2004 (5) TMI 576 - AT - Central Excise

Summary

Issues: Interpretation of Notification No. 1/93-C.E. regarding deemed Modvat credit eligibility and exemption limit.

In this judgment, the main issue revolves around the interpretation of Notification No. 1/93-C.E. concerning the eligibility of a unit to avail deemed Modvat credit and the exemption limit. The Commissioner (Appeals) accepted the respondents' claim that they were entitled to take deemed Modvat credit on steel ingots and re-rollable materials as per Letter No. TS/36/94-TRU. The dispute arose when the revenue contended that the unit ceased to be eligible for exemption under Notification 1/93-C.E. after exceeding the clearance value of Rs. 75 lakhs, thus necessitating the payment of normal excise duty. The Tribunal had to determine whether the unit could still be considered as availing the exemption beyond the Rs. 75 lakhs limit.

The judgment delves into the specifics of Notification No. 1/93-C.E., highlighting that an option must be exercised by the manufacturer to avail benefits under the notification for a financial year. It emphasizes that the notification's provisions do not apply if the aggregate clearances of excisable goods for home consumption exceeded Rs. 300 lakhs in the preceding financial year. The Tribunal observed that since the respondents had not surpassed this eligibility limit in the previous year, the terms of Notification No. 1/93-C.E. would apply to them. The judgment clarifies that the qualification of "unit availing exemption under Notification 1/93" pertains to the factory or unit as a whole, not individual clearances exceeding a certain value, such as Rs. 50 lakhs.

Ultimately, the Tribunal concluded that the unit in question qualified as a unit availing exemption under Notification No. 1/93-C.E. and rejected the objection that it was not entitled to the benefit of deemed credit as per the Order TS/36/94-TRU. The appeal was dismissed, affirming the order of the Commissioner (Appeals). The judgment provides a detailed analysis of the interpretation of the notification's provisions and their application to the specific circumstances of the case, ultimately clarifying the unit's eligibility for deemed Modvat credit and exemption under Notification No. 1/93-C.E.