedents were cited to support this decision, emphasizing that clearances under Rule 13 do not equate to clearances at nil rates or exemptions under Rule 57-C. The Tribunal upheld the decision, rejecting the Revenue's appeal.

In conclusion, the judgment clarified the applicability of Rule 57-C in determining the admissibility of Modvat Credit for goods cleared under specific notifications. The decision highlighted the distinction between clearances under Rule 13 and exemptions under Rule 57-C, ultimately ruling in favor of the Respondents based on the specific circumstances of the case and relevant legal precedents.