2008 (7) TMI 653 - AT - Central Excise

Summary

Issues involved: Interpretation of SSI exemption notification for cotton yarn manufacturers and utilization of MODVAT credit for duty payment on polyester-viscose blended yarn.

Interpretation of SSI exemption notification: The case involved a dispute where the respondents, engaged in cotton yarn manufacturing, availed SSI exemption for a period but were later denied the benefit by the original authority. The lower appellate authority allowed the SSI benefit without the respondents exercising the option at the start of the financial year. The Tribunal referred to previous decisions and held that early duty-paid clearances did not constitute opting out of SSI exemption. As subsequent clearances were in line with the notification, the respondents were deemed to have opted for SSI exemption from the beginning of the financial year. Therefore, the denial of SSI benefit was deemed incorrect.

Utilization of MODVAT credit: Another issue was the utilization of MODVAT credit by the respondents for duty payment on polyester-viscose blended yarn. The appellate authority approved this utilization, stating that duty on this product was required at the normal rate, not under SSI benefit. The Tribunal concurred with this decision, allowing the MODVAT credit for duty payment on the final product.

Judgment: After examining the records and arguments, the Tribunal dismissed the appeal of the Revenue, upholding the lower appellate authority's decision to allow the SSI benefit and the utilization of MODVAT credit by the respondents.