2004 (11) TMI 348 - AT - Central Excise

Summary

Issues:
Whether a manufacturer of excisable goods can avail the benefit of Notification No. 1/93-C.E.

Analysis:
The appeal filed by Revenue questioned whether a manufacturer of excisable goods could benefit from Notification No. 1/93-C.E. The respondents, M/s. Gupta Engineers, manufactured aluminum enamel winding wire eligible for exemption up to the first clearance of Rs. 30 lakhs under the said notification. The Deputy Commissioner vacated a show cause notice disallowing Modvat credit, stating that the respondents had the option to avail or not avail the exemption. The Commissioner (Appeals) upheld this decision, citing previous tribunal orders. The Senior Departmental Representative argued that the exemption was obligatory for the assessee, preventing them from availing Modvat credit. He referenced a Supreme Court decision emphasizing that if the final product is duty-exempt, Modvat credit cannot be claimed.

The Advocate for the respondents, Shri V.K. Gupta, supported the lower authorities' findings and cited relevant case law. The Tribunal considered both sides' arguments. Notification No. 1/93 provided duty exemption subject to specified conditions, including registration as a Small Scale unit. Even unregistered units could avail exemption up to Rs. 10 lakhs. The Tribunal found that the notification required compliance with conditions before availing the exemption, rejecting the Department's argument that the benefit was unconditional. The Tribunal concluded that the assessee must fulfill the notification conditions to avail of the exemption, dismissing the Revenue's appeal.

This judgment clarifies that manufacturers of excisable goods must comply with the conditions of Notification No. 1/93 to avail duty exemption. The Tribunal emphasized that even unregistered small-scale units must meet the notification requirements to benefit from the exemption. The decision highlights the importance of adhering to notification conditions for claiming exemptions and reinforces that duty exemption does not automatically entitle manufacturers to additional benefits like Modvat credit.