2007 (11) TMI 504 - AT - Central Excise

Summary

Issues:
Department's appeal against Commissioner (Appeals) order dated 19-8-2003.

Analysis:
The case involved two appeals by the Department against the order of the Commissioner (Appeals) dated 19-8-2003. The respondent was engaged in the manufacture of casting, capping, and scrap under Chapter 39 of the Central Excise Tariff. They had availed the exemption benefit up to Rs. 100 lakhs as per Notification No. 5/98, with the condition of not availing credit of duty paid on inputs under Rule 57A or 57B. The notification allowed payment of duty at a concessional rate of 8% after the limit of Rs. 1 crore was exhausted. However, the respondent opted out of the notification after crossing the limit and paid duty at the normal rate of 24%, also availing Cenvat credit. The Original Authority demanded duty, interest, and penalty for violating the notification conditions. The Commissioner (Appeals) set aside the Original Authority's order.

The Department sought to set aside the Commissioner (Appeals) order and reinstate the Original Authority's decision. The respondent argued that Notification No. 5/98 did not require continuous availing throughout the financial year. The Tribunal noted that the notification did not mandate continuous availing and observed that the Original Authority did not seek to deny the benefit of duty-free clearances up to Rs. 1 crore. The Tribunal found it contradictory that the Original Authority confirmed duty at 24% instead of the applicable 8% for clearances beyond Rs. 1 crore. The assessee had paid normal duty after crossing the limit and had availed input credit for dutiable products.

The Tribunal concluded that Notification No. 5/98 did not require continuous availing throughout the financial year. The assessee had paid normal duty after crossing the exemption limit, and no dispute was raised for clearances up to Rs. 1 crore at a nil rate. Therefore, the Tribunal rejected the Department's appeals, as they found no merit in the Department's contentions. The appeals were dismissed by the Tribunal.