2003 (7) TMI 633 - AT - Central Excise

Issues Involved:
1. Applicability of Small Scale Notification No. 1/93 dated 28-2-1993 as amended by Notification No. 90/94 dated 25-4-1994.
2. Computation of the value of clearances for concessional duty.
3. Interpretation of the term "first clearances of the specified goods up to an aggregate value not exceeding rupees thirty lakhs."
4. Eligibility for Modvat credit and its effect on concessional duty.
5. Date from which the benefit of the notification is available.

Issue-wise Detailed Analysis:

1. Applicability of Small Scale Notification No. 1/93:
The respondents are engaged in manufacturing texturised/crimped yarn under Chapter heading 54.03. Notification No. 1/93 was amended by Notification No. 90/94 to include these goods for SSI benefit. The department contended that clearances should be computed from 1-4-1994, the start of the financial year, not from the date the respondents opted for the benefit. Show cause notices were issued for recovery of differential duty after the first clearance value of Rs. 50 lakhs was crossed.

2. Computation of the Value of Clearances for Concessional Duty:
The Commissioner (Appeals) set aside the adjudicating authority's order, stating that clearances made between 1-4-1994 to 24-4-1994 should not be computed for concessional duty as the goods were not "specified goods" during this period. The goods became specified only from 25-4-1994. The Commissioner (Appeals) held that the clearances made prior to 20-5-1994, when the benefit of Notification 1/93 became legally available, should not be included for computing concessional duty.

3. Interpretation of the Term "First Clearances of the Specified Goods up to an Aggregate Value Not Exceeding Rupees Thirty Lakhs":
The term "first clearances of the specified goods up to an aggregate value not exceeding rupees thirty lakhs" was interpreted differently by the Tribunal and the High Court. The Tribunal initially held that clearances should be computed from 25-4-1994, but the High Court ruled that the benefit of Notification No. 1/93 was available from 20-5-1994, and clearances should be computed from the date the respondents opted for the exemption.

4. Eligibility for Modvat Credit and Its Effect on Concessional Duty:
The respondents availed proforma credit under Rule 56A until 20-5-1994, and the goods were not specified for Modvat credit under Rule 57A during this period. The Commissioner (Appeals) noted that since the respondents were not availing Modvat credit, they were not eligible for the concessional rate of duty under para 1(a)(i) or (ii) of Notification 1/93 during 25-4-1994 to 19-5-1994. The clearances made at full duty by availing proforma credit under Rule 56A were not eligible for computing the aggregate value for concessional duty.

5. Date from Which the Benefit of the Notification is Available:
The Tribunal, following the Gujarat High Court's judgment in Dhanlaxmi Texturisers, held that the benefit of Notification No. 1/93 was available from 20-5-1994, and clearances should be computed from the date the respondents opted for the exemption. The Tribunal's decision was based on the High Court's ruling that the benefit was legally available only from 20-5-1994.

Separate Judgments Delivered:

Majority Order:
The majority held that the benefit of Notification No. 1/93 as amended is available to the assessees from 20-5-1994, and they are entitled to the benefit by computing the value of clearances from the date they opted for the exemption in 1994-95.

Dissenting Opinion:
One member disagreed, stating that the computation of the Rs. 30 lakhs slab should be from 25-4-1994, the date the goods became specified, following the Larger Bench decision in CCE, Coimbatore v. Marutham Textiles.

Final Decision:
The majority decision was that the benefit of Notification No. 1/93 is available from 20-5-1994, and clearances should be computed from the date the respondents opted for the exemption. Appeals were disposed of accordingly.

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