2004 (4) TMI 485 - AT - Central Excise

Summary

Issues Involved:
Whether a manufacturer can avail exemption from duty in one unit while paying duty and availing Modvat Credit in another unit.

Analysis:
The appeal filed by the Revenue raised the issue of whether M/s. Alcon Engg. Industries could simultaneously avail exemption from duty in one unit while paying duty and availing Modvat Credit in their second unit. The Revenue argued that the manufacturer cannot claim exemption in one unit if another unit has already opted for a different duty payment scheme. The Assistant Commissioner had demanded duty on plastic containers manufactured in one unit, citing ineligibility to avail exemption due to duty payment in the second unit. However, the Commissioner (Appeals) allowed the appeal, referencing a Tribunal decision permitting simultaneous availment of exemption and Modvat Credit for factories producing goods under different tariff headings.

The Respondent's representative countered by asserting that the duty payment option under Notification No. 38/97 or 9/98 applied to goods manufactured in the respective unit only. They cited recent Tribunal decisions, such as Innovative Tech Pack Ltd. v. C.C.E., Delhi and Polyinks Pvt. Ltd. v. C.C.E., Delhi-IV, supporting the entitlement to exemption for specified goods regardless of duty payment in another unit. Additionally, they argued that a show cause notice had only been issued to the unit manufacturing plastic containers, and clubbing clearances of both units without notice violated legal principles.

Upon review, it was found that Notification No. 4/97-C.E. exempted goods under specific headings from duty subject to certain conditions, including not availing credit on inputs. Since the department did not allege the manufacturer availed input duty credit in the unit producing plastic containers, the benefit of the Notification could not be denied. Citing precedent cases like Polyinks Pvt. Ltd. and CCE, Ludhiana v. Munjal Gas, it was established that availing Modvat Credit in one unit did not disqualify the manufacturer from exemption in another unit. Consequently, the appeal by the Revenue was rejected based on these findings.